Disney Hikes Theme Park Ticket Prices But It Means Little For Shareholders

Following the pattern of annual price increase at its resorts, Disney (NYSE:DIS) raised its single-day admission prices close to 10% at its theme parks in Florida and California. Earlier last month, Comcast’s (NASDAQ:CMCSA) Universal Studios also increased its theme park day-pass price by 5%. Higher prices will boost the revenues at theme parks, which contribute close to 20% to Disney’s value. While consumer spending has improved in the U.S., we believe that it will not materially impact the attendance at theme parks.

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Yet Another Price Increase

A day-pass to Disney World will now cost $95 for adults, up from $89, and $89 for children (0-9), up from $83. Similarly, a day-pass to Disneyland or California Adventure will now cost $92 for adults and $86 for children (0-9). Parking passes at both locations also went up by $1 to $16.  The prices for Deluxe Annual Passports, which allow admission to both California parks throughout the year increased to $499 from $469. Premium Annual Passports for the California and Florida parks also went up $20 to $669.  The Disney Premier Passport, which allows its holders to visit unlimited attractions in its California and Florida locations, will now cost $979, up from $849. ^[1] This hike in prices didn’t come as a surprise. For more than a decade Disney has been increasing its prices for theme parks on an annual basis. Moreover, the attendance has been very strong for Disney giving it even more pricing power.

Theme Park Attendance

Disney’s theme parks in Q2 2013 witnessed 10% increase in per capita guest spending as compared to Q2 2012 due to the higher ticket prices and strong attendance. ^[2] Disney’s domestic theme park attendance has grown at an average annual rate of less than 1.5% for the last 5 years.  (See: How Is U.S. Theme Park Attendance Trending For Disney?, Trefis, Apr 3, 2013)

Since theme parks are destination for leisure activities, the attendance is somewhat linked to the state of the economy. The commerce department stated that the U.S. economy expanded at a 2.5% annual rate in the first quarter of 2013. ^[3] While the economic slowdown does put some pressure on the attendance at Disney’s theme parks, the impact is not very significant. This leads us to believe that the improving consumer spending in the U.S. may not materially impact the attendance at the parks though it can well boost the per capita spending of guests visiting the parks.

Our price estimate for Disney stands at $66, which is roughly in line with the market price.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Disney Raises Theme Park Ticket Prices, Deadline, June 3, 2013 [↩]
2. Disney SEC Filings [↩]
3. Spending by US consumers edges higher than expected, Financial Times, Apr 29, 2013 [↩]