One major takeaway from the Walt Disney Company’s Q1 FY22 Earnings Call was that Disney Parks surpassed any foreseeable financial goals in terms of profits during the first quarter of the current fiscal year. While Disney CEO Bob Chapek and other Disney executives on the call did specify that some of the attendance at Disney theme parks was likely the result of holiday travel, visitation to the parks was so much higher than the previous quarter (and years since the onset of the COVID-19 pandemic) that it is clear that expensive price points are not keeping Guests away.
During the call, Chapek shared that more than a third of Walt Disney World Guests purchased either Disney Genie+, Lightning Lane, or both, in an effort to minimize their time spent waiting in line for attractions. During the holiday season, Chapek reports that this number increased to more than 50%, demonstrating Guests’ preference to buy into the program even with the added expense if it meant less time in line.
In part, Disney Genie (both Genie+ with available times to pay to ride and the free Disney Genie tip board) function to their fullest ability based on numbers provided by the Disney Parks Pass Reservations System. While the system receives mixed reviews by Guests, availability has been more open in recent weeks, and regardless of how we feel about the system, the Walt Disney Company has given no indications that the system will be done away with anytime soon, if at all.
Chapek continued the discussion of parks revenue and the reservations system stating, “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 2019.”
The loss of Disney’s Magical Express is another financial blow for many Walt Disney World Guests, however, if attendance is still showing increased numbers it is likely that this added cost was not a factor in getting Guests to change their plans, and for many Guests, it would take a lot more than paying for a ride from the airport or Genie+ on busy park days to want to change their plans.
In the previous earnings call, Disney CFO Christine McCarthy mentioned that smaller portion sizes may be coming to restaurants at Disney Parks, however, prices would not necessarily increase (though the value of these items would arguable be less. When asked how the parks could work with supply shortages and inflation practices, McCarthy replied, “We can cut portion sizes, which is probably good for some people’s waistlines. We can look at pricing where necessary. We aren’t going to go just straight across and increase prices. We’re going to try to get the algorithm right to cut where we can and not necessarily do things the same way…”
While some Guests have noticed some small price increases and smaller portion sizes, there is no way to quantify this impact on attendance except to assume that Guests are still finding trips to Disney Parks worth any additional expense.
Looking toward the future, Chapek concluded this segment of the recent earnings call:
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.
Demand for the Star Wars: Galactic Starcruiser has had its ups and downs with a large number of bookings initially followed by a decline and cancellation when it was time to make final payments on this new vacation concept. This might seem to contradict Chapek’s point, however, bookings have seen leveled out once again and we are anxiously awaiting reviews of the Starcruiser when the experience opens next month.
And, demand for Disney Parks in general, resulting in the higher attendance numbers, while in part the result of pent up demand over the course of the pandemic, is sure to increase as these new experiences along with the new Guardians of the Galaxy attraction in EPCOT and Tron in the Magic Kingdom come online at later dates.