Disney Reports Massive Park Gains
The Walt Disney Company announced its revenue for the fiscal second quarter of 2022.
In this financial statement and the accompanying earnings call, we discovered a great deal about the status of the parks. Here’s what we learned.
The Parks Are Making More Money Than Ever
I don’t need to tell you about Disney’s financial struggles at the parks during the pandemic.
For example, during the same timeframe last year, the Disney Parks, Experiences and Products division suffered an operating income loss of $406 million.
Yes, Disney parks lost that much money from January through March 2021. However, the story unfolded much differently for roughly the same timeframe in 2022.
The Parks division earned $6.652 billion in revenue, more than double 2021’s $3.173 billion.
More importantly, operating income went from a net loss of $406 million to a gain of $1.755 billion. So yes, I’m happy to report that Disney’s theme park division is once again highly profitable.
The news isn’t entirely rosy for the next few months, though. Hong Kong Disneyland didn’t reopen until 20 percent of the current fiscal quarter was over.
Meanwhile, Shanghai Disneyland remains shut down due to COVID-19 concerns.
For this reason, the Chinese portions of the Parks division could suffer a financial hit of $350 million during the current quarter. That’s what Disney currently forecasts anyway.
Still, Disney executives on the earnings call pointed to the success at Disneyland Paris as an example of pent-up demand in such instances.
That’s something we’ve definitely tracked at Disneyland as well. Once that park reopened, Disney couldn’t even provide enough Park Passes for its Magic Key members.
I should mention that’s part of the explanation for the quarterly growth as well. Disneyland remained closed throughout the fiscal second quarter of 2021. Conversely, it was open for the entirety of the same quarter in 2022.
More about Disney Parks and Resorts
The most significant reveal may cause you to clench your teeth a bit.
Disney reported that guest per capita spending has increased more than 40 percent since 2019 and 20 percent just since last quarter!
Yes, you’re paying for that. Disney’s goal in combating its recent financial struggles is catering to “more favorable clients,” which means those who willingly pay more per visit.
Factors like Disney Genie+ and Lightning Lane impact the per capita spending, as do price increases for restaurants, park admissions, and merchandise.
Disney also indicated that its attendance appears strong for the third quarter as well. Obviously, we’re nearly halfway done with this quarter by now.
Still, Disney is referencing Park Pass reservations and hotel reservations in identifying upcoming park trends.
Speaking of which, many of those “more favorable clients” have already checked into Star Wars: Galactic Starcruiser.
Executives noted that the new Star Wars Hotel should sell out for the entire quarter after previously doing so in March.
So, we’re talking about at least four full months of 100 percent occupancy at the resort.
Remember in mid-February when critics asserted the place would fail? Yeah, they were wrong, at least in the short term. Demand for Galactic Starcruiser remains staggeringly high.
Coming Soon to Disney Theme Parks
Disney highlighted two other upcoming Marvel-related entities as well. One is Guardians of the Galaxy: Cosmic Rewind, which opens on May 27th.
The other is Avengers Campus at Disneyland Paris, which debuts this summer.
I cannot say that I’m surprised, but Disney didn’t announce any other new park projects during the earnings call.
Also, there was absolutely no mention of the Reedy Creek situation, either from Disney or any of the financial institutions that participated in the call.
Investors don’t expect that to impact the bottom line enough in the short term to worry about the matter.
Finally, I should add that The Motley Fool and some other sites have speculated that Park Passes could end within the next year.
Disney’s CFO bragged – and not for the first time – that this system plays a significant role in the increased per capita spending at the parks.
The information enables more efficient staffing. So, given the way executives talk about the Park Pass system, I don’t think it’s going away anytime soon.