Attendance and other revenue continue to rise at The Walt Disney Company's theme parks, Disney CEO Bob Iger reported in conference call with investors today. Disney's first quarter fiscal year 2019 report noted that revenue in the division that includes the company's theme parks increased five percent to $6.8 billion for the three-month period, and that operating income increased 10 percent to $2.2 billion.
"Operating income growth at our domestic theme parks and resorts was due to increased guest spending and higher occupied room nights. Guest spending growth was due to higher average ticket prices, an increase in food, beverage and merchandise spending and higher average hotel room rates," Disney said in its report. (Here is the PDF summary of the quarterly report.)
"Attendance at our domestic parks was comparable to the first quarter last year, however per capita spending was up 7% on higher admissions, food and beverage and merchandise spending," Disney CFO Christine McCarthy said. "Per room spending at our domestic hotels was up 5% and occupancy was up three percentage points to 94%. So far this quarter, domestic resort reservations are pacing up 4% compared to prior year, while booked rates are up 1%. Results at our international operations were lower in the first quarter versus last year, as growth at Hong Kong Disneyland Resort was offset by lower results at Shanghai Disney Resort and Disneyland Paris."
There wasn't much else about theme parks in the investor call this time, but Iger did respond to a question about Disney's plans for promoting its upcoming Star Wars: Galaxy's Edge lands in Disneyland and Walt Disney World's Disney's Hollywood Studios.
"I would say on the marketing expense side, don't expect much," Iger said. "I am thinking that maybe I should just tweet, 'It's opening' and that will be enough. We are going to end up with incredibly popular and in-demand product with these two new lands. They're large. They are beautiful, and they are extremely innovative. And they obviously leverage the popularity of the Star Wars brand. And I think that we are going to have absolutely no problem gaining attention for them or to them. It's not going to take much marketing to do that."
"That's a signal I just sent to our Parks and Resorts people to keep that budget really low," he said with a laugh.
Iger also addresses Disney's pricing strategy on tickets and annual passes, which Disney is using to try to even out demand for the parks throughout the year.
"We know that crowding can be an issue and when our parks are at their most crowded, the guest experience is not what we would like it to be," Iger said. "So we are leveraging the popularity to increase pricing and to spread demand — to get much more strategic about how we are pricing, so that the parks are still accessible but in the highest peak periods we are trying to manage the attendance so that the guest experience isn't diminished."
Iger also noted "softness" in attendance at Shanghai Disneyland, though the park remains profitable though "less so" than the company thought it would be, However, Iger reiterated Disney's commitment to the market. Disney recently announced plans for a Zootopia-themed land at the park, following its expansion with a Toy Story Land last year.
Overall, Disney reported revenue of $15.3 billion, which was flat compared with the same period one year ago. Earnings per share were down 3 percent, as studio performance lagged as Disney did not have a new Star Wars movie or other major blockbuster during the Christmas season this year. (Sorry, Nutcracker and the Four Realms fans. Both of you.)
Much of the call was devoted to plans for Disney's new streaming service, Disney+, which will become the exclusive streaming home for Captain Marvel and other future Disney films after they complete their theatrical runs. Disney plans to forgo some $150 million this year in content licensing revenue it would have gotten by allowing other services, such as Netflix, to show those movies.
Iger said that Disney might sell Disney+ in a bundle with its ESPN+ and Hulu streaming services, as well as each separately. Iger said that Disney plans to have Fox develop more content for Hulu, which the company will position as a more adult-oriented alternative to Disney+. The Disney+ service will launch later this year, after a demonstration of the app in an investor event on April 11.Tweet
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