Disney CEO Sees Several Opportunities for Shanghai Park Growth

(Source: Travel Weekly)

For the Walt Disney Company’s Parks and Resorts division, fiscal 2016 was not without its ups and downs.

Disneyland Paris lost $100 million following the November 2015 terror attacks in Paris, and the Disneyland Resort in California could not match the attendance from 2015, when the park celebrated its 60th anniversary.

Still, the opening of Shanghai Disney was one of the year’s big success stories.

Despite some headwinds in 2016, Disney CEO Bob Iger is confident that the company’s Parks and Resorts business is poised for growth in the coming months and years because Disney is finding new ways to increase revenue.

“We believe we still have pricing leverage, and that’s not just from raising prices on your standard ticket,” Iger said during Disney’s earnings call last week. “When we put in more demand-oriented pricing, we’re able to move some of the attendance away from the peak period and improve the guest satisfaction. But we believe that there are a number of tools we have available to us on the revenue yield management side, to create more revenue out of the attendance that we’re getting.”

Iger also signaled that Disney has additional expansion opportunities at the domestic parks, including building more hotels in Orlando, where he said that occupancy rates have been high enough to merit added capacity.

Additionally, he noted that another opportunity are the Star Wars lands being built at the Orlando and California parks, which will be “two of the biggest lands we’ve ever built” at those two theme parks. Opening dates for the highly anticipated Star Wars lands haven't been announced.

Iger was particularly bullish about the long-term earnings potential of Shanghai Disney, the company’s first theme park in mainland China, which opened in June.

“We welcomed 4 million guests in our first four months of operation,” said Iger. “More than half our guests come from outside Shanghai and millions of people across China are developing a much greater awareness and affinity for our brand, which will certainly help drive our growth in that huge market over the long term.”

The Parks and Resorts division's revenue for the fourth quarter increased 1%, to $4.4 billion, but the division's operating income dipped 5%, to $699 million. For the full year, Parks and Resorts' revenue was up 5%, to nearly $17 billion, and operating income rose 9%, to nearly $3.4 billion.

For the entire company, Disney reported that revenue for the year increased 6%, to $55.6 billion, and net income increased 12%, to $9.4 billion, marking the company’s sixth consecutive year of record results.