Disney's (DIS -0.83%) industry-leading Florida theme park resort is testing a new premium service for select high-end overnight guests. Most park visitors will hate the offering, but it could be a pretty big deal for Disney shareholders.
Disney World has been allowing guests to single out expedited queue access for as many as three rides or experiences a day since it launched FastPass+ four years ago. Visitors can use the resort's official app to square away the reservations weeks in advance with one-hour return windows at no additional cost. Earlier this month, Disney World began offering a deal for guests at select suites, club rooms, and other elite accommodations to purchase three more FastPass advance reservations on any given day. The $50 offering also includes access to a preferred viewing area for a nighttime event at any of the four theme parks -- something that is typically available as a FastPass selection -- so we're talking about paying for seven FastPass reservations instead of three that are freely available to everybody else.
Image source: Disney.
The good, bad, and ugly of buying access
There is naturally going to be some rumbling among the Disney community, particularly local or off-site passholders that already deal with a tighter window to make advance FastPass reservations. Resort guests can start squaring away their expedited queues as much as 60 days out. Everyone else, including passholders, can pick out their FastPasses just 30 days out, and that often means the most popular rides -- namely the two Pandora attractions that opened last year at Disney's Animal Kingdom and the Magic Kingdom's Seven Dwarfs Mine Train -- are typically unavailable. If Disney lets some of their more affluent visitors pay for more FastPasses, we're talking about four fewer rides and attraction slots available for everybody else.
Disney's counter is that the impact on FastPass availability will be minimal since the premium offering is only being pushed to a small number of resort guests. However, with folks paying $50 a day per person for this perk, it's easy to see how this can add up on Disney's bottom line. A family of four would be spending an additional $200 for each day they want to take advantage of the new service.
Attendance growth dipped slightly at all of Disney World's domestic theme parks in 2016, and the likely recovery in 2017 -- Disney doesn't put out official visitor information -- has been modest at best. Revenue has still inched higher at the resorts through the lull in turnstile clicks as annual ticket price hikes, increased hotel capacity, and new upcharge offerings like this one find the media giant milking more money per visitor. Disney's theme parks and resort division was the only segment to grow its revenue in fiscal 2017.
When Disneyland began offering MaxPass as a premium FastPass+ kind of service a year ago, I argued that it was only a matter of time before its larger resort in Florida would find a way to charge for FastPass access. Well, we're here. It's going to upset a few people, but if it's enough to reward investors while keeping the next ticket price increase modest, it may be a win-win offering, with affluent guests partly subsidizing the visits of everybody else, who will be only marginally inconvenienced.
Disney is timing this pilot program perfectly. The holiday rush is over, making this an ideal time to work the kinks out of the program. It wouldn't be a surprise if it expands availability to a larger pool of potential visitors in the coming months, especially as we head into this summer with the traffic-generating opening of Toy Story Land at Disney's Hollywood Studios.
