Disney Chief Financial Officer Hugh Johnston offered an interesting look at the state of Disney’s theme park business Wednesday, touching on everything from growing attendance at Walt Disney World and Disneyland to ticket prices, new attractions, and the importance of keeping Disney vacations within reach for younger families.
Speaking during the Goldman Sachs Communacopia + Technology Conference, Johnston pointed to Disney’s most recent quarter as evidence that its domestic theme parks remain strong. Attendance at the domestic parks increased 3% during Disney’s third fiscal quarter, while global attendance climbed 4%. Disney Experiences generated nearly $10 billion in revenue during the quarter and more than $3 billion in operating income.
Johnston acknowledged that there had been expectations that Walt Disney World might struggle, particularly in the Orlando market. Instead, he said Disney saw the opposite. He credited the company’s intellectual property, along with a shift in marketing and promotional efforts toward domestic travelers, for helping drive those results.
But perhaps the most interesting part of the conversation concerned what happens as Disney continues pouring billions of dollars into its theme parks.
New projects are underway across Walt Disney World and Disneyland Resort, including Monstropolis, Tropical Americas, Piston Peak National Park, Villains Land, an expanded Avengers Campus, and Disneyland’s upcoming Coco attraction. Disney Cruise Line is expanding rapidly as well. Johnston said those investments serve two purposes: adding much-needed capacity and giving guests more value for what they’re spending.
That conversation naturally led to pricing.
Johnston said Disney remains particularly sensitive to keeping ticket prices relatively low during value periods because the company wants younger families, who may have less disposable income, to be able to visit. As those guests gain more financial flexibility over time, Disney sees opportunities for them to spend on premium extras such as Lightning Lane products, higher-end dining, and VIP tours. Johnston noted that much of Disney’s per-capita spending growth is coming from those optional experiences rather than simply increasing admission prices.
There’s an interesting message underneath all of that. Disney clearly intends to keep investing heavily in its parks, but it also believes those new attractions increase the value of a Disney vacation and create opportunities for additional spending once guests arrive.
And Disney Cruise Line certainly doesn’t appear to be having trouble finding customers either. Johnston said demand currently exceeds what Disney can accommodate, even after the cruise line increased its stateroom capacity by roughly 50% over the last couple of years. He said Disney’s recently launched ships continue to sell out and capacity utilization remains high.
For Disney Parks fans, the biggest takeaway may be that the enormous construction boom we’re watching right now isn’t simply about adding shiny new attractions. Disney views those projects as a way to increase capacity, keep attendance growing, and give guests more reasons to spend once they’re inside the parks.
And judging from Johnston’s comments today, Disney believes that strategy is already working.
