uploads/2018/02/Disney-parks-and-resorts-segment-revenue-1.png

Behind Disney’s Investment in Theme Parks in Fiscal 1Q18

By

Updated

Disney in fiscal 1Q18

The Walt Disney Company (DIS) has been investing in its theme parks, which remain the driving force behind the company’s top line growth. 

In fiscal 1Q18, Disney’s Parks and Resorts segment reported revenue of $5.4 billion, beating Wall Street’s consensus expectation of $4.9 billion. The Parks and Resorts segment saw a significant 13% revenue rise on a YoY (year-over-year) basis compared to $4.6 billion in fiscal 1Q17.

Article continues below advertisement

Driving factors of Parks and Resorts segment

In fiscal 1Q18, the rise in the top line growth of the Parks and Resorts segment was backed by a rise in the number of domestic parks and resorts and cruise line and vacation club businesses. Disneyland Paris also drove the results via higher average ticket prices and higher customer attendance.

The company has been investing significantly in its theme parks, which has also raised its costs. Higher costs related to theme parks were driven by labor costs and higher depreciation expenses. Increased spending for new guest offerings also added to these costs. In fiscal 2017, Disney made more than 60% of its total investments in its domestic parks, which likely spiked the company’s capital expenditure.

Future investments

After the success of its themed area called Pandora – The World of Avatar, in fiscal 2017, Disney plans to launch Pandora areas in other parks as well. The company’s acquisition of Fox’s (FOXA) assets could also support other park attractions like Pandora.

The company is also planning to open a Star Wars attraction in 2019. Parks and entertainment peers Comcast (CMCSA) and SeaWorld Entertainment (SEAS) have also been investing in theme parks to attract more crowds.

Disney is looking to expand its revenue internationally with an increased focus on Disneyland Paris and Hong Kong along with its Shanghai Disney Resort. These locations have been contributing to the Parks and Resorts segment’s international growth.

Advertisement

More From Market Realist