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Home / Business / Why Disney Resort’s Ridiculous Price Increase Makes Sense — The Motley Fool

Why Disney Resort’s Ridiculous Price Increase Makes Sense — The Motley Fool



In what is becoming an annual ritual, Disney (NYSE: DIS) has just announced price hikes for passes and parking in its California parks. A daily pass will now cost up to $ 149 and parking $ 25, an increase of 10% and 25%, respectively.

At a greater cost, consumer protest inevitably comes, and this round is no different. However, this has not deterred tourists in the past. Disney promoted a similar increase at the start of 2018, but participation was still 4% for the year. The result was a 10% increase in park and resort revenues and an 18% increase in that segment's operating income.

As unpleasant as consumer inflation, Disney fans find a way to enter the Magic Kingdom, regardless of costs. Paired with the recent move, if the crowds keep getting bigger, Disney could be in another record year in 201

9 in its locations. More than just taking cash, however, there are good reasons why Disney has to increase its entry tickets.

Checking the crowd

Anyone who has challenged a Disney park on holiday or on a high-season weekend can attest to the crowded lines and long waits for attractions. Overcrowding is bad for business. It could reduce visitor spending within the park, increase operating costs on crowded days and reduce the chances of repeated visits.

Disney price increases are an attempt to clarify things. While the prices of high season and weekend tickets have increased by 10%, the cheapest daily passes, those that fall on non-holiday days, have increased by only 7%. This is a trend that the company has maintained in recent years.

Also, in recent years theme parks have started making ticket purchases based on dates. Visitors can use an interactive calendar on the Disney resort websites to plan their vacation on the most convenient days. While planning trips on vacation and weekends might be the easiest for many, a simple push from the calendar tool could convince some to organize their trip on a day of rest and help overshadow the mass of the day. humanity.

A Bigger Payday for Employees

During the summer and fall of 2018, Disney set up pay talks with its employees. For the Californian resorts, the new minimum wage rose to $ 15 the now January 1, compared to the state minimum wage of $ 12 the hour for large companies. In Florida, Disney will pay one dollar per year up to $ 15 an hour in 2021, with the minimum jump to $ 13 this coming September. This compares with Florida's minimum wage of just $ 8.46.

Wage increases can be a major obstacle to corporate profitability and cause distress to investors. Finding a balance between taking care of employees and shareholders is a daunting task, and Disney's payroll will certainly have an effect on profits. However, asking park guests to pay the bill should help mitigate the problem. While no one will get rich at $ 15 an hour, the more expensive tickets mean that the employees get a much-needed boost to the cost of living, and investors will not feel such a big impact on profits.

  An illustration of the artist of the new Star Wars ride the smugglers of Star Wars Galaxy & # 39; s Edge, which opens at Disneyland in the summer 2019.

Disney will open Star Wars : Galaxy & # 39; s Edge at Disneyland and Disney World in 2019. Image source: Disney.

Intellectual Property Mania

Disney owns some of the most recognizable entertainment brands out there. In addition to the classic Disney characters, there is Pixar, the universe of superheroes Marvel and Star Wars . In addition, once the acquisition of is completed 21st Century Fox (NASDAQ: FOXA) (NASDAQ: FOX) Disney gets another piece of the Marvel universe – including X -Men series – as well as other Fox franchises such as Avatar . The company's parks have added thematic attractions and costumed characters in recent years as they gained popularity in theaters, but 2019 may be one of the biggest new introductions to date.

This is because the new Star Wars : The expansions of Galaxy's Edge open in California and Florida over the course of the year. This in itself could clog Disneyland and Disney World in the summer and fall months, but add the fact that the latest episode of the Skywalker family story closes with Star Wars: Episode 9 still untitled December ? It could add up to a particularly challenging year for participating in the Disney park.

I mentioned at the beginning that the ticket hikes were not so much a cash-taking as the running of a busy schedule, but increasing the cost for a new opening might be opportunistic on the part of Disney. Why not? If the cost is really based on demand and the demand for entry into Disney resorts is too high, too low a price could exacerbate the "too busy" problem. So with probable extensions and higher prices here, it seems like Disney parks have a great year.


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