In what becomes an annual ritual, Disney (NYSE: DIS) announced just the price increases for passing and parking at their parks in California. A day pass will now cost as much as $ 149 and parking $ 25, a 10% and 25% increase, respectively.
At higher cost, there is inevitable consumer outbreak, and this round is no different. But it has not deterred vacationers in the past. Disney adopted a similar increase at the beginning of 2018, but attendance was still up 4% this year. The result was an increase of 10% in parks and resort revenues, and an increase of 18% in the segment's operating revenues.
As unpleasant as inflation may be to consumers, Disney fans find a way to enter the Magic Kingdom, regardless of cost. Paired with the last move, if the crowds continue to grow, Disney could join another record year in 201[ads1]9 at the resorts. More than a simple cash flow, there are good reasons why Disney is increasing its entry fee.
Anyone who has braved a Disney park on a holiday or high season weekend, can attest to the crowded lines and long waits for attractions. Overcrowding is bad for business. It can reduce visitor costs in the park, it increases operating costs on the busiest days, and it can reduce the chances of a repeat visit.
Disney's price increases are an attempt to smooth things out. While peak season and weekend pricing for tickets increased by 10%, the cheapest single day passes – those that fall on non-holiday weekdays – went up by only 7%. It is a trend the company has been doing in recent years.
In addition, theme parks have rolled out date-based ticket purchases in recent years. Visitors can use an interactive calendar on Disney's resort sites to plan their vacation around the most cost-effective days. While planning trips around holidays and weekends may be the easiest for many, a simple sip from the calendar tool can persuade anyone to arrange the trip on a day off and help level out humanity.
A larger payday for employees
During the summer and autumn of 2018, Disney settled wage negotiations with its employees. For California resorts, the new minimum wage jumped to $ 15 an hour on January 1, compared to the state's minimum wage of $ 12 an hour for big businesses. In Florida, Disney will set aside a dollar a year until it reaches $ 15 an hour in 2021, with the minimum jump of $ 13 in September. It compares to Florida's minimum wage of just $ 8.46.
Wage increases can be a major feature of profitability and cause investor attacks. Finding a balance between taking care of employees and shareholders is a high order, and Disney's wage gap is sure to have an impact on the bottom line. Nevertheless, asking guests at the parks on foot the bill should help reduce the problem. While no-one is going to be rich at $ 15 an hour, worthwhile tickets mean that employees get a needed lifetime cost and investors will not have such a huge impact on profits.
Intellectual Property Craze
Disney owns some of the most recognizable entertainment brands out there. Besides classic Disney characters, it is Pixar, the Marvel superhero universe, and Star Wars . Also, when the acquisition of 21st Century Fox (NASDAQ: FOXA) (NASDAQ: FOX) is completed, Disney gets another part of the Marvel universe – including X -Men series – as well as other Fox franchises as Avatar . The company's parks have been adding theme attractions and costumed characters in recent years as they gain popularity in theaters, but 2019 may be one of the greatest new introductions to date.
That's because the new Star Wars : Galaxy's Edge extensions open in California and Florida later this year. Which in itself can clog Disneyland and Disney World during the summer and fall months, but add to the fact that the final fee in the family history Skywalker closes with it still unnamed December 2008 Star Wars: Episode 9 ? It can add up to a particularly busy year for Disney attendance.
I mentioned at the outset that the fare increase was not as much money as they were in the lead of a busy schedule, but it was actually opportunistic at Disney's part to quote the cost before a big new opening. And why not? If the price is really based on demand and the demand to get into Disney resorts goes high, too low a price tag can worsen the "too busy" problem. Thus, with long lines likely and higher prices here, it looks like Disney parks are set to have a big year.