Disney earnings could offer clarity to uncertain outlook for theme parks
Tue, 10 Aug 2010 The Walt Disney Co. reports fiscal third quarter earnings this afternoon amid widespread uncertainty about a theme-park business that is being buffeted by some conflicting crosswinds.
There are plenty of positive trends. Universal Orlando, for instance, last week posted an upbeat quarter, with higher attendance and guest spending powered by its new Wizarding World of Harry Potter. Walt Disney World and Disneyland just raised ticket prices, suggesting consumer demand is strong. And passenger traffic into Orlando International Airport improved in both May and June.
Then again, a drumbeat of dour national news in recent weeks suggests the overall economic recovery is a sluggish one. Universal is spending heavily to advertise Wizarding World in Orlando and a new King Kong attraction in Hollywood, potentially eroding Disney’s market share on both coasts. And Disney last month extended a free-dining promotion at Disney World through the end of the calendar year (albeit at reduced discount levels), which could very well be a more telling sign of consumer strength than last week’s ticket-price increase.
Wall Street is generally expecting attendance at Disney’s U.S. resorts to be down for the quarter. Janney Capital Markets, for instance, forecasts a 3.1 decline. JP Morgan projects a 5 percent drop. (Disney executives said in May that hotel reservations for the quarter were running about 10 percent behind last year’s pace, though they said in June that bookings had accelerated considerably.)
On the other hand, with Disney slowly attempting to wean travelers off of discounts, the analysts also expect Disney will make more money off the visitors who do show up. Janney projects guest-spending will rise 7 percent for the quarter; JP Morgan forecasts a 4 percent improvement.
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