Lightning Lane Is a Huge Success
Last week, The Walt Disney Company performed its scheduled fiscal earnings report for the first quarter of 2022.
If you watched the stock immediately afterward, you know the results. Disney crushed it across the board, especially at the parks.
In fact, Disney’s vaunted parks division reported its second-best quarter ever!
During the accompanying earnings call, CEO Bob Chapek and CFO Christine McCarthy offered context and insights about the parks.
I found these comments enlightening, as they explained the recent past and near-future at the parks. Here’s what we just learned.
Disney’s Shocking Success
Disney doesn’t really have a comparison within the theme park industry. Disney parks claimed nearly 156 million visits in the last full year before the pandemic.
The second-place entrant lagged behind by nearly 90 million…and it wasn’t Universal Studios. Instead, universal managed a still-impressive 51.2 million, roughly 105 million behind Disney.
So, let’s not pretend like Disney does anything but dominate the theme park industry. Still, COVID-19 set back Disney and especially its parks. Until now.
For the first fiscal quarter of 2022, which covers October 2nd through January 1st, Disney’s parks earned $7.2 billion.
That number should get your attention if you paid attention at any point during the pandemic.
For the same quarter in fiscal 2021, Disney managed only $3.6 billion. So yes, Disney’s parks doubled their revenue during the most recent quarter.
As a reminder, some of the parks were closed at various times during that quarter. In fact, Hong Kong Disneyland remains shut down today.
Meanwhile, all the parks are operating until maximum guest capacity for reasons I’m about to discuss.
Despite these significant stumbling blocks, Disney’s parks enjoyed their second-best quarter ever in terms of revenue.
How Disney Earned So Much
You probably don’t care about the financials inasmuch as what this means for the parks.
On that front, the news is decidedly mixed. Disney executives revealed that one of the causes for the near-record revenue involves staffing.
Disney previously employed approximately 223,000 workers in 2019, the year before the pandemic.
Today, that number has dropped to 190,000. Obviously, not all those job losses stem from the parks.
Still, we cannot easily separate this conversation from the furloughs Disney performed during the Spring of 2020.
Yes, the Great Resignation factors into the conversation as well. Many cast members simply found jobs they liked better, and we’re all happy for their career opportunities.
However, for frequent park guests, you’ll notice the losses when planning your trip and while at Disney.
Many of the employee staffing shortages involve Disney customer service, especially via phone calls and online support. Unfortunately, it’s…lacking today.
These numbers explain all the aggravation you may have experienced over the past two years.
Oddly, Disney lists a different job as the most challenging one to staff.
Yes, short order cooks remain in short supply at the parks. As a result, Disney has offered incentives ranging from $1,000 to $6,000 to hire new workers.
Those larger amounts go toward chefs, as Disney just doesn’t have enough of them right now.
So, this part explains why your favorite restaurants remain challenging to book.
How Disney Earned So Much Part II
Here’s the other explanation for Disney’s strong park earnings growth. Some of you really aren’t going to like it.
The launches of Disney Genie+ and Lightning Lane count as unqualified successes.
Since their October debuts, more than one-third of customers have purchased them during park visits. Unfortunately, Disney didn’t list an exact number, so I cannot be more specific.
Still, that’s in range with what I had indicated would please them. MaxPass at Disneyland had hovered around 40 percent.
Remarkably, these two services performed even better during the holidays. Chapek pointedly mentioned that more than half of holiday guests used these products.
In other words, when the parks grew more crowded, guests willingly paid extra to enter the shorter line queues.
That’s the behavior Disney had wanted, and it underscores that Disney+ and Lightning Lane, aka paid FastPass, appear here to stay.
In fact, Disney’s favorite metric, per capita spending, has increased by 40 percent (!) compared to the first quarter of 2019.
Yes, Disney is earning that much more per guest over the same timeframe three years ago. And yes, Disney Genie+ and Lightning Lane play a considerable factor.
For better and/or worse, the new system has proven its viability and seems likely to stay at Disney parks.
Yes, we already knew – or at least suspected — this when MaxPass debuted in 2017. The recent holiday performance solidifies it, though.