Visitor spending fuels soaring revenues at Disney theme parks

Visitor spending is up at Disney’s U.S. theme parks as average daily attendance has been only slightly below pre-pandemic levels of 2019 so far this fiscal year, Disney executives said Wednesday.

In a third-quarter earnings call Wednesday, CEO Bob Chapek and CFO Christine McCarthy attributed increased guest spending to ticket add-ons like skip-the-line service Genie+ and higher average hotel rates year-over-year. About 50% of park guests buy Genie+, Chapek said.

Disney’s third quarter began in early April, as its fight with Gov. Ron DeSantis over Florida’s so-called “don’t say gay” bill intensified when the measure passed the Legislature in mid-March and Chapek said he would fight it. DeSantis and the Legislature dissolved Disney’s Reedy Creek Improvement District in April, and some conservatives encouraged boycotts of the company.

But the dispute did not appear to have any effect on Disney’s theme park finances during the quarter, which ended July 2. Disney’s Parks, Experiences and Products division earned nearly $7.4 billion in revenue, a 72% increase from 2021′s third-quarter revenue of $4.3 billion.

The company’s stock, however, has struggled in 2022. It closed at $157.89 in early January but fell to $91.84 in mid-July. It has rebounded of late, closing Wednesday at $112.43.

The company does not report specific finances by resort, but Disney’s U.S. parks generated $5.4 billion of the division’s revenue while international parks made $788 million.

The division’s operating income hit $2.2 billion, an increase of $1.8 billion from the same period last year. Disney said that increase was due to larger crowds year-over-year spending more money at its theme parks and hotels, along with the return of cruises, which began sailing again in August 2021.

McCarthy said per capita guest spending was 10% higher than in 2021′s third quarter and up 40% compared to 2019′s. Occupancy at Disney’s U.S. hotels was 90% last quarter as theme park attendance surpassed 2019 levels on “many days.”

The company has not seen demand falter at its theme parks, McCarthy said. Disney has been using its park reservation system, implemented during the pandemic, to gauge and manage theme park demand.

“We’re still seeing demand in excess of the reservations that we are making available for our guests,” she said.

Disney has also been bringing back in-park entertainment, like character meet-and-greets and theater shows, to increase park capacity, Chapek said.

The amount of international visitors to Disney’s U.S. theme parks is returning “with significant progress,” per McCarthy, but it still remains below pre-pandemic levels. Typically, these guests made up somewhere around 20% of total park visitors.

Chapek said the increased demand for Disney’s parks is more than just pent-up demand from the pandemic, and executives expect it to remain high should a recession occur.

“What we’re seeing is far more resilient, far more long-lasting in terms of an increase in the affinity for our parks, both from the willingness to come to our parks and its attendance, but also in terms of what guests are willing to spend when they get there in order to personalize their experience,” he said.