Price hikes in today's inflationary environment are par for the course, but Walt Disney (DIS -1.97%) is taking aim again with its warm price gun. The world's largest operator of theme parks is changing the way it charges for the Genie+ in-app offering that allows guests to have expedited access to many of its most popular rides and attractions.
The platform -- which used to set park enthusiasts back $15 for a day at Disney World and $20 at Disneyland -- is shifting to a variable pricing strategy. Disney World's Genie+ will start at $15, but the rate will be a few bucks higher on high-demand days. Disneyland's platform will go up to $25 for days purchased in advance, along with a variable component for those who have to buy premium add-on for the day that Genie+ is being used.
In short, prices will be the same -- if not higher -- if you don't want to wait in long standby lines. Customers get that. Rival theme parks and regional amusement parks have been offering a way for guests to pay for quicker access to rides. The rub here is that things just became more complicated. A trip to Disney World isn't cheap, and for many families it's a journey that needs to be budgeted. Variable pricing throws a wrench into those plans. It's just one more Epcot ball for potential visitors to juggle.
Image source: Disney.
There's a shortcut between Adventureland and Fantasyland
Guests can complain about prices clawing their way higher across the Disney World resort experience, but that's not going to change as long as folks keep going through the turnstiles. Costs to operate a gated attraction are higher, and Disney isn't alone in jacking up its prices on this side of the COVID-19 crisis. Revenue more than doubled for Disneyland and Disney World combined in the media giant's latest quarter.
Transitioning its mix of daily visitors to favor day guests paying triple figures for a one-day ticket over annual passholders paying between $1 to $5 a day for year-round access is also not going to change as long as mouse-eared patrons keep coming. Per-capita revenue is 40% higher now than where it was three years ago. You can't put that genie -- or that Genie+ -- back in the bottle.
The more legitimate beef that could eventually blow up in Disney's face is how complicated it is to check up on the House of Mouse. Genie+ helps guests save time, but it's also a bit messy. Folks need to wake up early -- before 7 a.m. -- to start securing the best Lightning Lane options. This week's new wrinkle means that the amount that Disney World resort visitors will be paying for access to the app's advantages will change day by day. It's not the only hoop to jump through that didn't exist before the parks shut down in March 2020 to prevent the spread of the COVID-19 virus.
Guests now need to make park reservations that do run out, and things get tricky if there are any late additions to your party when the reservation well has run dry. There's also the problem with park hopping. Annual passholders and folks paying up for park hopper tickets used to be able to travel freely between Disney World's four theme parks, but that's no longer the case. Park hopping doesn't begin until 2 p.m. now.
Shareholders may not see the problem. The stock may be down 46% over the past year, but its theme parks business is one of the few bright spots. The nearly $1.7 billion in segment operating income for Disney's domestic parks accounted for nearly 70% of the segment operating profit in the fiscal third quarter of 2022. Business is booming. Folks aren't flinching at the price hikes, and the new layers of restrictions haven't been deal breakers.
Disney was a late arrival to the lucrative game of getting folks to pay a premium for faster-moving queues, but it's playing solitaire with its experience speed bumps. None of the other major park chains in the U.S. are requiring reservations anymore, and the same can be said about park hopping limitations and the 7 a.m. Genie+ land grabs.
With Disney World set to open its last major ride in the spring of 2023 -- and an 18-month celebration for the resort turning 50 ending in March -- consumers may finally hit their tipping point next year. A global economic slowdown could also send guest counts to a screeching halt like a spinning teacup ride coming to an end. Will Disney World lower prices or its barriers to entry first? The entertainment stock bellwether will have a tough choice to make, but shareholders and visitors alike won't mind if it's the restrictions that get tweaked first.
