Disney price rise: Theme Park demand drives increases - will DIS stock price follow?
By Jenny McCall
11:07, 16 November 2022
It seems the most magical place on earth has also become the priciest, as media and entertainment conglomerate, Walt Disney (DIS) looks to increase the prices of its theme parks from 2023.
Disney’s stock price rose 1% on Tuesday – the day the announcement was made public. But this year has not been the best for DIS share price, which has fallen 38%, as customer discretionary spending slips due to rising inflation.
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Walt Disney (DIS) share price
Will DIS dreams come true with its theme park price hikes?
Customers have until 8 December to get theme ticket prices at the current rates and then DIS plans to hike the price of its single-day tickets, as well as its multi-day passes and annual pass renewals.
This is not the first time Disney (DIS) has increased its prices. Its flagship resort in Orlando, Florida had a price increase back in February, at the start of the year.
So, this latest increase will be the second time in a calendar year that it has risen its prices.
From 8 December, all one-day, one-park tickets will be:
- Disney's Animal Kingdom: $109 (£91.52) -$159 (same as today's price)
- Disney's Hollywood Studios: $124 -$179 (Increase of 12%)
- EPCOT: $114-$179
- Magic Kingdom Park: $124-$189 (Increase of 12%)
So, Disney’s slogan Where Dreams Come True appears to be playing out for the media and entertainment conglomerate right now, especially if it starts to see an increase in profits because of its price increase.
A spokesperson for DIS said that the increase has been driven by strong demand and investment across the company’s theme parks over recent years.
With that said, if Disney (DIS) is seeing strong customer demand, which is driving theme park increases, will DIS flagging stock price also be revived?
According to analysts, recovery in the theme parks business is expected to drive Disney’s prospects in the long haul.
Good and bad news for DIS stock
“Although the business has suffered from the pandemic-led disruptions, pent-up demand bodes well for Disney. Star Wars: Galactic Star cruiser at Walt Disney World, the new roller coaster at Epcot, Guardians of the Galaxy: Cosmic Rewind, and Avengers Campus at Disneyland Paris are noteworthy additions on this front,” analysts at Zacks wrote in a note.
Zacks forecasted at the start of the month that theme park business would gain from strong demand across both the domestic and international parks.
“Per capita spending increased 10% year over year, while occupancy at domestic hotels was 90% in the fiscal third quarter,” Zacks analysts said.
However, it’s not all good news. Disney (DIS) doesn't just have its theme park business, it also has its streaming service, which could impact the group's share price.
“Disney’s profitability was negatively impacted by higher programming and production costs across Disney+, ESPN+ and Hulu. Disney’s leveraged balance sheet remains a concern. Shares have underperformed the industry year to date,” Zacks analysts continued.
Disney+ is also facing huge competition in the streaming market, from the likes of Netflix (NFLX) and Amazon prime video (AMZN).
But analysts do believe DIS theme park admissions will continue to rise and are even expecting a “surge.”
Netflix (NFLX) share price chart
Disney (DIS) theme parks could help boost its stock price
“We anticipate revenues from Theme Park admissions and Parks & Experiences Merchandise, Food and Beverage to jump 109.7% and 76.1% in fiscal 2022. Resorts and vacation revenues are expected to surge 120.5% year over year. Overall, the revenues for Parks, Experiences & Consumer Products are estimated to grow 68.4% in fiscal 2022,” Zacks analysts concluded.
For now, investors will have to wait before knowing the true impact of Disney’s (DIS) price hikes on its share prices and whether it will move in a positive direction. But the challenges of a recession and consumer spending dropping remain, and something DIS will have to consider over the coming months and into next year.
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