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Disney World Is Getting Too Expensive

By Rick Munarriz - Feb 11, 2020 at 11:55AM

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The world's leading theme park operator boosts annual pass prices for the third time in the past 16 months.

Being a regular at Disney World just got a bit more expensive. Walt Disney (DIS 0.45%) raised some of its annual pass prices on Tuesday, its second hike in the past eight months. It's also the third time that Disney World annual prices have gone up in the last 16 months. Shareholders might be tickled by the move, but diehard visitors will naturally see things differently.

The boosts this time around aren't as dramatic as the move this past summer to jack up prices as much as 25%, but the increases are still running ahead of inflationary rates. Some prices for out-of-state annual pass holders are going up as much as 7%. Disney's priciest offering -- the Premier pass, which includes access to all of the domestic Disneyland and Disney World parks -- increased $100 to $2,199 plus tax. The nearly 5% price hike may seem like chump change, but between last year's boost and the 3% to 9% uptick in late 2018, one has to wonder whether the media giant is overplaying its hand in this buoyant economy.

Alice in Wonderland and costumed friends in front of the Mad Hatter ride at Disney World.

Image source: Disney.

You must be this rich to ride

Disney has never positioned its gated attractions as anything other than a premium experience, so it makes sense for the operator of the world's busiest theme parks to price its offerings as ambitiously as possible. Even after the last couple of hikes -- and daily ticket prices that have gone up every year since 1989 -- Disney World is still checking in with record attendance levels. 

There seemed to be a moment of mortality when year-over-year turnstile clicks declined at Disneyland and Disney World in its springtime quarter of last year, but that trend reversed itself in Florida the following quarter and in California the period after that. With crowds starting to build again, one can argue that Disney has every right to test its pricing elasticity. It's making big investments in new experiences, and that alone warrants a higher cover charge. 

However, Disney could be raising ticket prices at the worst possible time. The coronavirus outbreak has already shuttered the company's theme parks in Shanghai and Hong Kong, and Disney is expecting a $175 million hit related to the closures for the current quarter. We're already starting to see the first whiffs of international travel disruptions, and if more than a few isolated cases land in the U.S., it's easy to see why families may start putting off their next Disney World visits. 

Disney is setting a potentially problematic cadence with its hikes. This is the second time in a row that it waited just eight months between annual pass price increases. The inevitable uproar on social media over the pricing boosts will once again paint the House of Mouse as out of touch. Even if Disney's playing a different game here, where it's more interested in increasing per-capita spending than entrance taps, it can all backfire if the coronavirus outbreak spreads, a recession arrives, or consumers just collectively decide that the value proposition is no longer as compelling as it used to be. Disney investors may be cheering today's move, but it may be a different story a few months later.

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