Your neighbor's putting up inflatable skeletons in her yard. The Major League Baseball playoff season is under way. And Walt Disney (DIS +0.69%) is raising ticket prices. These are a;; seasonal rites this time of year. Why is it that only one of them surprises people?
Yes, Disney hiked prices on many annual passes and single-day tickets for its domestic theme parks this week. The same thing happened in early October last year. It was also a cause celebre this month two years ago. And the year before that.
We can talk about the severity of the increases this time around. There will be some people lamenting on Disney fan forums that they've been priced out of the Disney World and Disneyland experience. I don't want to dismiss that. It hurts to see special things become unattainable. However, as long as people keep coming -- and paying those higher prices -- do you think that next October will be any different?
Image source: Disney.
Pass the salt
Florida's Disney World is the most visited theme park on the planet. Its annual turnstile clicks -- according to industry tracker TEA/AECOM -- have declined just twice in the last 14 years (through 2024, last year's numbers should be coming soon). There was a scant 0.5% dip in 2016. Then there was a hard reset in 2020 in the aftermath of a four-month closure at the resort. Prices went up almost every year.
The headline grabber is that Disney World's priciest annual pass -- the Incredi-Pass, which provides year-round access without any blackout dates -- is now $1,749 per person. This is a steep $120 increase, but isn't that just $0.33 more a day? The 7% increase does outpace inflation, but it's a different story at the low end. The Pirate Pass, available only to Florida residents, is valid only for non-holiday weekday visits and now costs just $10 more, at $499 per year. The 2% increase is a discount to both inflation and Disney's own rising costs of serving its guests.
NYSE: DIS
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Salt the pass
Disney stock has been a market laggard for years, but you can't lay the blame at the feet of the media giant's experiences segment. It sells cruises at a market premium, but it's seeing strong trends to warrant expanding its fleet faster than traditional cruising companies. Its theme parks continue to grow, cranking out record results.
The $1,749 Incredi-Pass annual pass or one-day tickets, now as high as $229 during peak travel periods, will be ammo for the naysayers. The irony is that those same moves provide ammo for shareholders. If Disney starts to become a hot investment again, it will be because it monetized its good fortune without losing its audience. The headlines this week appear mean-spirited, for what is essentially a reasonable 2% to 7% annual pricing adjustment. Disney knows what it's doing.
