Disney World won’t be cheaper anytime soon
When Disney (NYSE: DIS) announced prices for its new Space 220 restaurant, a richly themed dining experience located in a space station overlooking panoramic projections of Earth, social media let the House of Mouse have it. Who would pay $ 55 for a two-course lunch or $ 79 for a three-course dinner at a theme park?
We now have the answer. Disney made Space 220 reservations available on Monday morning, and within minutes the first 60 days of availability were used up. Given Space 220’s limited daily capacity and the unique nature of the experience (with a theatrical take-off before the show), Disney has apparently left money on the table here. He could easily have charged $ 75 for lunch and $ 99 for dinner, if not more, and still full.
Theme park fans won’t like it, but Disney World prices will go up. Shareholders won’t care as much, of course.
The prices are out of this world
Space 220 isn’t even the big-ticket space-themed experience that really stoked the fires for Disney World fans this summer. Last month, Disney announced that Star Wars: Galactic Starcruiser, the new Star wars-Fashionable accommodation experience, will allow a group of two to earn at least $ 4,809 plus tax for a two-night stay when it opens next year.
“This is the way” (as we say on The Mandalorian) is likely echoed in Disney management meetings when it comes to pricing decisions. It’s not just about sci-fi experiments, either, where the price weapon seems to get out of hand.
Right now, at the resort’s flagship theme park, Magic Kingdom, an after-hours Halloween event is selling far more than two years ago. The new family home evening is shorter in terms of hours than before. It’s also missing some of the features of the 2019 incarnation. Disney is charging up to 47% more than two years ago, and every night has been full for weeks.
Disney World Annual Passes were reintroduced for new customers earlier this month. They are also offered at higher prices than before. Some of the features that passes previously included (like access to fast-track queues and digital photo downloads) are now premium-priced add-ons.
None of this should come as a surprise. The House of the Mouse has been telegraphing these movements since last year. Disney’s new calculations imply fewer guests (which should improve the experience for all visitors) paying more per capita. Disney’s theme parks division surprised investors by returning to profitability in its final quarter, and now it is refining the segment into a high-margin product.
The initial response – from customers, not those complaining on social media – has been encouraging. People have no problem paying up to $ 199 for the Disney After Hours Boo Bash. They don’t back down from $ 79 for a three-course dinner at Epcot. Even the Star wars the cruise-style hotel experience will sell out quickly for its price of around $ 5,000.
Skeptics will say the bonuses won’t last once the novelty runs out. The contrarian is that Disney is selling its most expensive deals even as travel restrictions keep many international visitors away and the pesky delta variant keeps Florida’s COVID-19 case count problematic.
Disney World won’t be immune to an economic downturn, but the same can be said of all travel and tourism stocks. For now, it is clear that Disney has not reached the end of its tariff elasticity at its theme parks. You don’t have to like it to accept it’s true.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.