It's going to cost a lot more for Disney World regulars to keep visiting the planet's most visited theme park resort. Walt Disney (NYSE:DIS) boosted annual pass prices on Tuesday, and it was more than just a token hike. Prices for the various annual prices are rising as much as 25%, following a now relatively modest 3% to 9% uptick just eight months ago.
Social media is naturally in an uproar among diehard Disney World fans. Folks are used to annual price hikes, and we had already seen Disneyland prices as well as one-day Disney World tickets move higher earlier this year. Tuesday's move, though, is a bit extreme. Sooner or later, Disney is going to price out its core audience, and -- spoiler alert -- it may be the plan all along.
Using the Force, Luke
The bulk of the the increases will be paid by folks already willing to spend the most for annual Disney World access. The cheaper annual passes -- including the Epcot After 4 pass that only lets folks visit the resort's second-oldest theme park for the final few hours of the day as well as the Silver pass that includes access to all four of the gated parks but with several blackout dates during busy travel periods -- are only moving 7% to 9% higher for Florida residents. Pricier passes are getting double-digit percentage hikes.
Disney's Platinum pass that provides year-round access to the parks is rising 20% for Florida residents and 25% for folks living outside of the state. The slightly more expensive Platinum Plus pass that also includes that the resort's two water parks is now 18% to 23% costlier than it was on Monday.
The move is risky, but Disney feels pretty confident about the hand that it's holding. Disney World's four theme parks saw a combined 4.4% increase in attendance last year, entertaining 58.3 million guests in 2018 according to industry watchers Themed Entertainment Association and AECOM. It has an arsenal of new rides and attractions opening between late August of this year through the resort's 50th anniversary in late 2021 that will keep guests coming at just about any price.
Disney World has increased ticket prices every year since 1987, and the turnstile clicks continue. The resort shifted to demand-based pricing more than three years ago in an effort to make its parks less crowded during seasonally potent holiday periods, and it still has to close the Magic Kingdom to capacity sometimes. It's not a surprise that Disney saved its biggest increases for the passes that provide access every day of the year.
We'll find out soon enough if Disney is stretching the pricing elasticity of its passes. In the meantime, it's fair to say that Disney fans will be fuming and Disney shareholders will be enjoying the inevitable near-term pop in operating margins for Disney's most resilient business segment.