There's rumbling in the belly of Walt Disney's (DIS 0.97%) original theme park. Disneyland stopped selling its Southern California Passport on Monday, a $469 annual pass for locals that offers access to the resort's two theme parks for roughly 215 days of the year. Saturdays, holidays, and a good chunk of the summer are off limits.
Temporarily suspending sales of a popular pass may seem like a lousy idea. Attendance was down across all six of Disney's domestic theme parks last year, according to industry tracker Themed Entertainment Association. Attendance has drifted marginally higher this year, but not enough to warrant nixing a pass that made Disneyland more accessible to Southern California residents.
Image source: Disney.
Use the force, Luke
There is a method to Disney's madness, and the media giant could be playing the long game here. Disney's parks on both coasts are going to be ridiculously busy in 2019 when the 14-acre Star Wars: Galaxy's Edge expansion debuts. Selling these passes into 2018 when they would bleed into the following year's Star Wars-themed opening doesn't make a lot of sense. Disney will have no problem filling up its resort with patrons paying for full-priced tickets.
Locals don't need to stay at an on-site resort, and regulars historically spend less on food and merchandise than out-of-towners. This isn't the first time that Disney has suspended sales of the Southern California Passport. It pulled the passes in 2014 when crowds -- particularly on Sundays when the Southern California Passport wasn't blacked out -- started getting out of hand. Disney brought it back in 2016 when attendance started to slump.
Disney blogs and message boards are speculating that this is a retention tactic. Passholders who were planning on taking 2018 off -- only to buy new passes in 2019 when the hyped attractions open -- will now stick around, as those who already own the Southern California Passports can continue to renew them. That logic is flawed. If Disney wanted to keep its local regulars close, it would have announced a date in the future that it would stop selling the pass to drum up even more sales of folks trying to get in under the wire. Instead, Disneyland discontinued new pass sales abruptly.
This move is all about planning ahead. Disney is actually still selling the Southern California Select Passport, a cheaper $339 pass that adds Sundays to the blackout dates. In short, Disney wants to keep its locals coming on weekdays when school's in session and the parks won't be as crowded with full-price-paying visitors.
Theme parks have been Disney's saving grace lately. The media giant's theme parks segment was the only one of Disney's four divisions to post gains in revenue and operating income in its latest quarter, as well as all of fiscal 2017. Disney's theme parks have excelled at milking more revenue out of its guests -- working on both the quantity and quality of traffic through demand-based pricing -- and now regulating annual pass sales. Disneyland fans may not like it, but shareholders can't complain.
