Everything New We Just Learned about Disney Parks
We already knew that Bob Chapek’s November would define his early Disney tenure.
Well, the show has started, as Chapek and other executives just reported The Walt Disney Company’s quarterly and annual earnings.
Photo: Getty Images
Here’s everything new we just learned about Disney.
The Current State of the Parks
One of the differences between Chapek and his predecessor, Bob Iger, involves transparency.
Photo: Disney
Iger didn’t mind pulling back the curtain, as he enjoyed the politics and adulation of his job.
Chapek strikes me as more of a grinder, a hard worker who doesn’t like to show his hand unless circumstances dictate it.
Photo: Marc Piasecki/Getty Images
For this reason, I hadn’t expected Disney to say anything about its new product, Disney Genie+.
To my surprise, the executives on the earnings call proved unusually forthcoming.
We learned that roughly one-third of Walt Disney World guests thus far have ordered the new paid service.
At Disneyland, most people perceived MaxPass as selling in the range of 40-50 percent. As such, the interest at Walt Disney World isn’t quite as high.
However, that’s not surprising. In fact, I’d predicted as much several times. So, to my mind, Disney officials should feel quite pleased if the number holds at 30+ percent.
Not coincidentally, park revenue metrics all grew significantly during the fiscal fourth quarter.
Disney’s Chief Financial Officer, Christine McCarthy, stated that Walt Disney World increased double digits from the third to the fourth quarter.
Guest spending also went up by nearly 30 percent compared to the fourth quarter of 2019.
So, the parks aren’t merely doing better. They’re exceeding the pre-pandemic stats in some categories.
She did offer the following warning, though:
“We don’t expect to see a substantial recovery in international attendance at our domestic parks until towards the end of fiscal 2022.”
Photo: Fortune
So, yes, international travelers can return now. Disney doesn’t expect to reach pre-pandemic levels for another nine months, though. That strikes me as reasonable.
The Less Encouraging News from the Parks Division
Disney is similarly skeptical about the cruise industry during the next six months.
Credit: Disney
McCarthy indicated that the second half of the year – it’s unclear whether she means the fiscal year or July-December – has claimed more bookings historical ranges.
Even better from Disney’s perspective, those bookings come at higher rates, presumably due to the impending arrival of the costlier Disney Wish.
Credit: Disney
Also, Disney indicates that it expects the per capita spending, which is already up nearly 30 percent, to increase even more during fiscal 2022.
That means you’ll be paying more at Disney. McCarthy states that this will happen due to:
“…inflationary pressure on wages, costs related to new projects and initiatives such as Star Wars: Galaxy’s Edge, Avengers Campus, and the EPCOT expansion and a ramp up of expenses in support of our cruise ship expansion.”
Photo by Jeff Gritchen, Orange County Register/SCNG
We learned this news on top of the fact that Disney spent roughly $550 million less on domestic theme park improvements in fiscal 2021 than in 2020.
Now, we knew this already, and it could have been worse. At one point, Disney had cut capital expenditures (CapEx) by $900 million.
Still, this statement verifies what we’d already suspected. Disney hasn’t advanced with several promised projects, at least not yet.
That’s where Destination D23 comes into play next weekend. We’ll learn what park officials have prioritized on Saturday, November 20th.
Leave My Portion Sizes Alone!
The other rather alarming note also came from McCarthy. An analyst asked her about the current park margins and whether they were sustainable.
Source: Disney
In other words, will Disney earn as much money from guests in future years as they have lately?
Chapek had already addressed this matter previously, but McCarthy added some suggestions that…weren’t great.
Photo: CNBC
The CFO referenced an “algorithm” in stating the following:
“We can adjust suppliers, we can substitute products, we can cut portion size, which is probably good for some people’s waistlines.
We can look at pricing where necessary, but we aren’t going to go just straight up across and increase prices.
We’re really going to try to get the algorithm right to cut where we can and not necessarily do things the same way.”
I suspect the portion thing was intended as a joke. It came across as Disney contemplating extreme penny-pinching, though.
The most alarming part came from the previous sentence, though. McCarthy commented, “just last week I was talking to our Parks Senior Team about things we could do there.”
So, these discussions are ongoing at Disney theme parks. The conversation circles back to the earnings report, wherein we learned that Disney is a bit cash-poor right now.
Part of that may be spreadsheet shenanigans, but Disney isn’t puffing out its chest about wealth at the moment.
In doing so, they’re letting investors know that they’re tightening the purse strings whenever possible without lessening the park experience.
The Other Stuff
I previously discussed the streaming services in last week’s article. The subject came up again on Disney+ Day, which was last week.
So, there’s no point in covering that ground right now. Instead, let’s talk about Disney’s latest film update.
The studio appears committed to the theatrical window, meaning most titles will spend 45 days in theaters before becoming available on digital. Disney will remain flexible, though.
Image: Disney Springs
Here are Chapek’s comments:
“Walt Disney Company have been built through the theatrical exhibition channel of distribution.
At the same time, we’re watching very, very carefully different types of movies to see how the different components of the demographics of that market come back.
Image Credit: Disney
And we’re watching very carefully our family films, as they are released over the next couple of months to make sure that that market will come back to theatrical exhibition.
The general entertainment will say the films that appeal to a younger target audience have come back.
Photo: Disney
And so we’re sticking with our plan of flexibility because we’re still unsure in terms of how the marketplace is going to react when family films come back with a theatrical first window.”
That’s the CEO of the most powerful content creator on the planet basically acknowledging that he has no idea what will happen next.
ROBYN BECK/AFP/Getty Images
Hollywood’s a chaotic place right now, friends.
