Growing attendance and higher guest spending are driving rising profits at The Walt Disney Company's theme parks, Disney reported today.
"I could not be more proud of our Disney Parks, Experiences and Products segment, which posted its second-best quarter of all time," Disney CEO Bob Chapek said in an investors' conference call.
The Disney Parks, Experiences and Products segment reported revenue of $7.234 billion, up from $3.588 billion in the same period last year, but down slightly from the $7.396 billion the segment reported in 2020, just before the pandemic started closing parks worldwide. The Disney Parks segment reported operating income of $2.450 billion, up from a loss of $119 million in the first quarter of Fiscal year 2021, and up from $2.338 billion in the first quarter of fiscal 2020.
"Growth at our domestic parks and resorts was due to higher guest spending and, to a lesser extent, increased attendance, partially offset by higher costs," Disney reported in its press release. "Guest spending growth was due to an increase in average per capita ticket revenue, higher average daily hotel room rates and an increase in food, beverage and merchandise spending. The increase in average per capita ticket revenue was due to attendance mix and the introduction of Genie+ and Lightning Lane. Higher costs were due to an increase in operating costs, due to volume growth, and higher marketing spending."
"While we anticipated these products would be popular, we have been blown away by the reception in the quarter, when more than a third of domestic park guests purchased either Genie+, Lightning Lane, or both," Chapek said. "That number rose to more than 50% during the holiday period.
"While demand was strong throughout the quarter at both domestic sites, our reservation system enabled us to strategically manage attendance. In fact, their stellar performance was achieved at lower attendance levels than in 2019. As we return to a more normalized environment, we look forward to more fully capitalizing on the extraordinary demand for our parks, along with the already realized yield benefits that took shape this quarter.
"And we of course will continue to invest in the guest experience. I am personally looking forward to Star Wars Galactic Starcruiser at Walt Disney World, a two-night adventure into the most immersive Star Wars story ever created. We are pleased with demand for this premium groundbreaking experience, which will welcome guests starting on March 1. Later this summer, we will debut an innovative new roller coaster at Epcot, Guardians of the Galaxy: Cosmic Rewind, and open Avengers Campus at Disneyland Paris, where the iconic Quinjet landed a few weeks ago, in advance of the resort's 30th anniversary celebrations."
Update: Followed up with another story, adding Chapek's comments on capacity and staffing issues: Why Disney Needs More Cooks in Its Kitchens
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Yes, when you start charging for things that used to be free, you will make more money. Meanwhile a milestone anniversary celebration is watered down with cavalcades replacing parades, etc. One thing that definitely isn’t at the 2nd highest level ever is guest satisfaction levels.
Call me crazy but I get more excited about getting my money’s worth on my trips, than I do how much money Disney makes…
Is it any wonder why they have the 2nd best profits ever? They have effectively "monetized" every action short of having preferred bathrooms for people willing to pay for the "wizz fast lane." The Disney experience was one that for nearly my entire life that I thought was worth the money, was superior to other "products," and that "special Disney magic." Now, 2-3 hour waits for lesser rides is the norm, Genie+ and Lightening Lane costing money and creating all of the issues of the former fastpass system, and multiple experiences altered (potentially permanently). I leave for Orlando on Saturday, and I am not setting foot on Disney property...a first for me. We have four days at Universal and multiple other experiences planned.
@Chopper: Good for you! Great points! Fantastic insight! Well said!
@MLB: You go! Way to take a stand! So inspiring!
I'd be curious to know what the current staffing levels are like at Disney (and any other park these days). If they're still short on employees in some areas, that can help raise profits.
Chapek seemed to be suggesting in the q&a that staffing among cooks was down enough that Disney needed to limit attendance because it couldn’t serve enough food to manage a larger crowd. But the statement was so meandering that I could not quote it. He also said that the absence of live entertainment such as parades was another contributing factor to Disney limiting daily attendance. Expect availability to increase as those shows return.
^That helps answer the question I had: Are they managing attendance / reservation / staffing or is staffing managing their attendance. Basically: which way is that stream going as they (like most everyone) is navigating the pandemic, and particularly omicron. With a substantial amount of luck, that will become less of an issue for Disney moving forward (a heavily vaccinated workforce will help Disney) but it'll be interesting to see how they manage attendance moving forward.
I had asked those at another site who following attendance levels closely their opinion about the lower than usual crowds during Christmas and New Years at WDW, and they believe it is staffing issues that is keeping Disney at a capped attendance level less than years past.
Chapek said in the call that Disney is dealing with a self-imposed attendance cap, which seems driven by staffing limitations, based on the color he provided. Chapek would not say what that attendance limit was, of course, but Christine McCarthy did say that FY22-Q1 attendance was down from FY20-Q1, even if it was up from FY21-Q4, as one would expect given the seasonal difference. Disney's FY Q1 is the final three months of the calendar year, when Halloween, Thanksgiving, and Christmas help spike attendance.
A lot of people are doing trips that they had put off due to the pandemic.
@Still a Fan: Got a link to a credible source quantifying the size of that demographic?
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BOOM!