Walt Disney Co. reported a rise in bookings at its U.S. theme park hotels for its latest quarter, another sign of consumers returning to domestic locations as its Asian parks struggle with pandemic disruptions.
Executives of the Burbank, California-based media giant said Wednesday its theme parks in Florida and California contributed to a generally brightening picture that includes rising subscriptions for its streaming entertainment services, which now have more than 221 million global paid subscribers.
Streaming services from Disney and numerous competitors have contributed to a rise in content production, which in turn has boosted demand for studio space in Los Angeles and other entertainment hubs. Disney has now narrowly surpassed Netflix, which had about 220 million global subscribers after losing 1 million in its latest quarter.
Disney executives told analysts during a conference call Wednesday that its theme park attendance and per-capita spending came close to pre-pandemic levels at its domestic parks on several days during the quarter ended July 2, with a rise in occupied hotel room nights and higher prices for those rooms. Gains were partially offset by higher labor, supply and other costs.
“In another sign of robust demand we have seen in our parks and resorts, occupancy in our domestic hotels in the third quarter was 90%,” Disney Chief Financial Officer Christine McCarthy told analysts, referring to company-owned hotels at Disney World in Orlando, Florida, and Disneyland in Anaheim, California. Advance hotel bookings are running at a pace close to pre-pandemic levels, McCarthy said.
Executives said hotel stays are an indicator that the domestic parks, along with Disneyland Paris, are bringing in more customers beyond regional drive-in visitors. Disney parks in Shanghai and Hong Kong continue to struggle with periodic closures caused by coronavirus outbreaks.
Luring New Customers
Overall, Disney CEO Bob Chapek said the company’s parks are moving beyond just serving pent-up demand, with new attractions opened during the latest quarter that are based on Disney-owned movie franchises, including its Avengers and Star Wars films, and are now attracting new customers.
Disney reported total revenue in the most recent quarter increased 26% from the year-ago period to $21.5 billion, as net income rose 53% to $1.4 billion. The division that includes its U.S. and overseas theme parks saw revenue rise 70% from the year earlier to $7.4 billion.
Theme parks are key drivers of neighboring hotel and retail demand, especially those that operate as year-round destinations. Several of Disney’s U.S. park rivals have reported similar upticks in attendance and revenue for the most recent quarter, including Cedar Fair Entertainment, SeaWorld Entertainment and Comcast’s NBCUniversal. Six Flags Entertainment is scheduled to discuss its earnings Aug. 11.
Theme park consultant Dennis Speigel told CoStar News he’s closely watching post-Independence Day attendance, especially as school gets underway this month in many U.S. cities. He’s expecting most of the major operators to finish 2022 strong, especially with events geared around Halloween in October that have proven popular during the pandemic amid pent-up demand.
Still, he’s not anticipating the industry to return fully to pre-pandemic attendance and revenue until late 2023 or early 2024. Park operators are still dealing with widespread staffing shortages that are preventing them from fully capitalizing on growing crowds through food and merchandise sales, while hampering efforts to minimize wait times for rides and concessions.
“You could be seeing a softening in attendance starting in the current third calendar quarter, especially with customers still dealing with other things in their lives like inflation and interest rates,” Speigel, founder of International Theme Park Services in Cincinnati, said in an interview Wednesday. “But things like per-capita spending at these parks are still looking very strong compared with a year ago.”