Theme park enthusiasts were up early on Thursday, looking for a shot at year-round access to Walt Disney's (DIS 0.15%) iconic Florida resort. Disney World resumed selling annual passes for new buyers, something that it hasn't done since the the summer season two years ago. They didn't last long then, and they likely won't last long now.
Disneyland in California brought back all tiers of its annual passes on April 11. It quickly sold out of all but its priciest plan that comes with the least restrictions. Disney World is a much larger destination. Florida's Magic Kingdom was the most visited theme park on the planet before the pandemic, drawing nearly 21 million guests in 2019 according to industry tracker Themed Entertainment Association in association with AECOM.
There were some technical issues on Thursday morning, briefly interrupting the sale of the passes. A lot can happen when demand is strong enough to topple a platform. Taylor Swift fans know the feeling. Ticketing tech can be such an anti-hero sometimes.
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Theme park and regional amusement park operators have a love-hate relationship with their passholders. They naturally appreciate their biggest fans. They wouldn't be selling annual or seasonal passes if that wasn't the case. However, those same diehard visitors can also be a liability when demand is strong for less frequent visitors paying up for single-day admissions.
Disney World annual passes aren't cheap. They start at $399 a year for the entry-level Pixie Pass that only offers access on nonpeak weekday visits. The priciest of the four tiers is the Incredi-Pass at $1,399 with no blockout dates. They all include standard parking and offer discounts on many in-park purchases. It's a big investment, but it breaks down to less than $2 and $4 per eligible day. Guests arriving on one-day tickets shell out between $109 and $189 for the experience, and that includes access to just one park without complimentary parking and in-park discounts.
Image source: Disney.
If any gated attraction could consistently get enough guests through its turnstiles paying triple-digit prices there wouldn't be a need for the annual smorgasbords. Some experiences with very limited capacities like SeaWorld Entertainment's Discovery Cove don't offer year-round passes. Disney World attracted an estimated 58.8 million guests across its four theme parks in 2019.
This doesn't mean that annual passholders are a nuisance for the industry in general or Disney World in particular. In this era of social media and influencers, diehard fans are the ultimate ambassadors. Even if they don't pay up for add-ons like queue-shortening access plans at the same velocity as less frequent visitors, their presence in the regular standby lines makes the premium offerings -- like Disney's Genie+ -- that much more valuable to those willing to spend money to save time.
The return of annual passes is a welcome sight for more than just Mickey Mouse-hugging fans. Along with the loosening of park reservation requirements for afternoon and evening visits earlier this week, the icy relationship between Disney and its most vocal enthusiasts should start to thaw. There will be rumblings as select passes run out -- Disney World did say that it's only making a limited number of these year-round admissions available -- but it's one step closer to pre-pandemic operations.
Shareholders should also be excited. This is incremental revenue. As long as Disney is making these moves because it feels it can increase capacity and expand its offerings -- and not because of internal forecasts of thinning global demand -- investors should be applauding even louder than those scoring fresh annual passes this week. The return of annual passes and fewer hoops to jump through to secure a day at the parks is a win-win deal for the leading media stock's theme park enthusiasts and stakeholders.
