3 Disney World Predictions You Won’t See Coming
- Disney’s controversial theme park reservation system could disappear if annual passes are also cancelled.
- Giant theme parks are set to post a record financial year this year, in large part due to higher prices and new premium offerings that hardcore fans seem to hate.
- “I wake up” Disney It doesn’t necessarily break Disney.
There is a lot of speculation these days about the best Walt Disney theme park resorts (NYSE: DIS) (NYSE: DIS) (NYSE: DIS). I’ll do my part to stir things up.
Disney World appears to be in the crosshairs of Florida politics, with regulars angered by recent revenue-raising measures and concerned about attractions delays. If you will allow me to quote the inner Madame of Liotta – that is the magical spirit in the crystal ball in The Haunted Mansion – I would like to make three predictions. You probably won’t agree with all of them or with any of them.
1. The Disney parks reservation system will be scrapped next year — at a steep cost
If there’s one thing everyone can agree on — and that’s no easy feat in these politically divided times — it’s that Disney World’s (and Disneyland’s) parking lane reservation system is bad. Each theme park gives a certain number of daily admissions, and without them you’d still be stuck on the sad side of the revolving door.
Reservations are split between hotel guests, day pass buyers and pass holders, with preference given to the first two groups because they are more profitable per day than annual pass holders, who pay between $1 and $4 per day for theoretical access throughout the year. The system is frustrating for impulsive passport holders, and that’s understandable. However, there are times when the other two buckets are empty. There are many horror stories where families and friends couldn’t spend a day together at Disney World because they couldn’t get all the reservations at the same park on the same day.
Disney is adamant that pre-bookings will continue in the future. I doubt that will be the case. Demand will never exceed supply. Capacity will continue to increase as more attractions and experiences return to service. The global economy could be upside down. one more time. Disney can extend its price flexibility to the point where it collapses. The 18-month celebration of the resort’s 50th birthday ends in 10 months, so by the end of Spring Break 2023 – say mid-April – it’s time to pull the new Oswald the rabbit out of the wizard’s hat.
The end of the dreaded reservation system will come at a price, and regular visitors won’t like it. I believe the end of the reservation requirement will coincide with the end of most annual passes. Disney World is already selling its cheapest annual plan — the $399 Pixie Dust Pass — which only includes off-peak weekday visits. However, all other permits can still extend their existing plans. Disney will have to cancel these passes, either by granting pro-rata refunds, as it did in California in 2020, or simply by excluding people from the next annual renewal.
Disney could offer a less restrictive year-round pass, albeit at a much higher price than current plans, to keep that segment limited and more profitable. A year from now, you won’t have to give up your park reservation, but if you screw up the annual admission buffet, you’ll either have to pay $399 for off-season weekdays, four to five times that per year-access to tours, or Do what Disney prefers to do, and buy discount tickets for multiple days off-season.
2. Fiscal year 2022 will be a record year for local Disney theme parks
Disney surprised the market earlier in the year with its first-quarter financial results that ended in December. The company recorded record sales and operating profits for its local theme parks. Despite the emergence of the Omicron variant of the coronavirus and international travel restrictions, Disney’s shift to low-cost, expedited queuing and a park reservation system that favors high-income per capita visitors is paying off.
Yes, you hate Lightning Lanes and Genie+ as much as you hate the parking reservation system. The premium platforms will remain. You’ll learn to pay, or you’ll accept your turn in the queue, which encourages others to pay for faster access to major attractions. Either way, if you think Disney got its start with premium product launches during the quarter in the midst of a pandemic, just wait two weeks for a bigger second fiscal quarter. Fiscal year 2022 will be the year when Disney theme parks make up for the slack in Disney+ and other segments.
3. Disney will survive Wokeism too
If I asked you how the dispute between Disney and Florida Governor Ron DeSantis would end, you would probably provide a political answer. Can we put the partisan perspective aside to develop an objective game theory?
What did Disney lose when it commented on a controversial bill in Florida and promised more inclusion in its content? The common argument is that he may have impeached nearly half of his audience, but is that really the case – and if so, is it a death sentence? Less than 60 million people visit Disney World each year. That’s less than 1% of the world’s population. In fact, it’s less than 1%, because we’re not talking about 60 million visitors. This is the number of people who pass through gates at one of the resort’s four attractions in a year. Most people visit more than one park or come back later in the same year.
Businesses don’t collapse because they stand with politics. Do you think Chick-fil-A on the right or Ben & Jerry on the left would be more popular if they remained publicly neutral? Ben & Jerry’s sells approximately 195 million sundaes in the United States each year. Chick-fil-A is the highest-grossing large fast food chain for each location. Spoiler alert: Conservatives are still enjoying Cherry Garcia, and liberals are still eating with Chick-n-Minis.
It’s safer to stay cross-platform and on the sidelines, but there’s also something to engage the audience by taking a stand. Do you think MSNBC on the left or Hobby Lobby on the right regret their decisions?
Even last week’s move, in which Florida lawmakers voted to dissolve the special circuit that has owned Disney World for 55 years, is not a death sentence. Some claim that Central Florida taxpayers have more than $1 billion in debt to pay off Disney debt. The other camp is that Disney has to pay more taxes and has less freedom to develop. The truth likely lies somewhere in the middle, and even then there’s no shortage of critics arguing that dissolving Disney’s Red Creek improvement zone may not happen next year as expected.
There are a lot of things that can harm Disney. The global recession could affect theme park attendance and Disney+ subscriptions. Box office revenue may continue to decline. Cable scraping may reduce ESPN’s viewership. Disney’s stance, which media moguls and other park operators will take under pressure from employees if not boards, will not spell the end of the flagship entertainment stock.
This article was written by Rick Monares and posted to Fool.com on 4/27/2022. It has been translated so our German readers can join the discussion.
Motley Fool owns and recommends shares in Walt Disney (NYSE: NYSE). Motley Fool recommends the following options: long January 2024 calls worth $145 on Walt Disney and short January 2024 calls worth $155 on Walt Disney.
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