It wasn't just Disney+ subscription rates moving higher on Thursday. Walt Disney (DIS 1.20%) also boosted prices on its annual passes and single-day admissions for its Florida resort. If you thought a visit to Disney World was expensive before, you'd better be ready to open your billfold even wider next time.
One-day tickets that used to run between $109 and $159 can now cost as much as $189. Seasonality used to dictate how much guests would pay to visit any of the parks, but now each of Disney World's four gated attractions comes with its own distinct cover charge. Park-specific pricing is something that Disney was doing for a couple of years before the pandemic shut operations down.
If you're going to visit the Magic Kingdom during the historically busy final week of this month, the $189 per person that you will pay is an 19% increase. Only one of the parks -- Disney's Animal Kingdom -- is staying with the previous pricing range that maxes out at $159 for a single day at the nature-themed destination.
Image source: Disney.
Annual passes are only going up as much as 8%, and that's on year-around admissions that are only available for renewal. In a move to optimize per-capita revenue, Disney has kept a tight leash on new pass sales. The only annual pass it offers first-time buyers is the low-end Pixie Pass that provides access to the theme parks on select weekday periods. Its price remains unchanged.
If you missed the uproar that typically happens with theme park enthusiasts when Disney prices move higher, you're just a bit late this time. The family entertainment behemoth typically springs hikes on its users as they happen, but this time it announced the news three weeks ago.
Stretching the rubber band until it snaps
Folks expect prices to move higher in today's inflationary environment, but every upward revision bears the risk of alienating potential customers. No company is immune to overplaying its pricing elasticity.
It's worth noting that this isn't the handiwork of returning CEO Bob Iger. It was announced a week before Disney's board orchestrated the removal of Bob Chapek from the helm. However, Iger hasn't suggested that he's here to slash prices at the theme parks anytime soon. It's a delicate balance to do right by both Disney fans and its shareholders.
Disney's shares have been cut by more than half since peaking last year. The popular media stock bellwether isn't trading below $100 because it started making its content more representative and inclusive. The biggest measuring stick of public opinion -- its theme parks -- are thriving at record levels. Visitors now are willing to pay 40% more than guests that frequented the parks just three years ago.
Disney's movies aren't faring well at the box office relative to pre-pandemic ticket sales, but that's a problem for the entire industry. Disney should still close out this year with three of the four highest-grossing theatrical releases.
Disney is down because of the widening losses for its streaming services. Iger's initial focus is turning Disney+ cash flow-positive in what is now just a two-year term.
Fixing one problem doesn't mean that another leak might spring somewhere else. It would be devastating if the theme parks that are carrying the House of Mouse right now falter. Disney will need to make sure that its iconic tourist destinations continue drawing premium crowds. Pricing strategies that are working right now might not if the economy sours or international travelers hold back on fears of the rising dollar. Goofy calls Disney home, but it doesn't mean that Disney can go goofy with hikes forever.
