Following the pattern of annual price increase at its resorts,
) raised its single-day admission prices close to 10% at its
theme parks in Florida and California. Earlier last month,
) Universal Studios also increased its theme park day-pass price by
5%. Higher prices will boost the revenues at theme parks, which
contribute close to 20% to Disney's value. While consumer spending
has improved in the U.S., we believe that it will not materially
impact the attendance at theme parks.
See our complete analysis for Disney
Yet Another Price Increase
A day-pass to
will now cost $95 for adults, up from $89, and $89 for children
(0-9), up from $83. Similarly, a day-pass to
will now cost $92 for adults and $86 for children (0-9). Parking
passes at both locations also went up by $1 to $16. The
Deluxe Annual Passports
, which allow admission to both California parks throughout the
year increased to $499 from $469.
Premium Annual Passports
for the California and Florida parks also went up $20 to
Disney Premier Passport
, which allows its holders to visit unlimited attractions in its
California and Florida locations, will now cost $979, up from $849.
This hike in prices didn't come as a surprise. For more than a
decade Disney has been increasing its prices for theme parks on an
annual basis. Moreover, the attendance has been very strong for
Disney giving it even more pricing power.
Theme Park Attendance
Disney's theme parks in Q2 2013 witnessed 10% increase in per
capita guest spending as compared to Q2 2012 due to the higher
ticket prices and strong attendance. Disney's domestic theme park
attendance has grown at an average annual rate of less than 1.5%
for the last 5 years. (See:
How Is U.S. Theme Park Attendance Trending For
, Trefis, Apr 3, 2013)
Since theme parks are destination for leisure activities, the
attendance is somewhat linked to the state of the economy. The
commerce department stated that the U.S. economy expanded at a
2.5% annual rate in the first quarter of 2013. While the economic
slowdown does put some pressure on the attendance at Disney's theme
parks, the impact is not very significant. This leads us to believe
that the improving consumer spending in the U.S. may not materially
impact the attendance at the parks though it can well boost the per
capita spending of guests visiting the parks.
Our price estimate for Disney stands at $66
, which is roughly in line with the market price.
How a Company's Products Impact its Stock Price at