Magic Key Renewals



Wow. So it’s Friday night, again. Nothing exciting drops on weekends. That leaves the majority (excluding early upgraders) of the first day passholders left holding the bag here coming up on 2 weeks out next week. And not even a hint of hints. Not a please be patient or coming soon or CM rumors or anything. This is weird. Unsettlingly so. I feel like the kid in class watching party invitations being handed out to everyone else and he keeps thinking, I have to be next, but never gets one. I guess we’re not welcome at the party. 😩
 
Disney stock is up after higher earnings than expected.

  • Parks, experience and consumer products revenue: $7.39 billion versus $6.65 billion expected
Disney's parks, experience and consumer products segment continued to thrive amid a surge in spring travel, particularly among international travelers. Operating income for the segment hit $2.19 billion, representing a year-over-year increase of well over 100%.

Still, analysts have cautioned that a worsening economy could spell trouble for the parks business in the quarters to come. Investors will want more clarity on how Disney's management team plans to keep up that momentum, especially in the face of macroeconomic challenges like inflation.

From Disney (People are focusing on the comment about “unfavorable attendance mix” as a knock against APs and a reason no renewal has been announced):

Disney noted higher volume and increased guest spending driving the revenue gains, with the higher guest spending the result of higher hotel rates and the introduction of Genie+ and Lightning Lane. The company also noted that its increased revenue was offset partially by higher costs, due to "volume growth, cost inflation and new guest offerings," as well as "an unfavorable attendance mix" at the Disneyland Resort.

International parks continued to post an overall loss, though that decreased from $210 million in the same period in 2021 to just $64 million this year. Shanghai Disney Resort was open for just three days in the third quarter this year, as opposed to the entire quarter in 2021.

"We continue to see strong revenue and profit growth at our domestic parks and experienced businesses, even as our cruise ships and international visitation have yet to fully recover," CEO Bob Chapek said. "Domestic demand or theme parks continues to be strong, and we are seeing continued progress and those businesses still recovering from the pandemic. At the same time, the business model transformations we have achieved over the past few years have driven substantial increases in per capita spending and give us the flexibility to adapt should economic conditions change."

"Demand at our domestic parks continues to exceed expectations, with attendance on many days tracking ahead of 2019 levels," Executive Vice President and Chief Financial Officer Christine McCarthy said. "Our continued focus on improving the guest experience through the use of our reservation system to purposefully manage capacity versus simply increasing volume has the added benefit of improving yield and optimizing overall economics. So even while the average daily attendance at our domestic parks across the first three quarters of this fiscal year was slightly below 2019, we have delivered significantly higher revenue and operating income over that same time period. This approach also provides flexibility with levers we can adjust if demand were to shift.

"Per capita spending at our domestic parks also remain strong, increasing 10% versus Q3 of fiscal 2021 and over 40% versus fiscal 2019. And in another sign of the robust demand we have seen in our parks and resorts, occupancy at our domestic hotels in the third quarter was 90%. Looking ahead, domestic demand at our theme parks continues to look robust, with current forward looking hotel bookings and intend-to-visit roughly in line with pre-pandemic trends."

"I think a lot of onlookers look at our park business and try to sum up our success recently [by] say[ing] that it has something to do with pent-up demand," Chapek said. "Certainly there is pent-up demand, but what we are seeing is far more resilient, far more long-lasting, in terms of a increase in the affinity for our parks, both from their willingness to come to our parks, but also in terms of what guests are willing to spend when they get there in order to personalize their experience. As you know, everything we do in our parks is all about improving the guest experience. Part of that has to do with limiting capacity, but also about personalizing experiences.

"So we believe we do have a lot of flexibility to shift if our demand changes. Remember we have a reservation system which now enables us essentially, real-time on the fly, to change whatever factors we need in terms of our ticket packaging that we want. Years ago we didn't have that. We published our prices by the quarter, and that was essentially all the flexibility we had."
 
Disney stock is up after higher earnings than expected.

  • Parks, experience and consumer products revenue: $7.39 billion versus $6.65 billion expected
Disney's parks, experience and consumer products segment continued to thrive amid a surge in spring travel, particularly among international travelers. Operating income for the segment hit $2.19 billion, representing a year-over-year increase of well over 100%.

Still, analysts have cautioned that a worsening economy could spell trouble for the parks business in the quarters to come. Investors will want more clarity on how Disney's management team plans to keep up that momentum, especially in the face of macroeconomic challenges like inflation.

From Disney (People are focusing on the comment about “unfavorable attendance mix” as a knock against APs and a reason no renewal has been announced):

Disney noted higher volume and increased guest spending driving the revenue gains, with the higher guest spending the result of higher hotel rates and the introduction of Genie+ and Lightning Lane. The company also noted that its increased revenue was offset partially by higher costs, due to "volume growth, cost inflation and new guest offerings," as well as "an unfavorable attendance mix" at the Disneyland Resort.

International parks continued to post an overall loss, though that decreased from $210 million in the same period in 2021 to just $64 million this year. Shanghai Disney Resort was open for just three days in the third quarter this year, as opposed to the entire quarter in 2021.

"We continue to see strong revenue and profit growth at our domestic parks and experienced businesses, even as our cruise ships and international visitation have yet to fully recover," CEO Bob Chapek said. "Domestic demand or theme parks continues to be strong, and we are seeing continued progress and those businesses still recovering from the pandemic. At the same time, the business model transformations we have achieved over the past few years have driven substantial increases in per capita spending and give us the flexibility to adapt should economic conditions change."

"Demand at our domestic parks continues to exceed expectations, with attendance on many days tracking ahead of 2019 levels," Executive Vice President and Chief Financial Officer Christine McCarthy said. "Our continued focus on improving the guest experience through the use of our reservation system to purposefully manage capacity versus simply increasing volume has the added benefit of improving yield and optimizing overall economics. So even while the average daily attendance at our domestic parks across the first three quarters of this fiscal year was slightly below 2019, we have delivered significantly higher revenue and operating income over that same time period. This approach also provides flexibility with levers we can adjust if demand were to shift.

"Per capita spending at our domestic parks also remain strong, increasing 10% versus Q3 of fiscal 2021 and over 40% versus fiscal 2019. And in another sign of the robust demand we have seen in our parks and resorts, occupancy at our domestic hotels in the third quarter was 90%. Looking ahead, domestic demand at our theme parks continues to look robust, with current forward looking hotel bookings and intend-to-visit roughly in line with pre-pandemic trends."

"I think a lot of onlookers look at our park business and try to sum up our success recently [by] say[ing] that it has something to do with pent-up demand," Chapek said. "Certainly there is pent-up demand, but what we are seeing is far more resilient, far more long-lasting, in terms of a increase in the affinity for our parks, both from their willingness to come to our parks, but also in terms of what guests are willing to spend when they get there in order to personalize their experience. As you know, everything we do in our parks is all about improving the guest experience. Part of that has to do with limiting capacity, but also about personalizing experiences.

"So we believe we do have a lot of flexibility to shift if our demand changes. Remember we have a reservation system which now enables us essentially, real-time on the fly, to change whatever factors we need in terms of our ticket packaging that we want. Years ago we didn't have that. We published our prices by the quarter, and that was essentially all the flexibility we had."
https://wdwnt.com/2022/08/disney-bl...-on-unfavorable-attendance-mix-at-disneyland/

Did you see this one? Despite the 70% increase in parks revenue, the CFO is not happy with the "unfavorable attendance mix" at Disneyland, meaning, Disney doesn't like all these Magic Key holders attending the parks. Doesn't bode well for renewals....
 


https://wdwnt.com/2022/08/disney-bl...-on-unfavorable-attendance-mix-at-disneyland/

Did you see this one? Despite the 70% increase in parks revenue, the CFO is not happy with the "unfavorable attendance mix" at Disneyland, meaning, Disney doesn't like all these Magic Key holders attending the parks. Doesn't bode well for renewals....

I hear what you're saying, but it just seems strange to me that they would build another DVC tower at the resort if they are looking to reduce or eliminate APs?
 
https://wdwnt.com/2022/08/disney-bl...-on-unfavorable-attendance-mix-at-disneyland/

Did you see this one? Despite the 70% increase in parks revenue, the CFO is not happy with the "unfavorable attendance mix" at Disneyland, meaning, Disney doesn't like all these Magic Key holders attending the parks. Doesn't bode well for renewals....
Yes, I copied and pasted a lot, but this is what I wrote that was buried in the middle:

From Disney (People are focusing on the comment about “unfavorable attendance mix” as a knock against APs and a reason no renewal has been announced):

It is definitely not great to hear. But they also never clarified as far as I can tell (I didn’t listen to the call myself).
 
I hear what you're saying, but it just seems strange to me that they would build another DVC tower at the resort if they are looking to reduce or eliminate APs?
I think the two are unrelated. A great majority of the Magic Key holders are locals from the immediate SoCal area, who probably won't buy into the new DVC tower. DVC is still a very obscure concept in Anaheim and a majority of potential buyers will likely be from neighboring states like Nevada, Utah, Arizona, etc... Will the elimination of APs impact DVC sales? maybe. I honestly think DLR would suffer without local AP holders since it's not really a vacation destination that is Orlando. It's more of a local's shopping mall where everyone goes to after school or work. But DLR really haveto do something about the uncontrollable crowds in the small parks they have in Anaheim. They just don't know how to find that right balance.
 
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Yes, I copied and pasted a lot, but this is what I wrote that was buried in the middle:

From Disney (People are focusing on the comment about “unfavorable attendance mix” as a knock against APs and a reason no renewal has been announced):

It is definitely not great to hear. But they also never clarified as far as I can tell (I didn’t listen to the call myself).
I think DLR executives don't know what to do with the crowding issue at the parks in Anaheim. They're still trying to figure out that right balance of not pissing off the local base while trying to keep the parks from bursting at the seams.
 
Would eliminating APs even impact crowds that much?

I guess my question is, would it reduce the number of people in the parks or simply change the "mix" between APs and day passholders?
 
Would eliminating APs even impact crowds that much?

I guess my question is, would it reduce the number of people in the parks or simply change the "mix" between APs and day passholders?
For Disneyland, I think eliminating APs would SIGNIFICANTLY impact crowds since most locals hate the thought of buying individual day tickets. That's why I believe Disney is so hesitant on making a decision on the MKs. They want to keep the parks busy but not too busy, all the while not pissing of the local fan base. It's a tricky tight rope. Too much for Ken Potrock IMO.
 
For Disneyland, I think eliminating APs would SIGNIFICANTLY impact crowds since most locals hate the thought of buying individual day tickets. That's why I believe Disney is so hesitant on making a decision on the MKs. They want to keep the parks busy but not too busy, all the while not pissing of the local fan base. It's a tricky tight rope. Too much for Ken Potrock IMO.

Makes sense...

I suppose we will know how much the lack of APs impacts park attendance come November.

September and October likely to be extremely busy anyway due to Halloween even without APs.
 
Makes sense...

I suppose we will know how much the lack of APs impacts park attendance come November.

September and October likely to be extremely busy anyway due to Halloween even without APs.
you think the parks will be less busy leading up to the Christmas season?
 
I figured there would be a dip between end of October and beginning of December - but I'm probably wrong about that.
Christmas, next to Easter and spring break, is the busiest season. Despite APs, there are always semi-lulls, like January, Feb, May, and September.
 
Christmas, next to Easter and spring break, is the busiest season. Despite APs, there are always semi-lulls, like January, Feb, May, and September.

I'm not sure if September is a "semi-lull" anymore.

We are there for the last week of September and Touring Plans has it at a 9/10.
 
I'm not sure if September is a "semi-lull" anymore.

We are there for the last week of September and Touring Plans has it at a 9/10.
LOL. all the more reason why APs should just die. There is no such thing as slow seasons anymore, for either coasts. Not with all these festivals, holidays, and varying school calendars. Though, I do find a sweet spot in terms of crowds in late August at WDW, when it's unbearably hot and most schools are back in session. But that heat.... and the rain. it's brutal.
 

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