What Will Drive Growth for Walt Disney Parks and Resorts?

The Walt Disney Company’s (DIS) parks and resorts are doing extremely well in the United States, and the company continues to add new attractions. In March 2016, Disney announced that it’s looking to add two more cruise ships to its fleet, taking the number to six. However, it doesn’t expect them to be operational until 2021–2023.

Disney has also introduced three-tier pricing at its US theme parks to increase revenue. The company stated in its fiscal 4Q16 earnings call that its three-tier pricing has been very successful in generating revenue for Disney Parks and Resorts. The company believes that with this kind of pricing tiers, the company could cater to the demand during peak periods and improve guest satisfaction.

The company also indicated that it has seen such high occupancy at its hotels in Orlando and California that it’s thinking about building more hotels at both sites. However, it made no new announcements in its fiscal 4Q16 earnings call.

As you can see in the above graph, Disney Parks and Resorts accounted for 31.0% of the company’s total revenues of $55.6 billion in fiscal 2016. The segment had revenues of $16.9 billion in fiscal 2016.

Disney stated at a MoffettNathanson conference in May this year that an important component of its domestic theme park success was its focus on adding attractions around its core franchises and brands. The company has also been successful in growing its operating margins for its theme parks by managing costs well.

The company said in its fiscal 2016 earnings call that it has just begun to fully harness its intellectual property, with Star Wars being its biggest success so far. The company further stated that it’s expanding its theme parks in Orlando and California with new attractions.