It's been nearly a week since Walt Disney (NYSE:DIS) pushed through the latest price hike on many of its tickets and passes for Disney World in Florida and Disneyland in California. Theme park buffs naturally don't like when a day or year of fun gets more expensive, but they aren't likely to stop coming to Disney's gated attractions.
Most field reports from Disney World and Disneyland over the weekend are talking about the huge crowds at both resorts. Sure, it's the seasonally potent Presidents Day weekend. Folks also tend to plan their vacations weeks (if not months) in advance, so it's not as if last Tuesday's price hike would be weighing on this holiday weekend's crowd levels.
And even if we look out weeks or months ahead, it would be a surprise if Disney's turnstile clicks aren't moving higher. The company should emerge from last week's price increases just fine.
Peter Pan handling
The headlines are saucy. A single day at Disneyland now costs as much as $209 for access to both California parks during peak season, up from $199. Disney World saved some of its biggest annual pass hikes for folks living outside of Florida, who are already paying more than locals for year-round access.
Disney jacking up its cover charges isn't a surprise. Disney World has come through with increases in each of the past 32 years. The only thing that should be worrisome for visitors and exciting for shareholders is that the pace is starting to pick up. Instead of annual hikes, Disney has been inching its prices higher every eight months or so.
Last week's increase wasn't as extreme as previous moves. Many of its ticket prices remained the same, and the ones that did get bumped higher didn't rise by more than 5%. Some of the more recent moves included increases as high as 25%. It all ultimately adds up, but Disney knows what it's doing. It's the world's leading theme park operator, attracting nearly 160 million visitors annually across its attractions worldwide. It knows what the market will bear, and it's also not ashamed to discount those higher price points when trends turn unfavorable.
The economy is humming along now, and Disney's big investments in new rides and experiences justify the stiffer pricing. Disney's theme parks segment should continue to post respectable growth, and the boost in admission rates means that the top and bottom lines should continue to move higher even if attendance levels are flat.
Outside of the wider spread of the coronavirus that has already shuttered Disney parks in Shanghai and Hong Kong and the always present recessionary threat, all that last week's pricing increase does is assure that a little strong 2020 will be that much stronger for the House of Mouse.