Disney's theme park segment recorded $2.186 billion in income on $7.394 billion of revenue in the three months ending July 2, 2022, The Walt Disney Company reported today. That's up sharply from the same period last year, when the Disneyland Resort were just reopening and then operating under capacity restrictions and the Disney Cruise Line had not returned to regular operations.
Disney noted higher volume and increased guest spending driving the revenue gains, with the higher guest spending the result of higher hotel rates and the introduction of Genie+ and Lightning Lane. The company also noted that its increased revenue was offset partially by higher costs, due to "volume growth, cost inflation and new guest offerings," as well as "an unfavorable attendance mix" at the Disneyland Resort.
International parks continued to post an overall loss, though that decreased from $210 million in the same period in 2021 to just $64 million this year. Shanghai Disney Resort was open for just three days in the third quarter this year, as opposed to the entire quarter in 2021.
"We continue to see strong revenue and profit growth at our domestic parks and experienced businesses, even as our cruise ships and international visitation have yet to fully recover," CEO Bob Chapek said. "Domestic demand or theme parks continues to be strong, and we are seeing continued progress and those businesses still recovering from the pandemic. At the same time, the business model transformations we have achieved over the past few years have driven substantial increases in per capita spending and give us the flexibility to adapt should economic conditions change."
"Demand at our domestic parks continues to exceed expectations, with attendance on many days tracking ahead of 2019 levels," Executive Vice President and Chief Financial Officer Christine McCarthy said. "Our continued focus on improving the guest experience through the use of our reservation system to purposefully manage capacity versus simply increasing volume has the added benefit of improving yield and optimizing overall economics. So even while the average daily attendance at our domestic parks across the first three quarters of this fiscal year was slightly below 2019, we have delivered significantly higher revenue and operating income over that same time period. This approach also provides flexibility with levers we can adjust if demand were to shift.
"Per capita spending at our domestic parks also remain strong, increasing 10% versus Q3 of fiscal 2021 and over 40% versus fiscal 2019. And in another sign of the robust demand we have seen in our parks and resorts, occupancy at our domestic hotels in the third quarter was 90%," McCarthy said. "Looking ahead, domestic demand at our theme parks continues to look robust, with current forward looking hotel bookings and intend-to-visit roughly in line with pre-pandemic trends."
"I think a lot of onlookers look at our park business and try to sum up our success recently [by] say[ing] that it has something to do with pent-up demand," Chapek said. "Certainly there is pent-up demand, but what we are seeing is far more resilient, far more long-lasting, in terms of a increase in the affinity for our parks, both from their willingness to come to our parks, but also in terms of what guests are willing to spend when they get there in order to personalize their experience. As you know, everything we do in our parks is all about improving the guest experience. Part of that has to do with limiting capacity, but also [it's] about personalizing experiences.
"So we believe we do have a lot of flexibility to shift if our demand changes. Remember we have a reservation system which now enables us essentially, real-time on the fly, to change whatever factors we need in terms of our ticket packaging that we want. Years ago we didn't have that. We published our prices by the quarter, and that was essentially all the flexibility we had."
In its press release, Disney noted that its U.S. theme parks are "generally operating without significant Covid-19-related capacity restrictions," and that the Disney Cruise Line has been operating without capacity restrictions since April of this year. International theme parks, especially in Hong Kong and Shanghai, continue to be affected by capacity, operating, and travel restrictions, however.
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