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Could Disney’s Park and Resorts Maintain Growth?

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Strong investments driving Parks and Resorts revenue

The Walt Disney Company’s (DIS) Parks and Resorts segment, which constitutes ~34% of its overall revenue, remains a potent force for the company’s top-line growth. Domestically and internationally, the Parks and Resorts business continues to generate strong growth, driven by higher average ticket prices and customer spending.

The graph shows the segment’s growth momentum over the last five quarters. During the period, the segment’s revenue has grown at a compound annual rate of 1.8%. In 4Q17, Parks and Resorts garnered $4.7 billion in revenue, a rise of 7.3% YoY (year-over-year).

In fiscal 2017, the media giant invested more than $2.5 billion in Parks and Resorts, versus $2.2 billion in 2016. Disney made ~67% of its total investments in domestic parks, which the company believes will increase its overall capital expenditure by $1 billion.

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Domestic and international contributions

In fiscal 2017, the segment’s Ddomestic revenue grew 4% YoY to $14.8 billion, driven by the success of its themed area, Pandora – The World of Avatar. The company plans to launch Pandora areas in other parks as well. A Star Wars attraction is due for launch in 2019. Such launches allow the company to attract more crowds than park and entertainment peers Universal (CMCSA) and SeaWorld Entertainment (SEAS), which also have a strong presence in Orlando.

The international division generated $3.6 billion in revenue in fiscal 2017, an annual improvement of 32%. Higher average guest spending at Disneyland Paris and ticket prices in Hong Kong, along with a full year of operations at Shanghai Disney Resort, contributed to Parks and Resorts’ international growth.

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