Please ensure Javascript is enabled for purposes of website accessibility

Disney Will Survive Last Week's Theme Park Price Hike

By Rick Munarriz – Feb 17, 2020 at 9:55AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Disney World and Disneyland prices have now moved higher in each of the past 32 years, and it won't make a dent in attendance trends.

It's been nearly a week since Walt Disney (DIS -2.48%) 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. 

Mickey Mouse wearing regal attire in front of the iconic theme park castle.

Image source: Disney.

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. 

Rick Munarriz owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short April 2020 $135 calls on Walt Disney. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
$96.93 (-2.48%) $-2.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.