uploads///Shanghai disneyland

Factors Driving the Profitability of Disney’s Theme Parks

By

Sep. 14 2017, Updated 11:37 a.m. ET

International theme parks driving profitability

The Walt Disney Company’s (DIS) Theme Parks business has been consistently profitable on a quarterly basis. In this final part of the series, we’ll look at the core growth drivers for Disney’s Theme Parks business. Disney’s Parks and Resorts segment reported operating income of $1.1 billion in fiscal 3Q17,[1. fiscal 3Q17 ended July 1, 2017] up 18% year-over-year.

A major factor driving the growth in operating income at Disney’s theme parks has been the successful fiscal performance at Shanghai (FXI) Disneyland and Disneyland Paris. Disney stated during its fiscal 3Q17 earnings call that in its first year of operations, Shanghai Disneyland has seen 13 million visitors so far.

Disney elaborated on the success of Shanghai Disneyland, noting that guests are staying longer at the theme park than Disney had anticipated. Around 66% of visitors at Shanghai Disneyland come from outside Shanghai, which indicates the park’s surging popularity.

Disney is also planning to add a new attraction, Toy Story Land, at Shanghai Disneyland and expects to open it in 2018. The company is also planning to add new cruise ships to its fleet but does not expect them to become operational until 2021–2023.

Article continues below advertisement

Disney’s theme parks in fiscal 3Q17

In fiscal 3Q17, Disney’s Parks and Resorts business had revenues of $4.9 billion, up 12% year-over-year. The rise in revenues was driven by higher per capita guest spending, higher attendance at its theme parks, and the success of Shanghai Disneyland and Disneyland Paris.

However, costs at its domestic theme parks and resorts also increased due to the dry-docking of its cruise ship, Disney Fantasy, for 18 days.

Advertisement

More From Market Realist