On May 10, 2011, the Walt Disney Company released its second quarter earnings statements. The second quarter includes the first three months of 2011 which are historically a slower time for the Parks and Resorts segment. This makes comparison with other quarters useless, but comparing 2010 second quarter to 2011’s allows some helpful trending, although, 2010 was notably not a good year to begin with for Disney.
The earnings statement for the Parks and Resorts segment shows revenue for the second quarter better than last year’s second quarter. $2,630,000 compared to $2,449,000. Operating income, however, shows a $5,000,000 decreases compared to last year. Disney attributes this decline to Easter break occurring late in 2011, falling into the third quarter earnings statement. Revenue at the international resorts was higher but when you take into account the impact of the earthquake in Japan and the temporary shutdown of the Tokyo
What does this mean to you, the average visitor? Well, indications from an investment manager Q&A to Disney executives, Bog Iger and Jay Rasulo, show that Disney is preparing to wean theme park visitors from expecting discounts. Talk of this has been occurring over the past 6 to 9 months and positive earnings may be a key metric Disney will be using to send a message to consumers that discounting is a thing of the past. And so far, it appears to be working. Rasulo has said that the decrease in discounting and recent room rate price increases “are definitely sticking” because room bookings (so far this quarter) are up by double digits as compared to last year. Bookings are also following the trend of filling value and deluxe resorts before the moderates. Once the values fill up, Disney starts to trade guests up to moderates because volume is of “great strategic importance” to Disney.
So, are we are going to start to see the end of steeply discounted rooms and promotions? Only time will tell…
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