Third Quarter Profit Falls 26 Percent
Posted: Mon Aug 03, 2009 3:48 am
Just got this from travel agent's news.
Walt Disney Co. Third Quarter Profit Falls 26 Percent, Parks & Resorts Revenue Off 9 Percent Fri Jul 31 2009, by Travel Trade Staff
The Walt Disney Co. said its fiscal third-quarter profit fell 26 percent, with parks and resorts revenue falling 9 percent to $2.75 billion as guests spent less. Disney blamed their struggles in part on lower guest spending at Disney World, where widespread discounts eroded average hotel rates and average ticket prices.
Despite the decline, Chief Financial Officer Tom Staggs said in a conference call with journalists that the company was "pleased with the attendance overall," with a 3 percent increase in domestic parks attendance overall, including its "Buy Four, Get Three Free" and free dining promotions, cut into revenues. Some promotions are set to continue through December. When asked how much longer the discounts would be offered, according to the Orlando Sentinel, Staggs said "we're going to take our cue from the economy."
Combined per-capita guest spending at Disney World and Disneyland fell six percent during the quarter compared with a year earlier. But the discounts again helped Disney sustain attendance levels despite the tough economic environment: Combined attendance at the company's US parks rose three percent from a year ago, with Disney World flat and Disneyland up 10 percent, according to the Orlando Sentinel.
Sponsorship income also fell at Disney World, though a spokesman attributed the decline to difficult comparisons from a year ago, when the company benefited from fees paid as part of a contract renewal with JP Morgan Chase for Disney-branded Visa credit cards.
Iger said Disney has commissioned research demonstrating the advantages of using promotions to stimulate park attendance. Among them: A "spike" in consumer's price-to-value perception of Disney that could encourage return visits.
Further, Iger said, the research showed that discounts have lured travelers who were not otherwise planning Disney vacations. Some stock analysts had expressed concern that the promotions were simply cannibalizing future theme-park business by persuading travelers who were planning to take trips later this year or in 2010 to travel immediately instead.
"We're attracting people today that would never have come before," Iger said.
Still, maintaining attendance levels in the months ahead will likely be challenging.
Although company executives said fourth-quarter room reservations are "slightly ahead" of last year's pace, that is because this year's fourth quarter includes an extra week, thanks to a quirk in Disney's fiscal-year calendar. Without that extra week included, combined reservations at Disney World and Disneyland are lagging last year's pace by seven percent.
The company did not rule out extending its current discounts or introducing new offers. Consumers, Iger said, are "still out there looking for value. And that's a fact that we obviously can't ignore."
Walt Disney Co. Third Quarter Profit Falls 26 Percent, Parks & Resorts Revenue Off 9 Percent Fri Jul 31 2009, by Travel Trade Staff
The Walt Disney Co. said its fiscal third-quarter profit fell 26 percent, with parks and resorts revenue falling 9 percent to $2.75 billion as guests spent less. Disney blamed their struggles in part on lower guest spending at Disney World, where widespread discounts eroded average hotel rates and average ticket prices.
Despite the decline, Chief Financial Officer Tom Staggs said in a conference call with journalists that the company was "pleased with the attendance overall," with a 3 percent increase in domestic parks attendance overall, including its "Buy Four, Get Three Free" and free dining promotions, cut into revenues. Some promotions are set to continue through December. When asked how much longer the discounts would be offered, according to the Orlando Sentinel, Staggs said "we're going to take our cue from the economy."
Combined per-capita guest spending at Disney World and Disneyland fell six percent during the quarter compared with a year earlier. But the discounts again helped Disney sustain attendance levels despite the tough economic environment: Combined attendance at the company's US parks rose three percent from a year ago, with Disney World flat and Disneyland up 10 percent, according to the Orlando Sentinel.
Sponsorship income also fell at Disney World, though a spokesman attributed the decline to difficult comparisons from a year ago, when the company benefited from fees paid as part of a contract renewal with JP Morgan Chase for Disney-branded Visa credit cards.
Iger said Disney has commissioned research demonstrating the advantages of using promotions to stimulate park attendance. Among them: A "spike" in consumer's price-to-value perception of Disney that could encourage return visits.
Further, Iger said, the research showed that discounts have lured travelers who were not otherwise planning Disney vacations. Some stock analysts had expressed concern that the promotions were simply cannibalizing future theme-park business by persuading travelers who were planning to take trips later this year or in 2010 to travel immediately instead.
"We're attracting people today that would never have come before," Iger said.
Still, maintaining attendance levels in the months ahead will likely be challenging.
Although company executives said fourth-quarter room reservations are "slightly ahead" of last year's pace, that is because this year's fourth quarter includes an extra week, thanks to a quirk in Disney's fiscal-year calendar. Without that extra week included, combined reservations at Disney World and Disneyland are lagging last year's pace by seven percent.
The company did not rule out extending its current discounts or introducing new offers. Consumers, Iger said, are "still out there looking for value. And that's a fact that we obviously can't ignore."