When Disney (DIS -3.52%) announced pricing for its new Space 220 restaurant, a richly themed dining experience set in a space station overlooking panoramic projections of Earth, social media let the House of Mouse have it. Who would pay $55 for a two-course lunch or $79 for a three-course dinner inside a theme park?
We now have the answer. Disney made Space 220 reservations available on Monday morning, and within minutes the first 60 days of availability were sold out. Given the limited daily capacity of Space 220 and the unique nature of the experience (complete with a theatrical pre-show liftoff), Disney apparently left money on the table here. It could've easily charged $75 for lunch and $99 for dinner, if not more, and still filled up.
Theme park fans aren't going to like it, but Disney World prices are going to be heading higher. Shareholders won't mind as much, of course.
Prices are out of this world
Space 220 isn't even the big-ticket space-themed experience that really stoked fires for Disney World fans this summer. Last month, Disney announced that Star Wars: Galactic Starcruiser, the new Star Wars-fashioned lodging experience, will set a party of two back at least $4,809 plus tax for a two-night stay when it opens next year.
"This is the way" (as they say on The Mandalorian) is probably echoed in Disney exec meetings when it comes to pricing decisions. It's not just on sci-fi experiences, either, where the pricing gun seems to be going out of control.
Right now at the resort's flagship Magic Kingdom theme park, a Halloween after-hours event is selling for a lot more than it did two years ago. The new family-friendly soiree is shorter in terms of hours than before. It also lacks some of the features of the 2019 incarnation. Disney is charging as much as 47% more than it did two years ago, and every night has been sold out for weeks.
Disney World annual passes were reintroduced for new customers earlier this month. They also come at stiffer price points than before. Some of the features the passes used to include (like access to expedited queues and digital photo downloads) are now premium-priced add-ons.
None of this should come as a surprise. The House of Mouse has been telegraphing these moves since last year. The new Disney math involves fewer guests (something that should enhance the experience for all visitors) paying more per capita. Disney's theme parks division surprised investors by returning to profitability in its latest quarter, and now it's fine-tuning the segment to be a high-margin product.
The initial response -- from customers, not those complaining on social media -- has been encouraging. Folks are having no problem paying as much as $199 for the Disney After Hours Boo Bash. They're not flinching at $79 for a three-course dinner at Epcot. Even the Star Wars cruise-like hotel experience is going to sell briskly at its roughly $5,000 price point.
Skeptics will argue that the premiums won't last once the novelty wears thin. The counter to that is that Disney is selling out of its priciest offerings even while travel restrictions are keeping many international visitors away and the pesky delta variant is keeping COVID-19 caseloads in Florida problematic.
Disney World won't be immune to an economic downturn, but the same can be said about all travel and tourism stocks. For now, it's clear Disney hasn't reached the end of its pricing elasticity at its theme parks. You don't have to like that to accept it to be true.