What Will Be the Key Growth Drivers for Disney Parks & Resorts?



Disney’s Parks & Resorts

Late last month, The Walt Disney Company (DIS) announced that it would introduce seasonal pricing for tickets bought for a day. It means that tickets purchased at Disney’s theme parks during weekends and holidays would be priced higher.

The reason for this change in pricing could be because Disney expects higher attendance at its theme parks during holidays and weekends as the company continues to add more attractions at its theme parks.

Disney’s Parks & Resorts saw revenues of $4.4 billion in fiscal 4Q15, which was up by 10% YoY (year-over-year), driven by higher per capita guest spending at its theme parks.

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In contrast, Comcast’s (CMCSA) Theme Parks segment saw revenues of $3.3 billion in fiscal 2015, driven by higher attendance and per capita guest spending at the company’s Universal theme parks. In 2016, Comcast will open a Harry Potter theme park in Hollywood, and it plans to integrate Universal Studios Japan (EWJ) into its Theme Parks portfolio.

As the chart above indicates, Disney’s Parks & Resorts had operating income of $981 million in fiscal 1Q16, up by 22% YoY (year-over-year).

Key growth drivers

In domestic markets, Disney will continue to add new attractions to its theme parks like the upcoming Star Wars attractions. Disney may also expand its hotel capacity sometime shortly considering the strong room occupancy at its hotels.

In international markets, the company views the opening of Disneyland in Shanghai, China (FXI), as a strong revenue growth driver for the company. The company expects to declare its Shanghai Disney Resort open on June 16, 2016. It will be Disney’s first resort in mainland China. Disney expects pre-opening expenses for the Shanghai resort to be around $300 million in fiscal 2016.

Disney makes up 0.85% of the SPDR S&P 500 ETF (SPY). For an investor interested in the information technology sector, SPY holds 3.9% of the sector. SPY also holds 0.18% of 21st Century Fox (FOXA) and 0.13% of CBS (CBS).

In the next part of this series, we will look at how Disney expects Star Wars to propel the growth of Disney’s Studio Entertainment segment.


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