Disney (DIS) just keeps ringing the cash register. Over the weekend the Mouse House announced unexpected price increases for visitors to its Disney Land resort complex in Los Angeles. As of yesterday morning a day pass to Disney Land will cost $96, up from $92, and the popular "One Day Parkhopper" passes give visitors access to both Disney Land and the adjacent California Adventure Park will run a cool $150, nearly 10% more than the passes cost last week. Disney also said it will stop selling new annual passes which had been available to local residents.
It's another triumph for CEO Bob Iger who chose to spend billions upgrading Disney Parks during the recession while other companies pulled back. Disney paid $1.1 billion on California Adventure alone, and now it's cashing in. Even before last weekend's price hikes, domestic park attendance and profits have been up double digits every year since 2011 and park attendance is at record levels.
To be sure, Disney customers are used to price hikes but the company is showing signs of getting more aggressive in recent years. The company normally waits until school lets out in June before hiking annual prices, but the Disneyland ticket boost comes immediately ahead of the unofficial start of summer with Memorial Day weekend starting Friday (the park also increased prices by 4% last June). Visitors to Disney World in Orlando took an even harder hit last February when the price of a one day pass was hiked to $99. Industry analysts are now placing bets on when the company will break the psychologically daunting $100 level with most expecting the company to hold off until 2015.
Disney hasn’t been so restrained when it comes to Park Hopper passes. In 2011 it cost just $105 for a full day of access to Disney Land and California Adventure. In May of 2012 the price was hiked to $125 and last June Disney was charging $137. It’s perhaps not entirely coincidental that Disney shares have more than doubled in the same time Park Hopper Pass prices have gone up 40%.
What's this tell you about the economy as a whole? Just this: if you give the customers want they want, a few basis points of growth or shrinkage in year-over-year consumer spending just doesn't matter all that much. While SeaWorld (SEAS) languishes just down the freeway, Disney Land is knocking the cover off the ball in Orange County. That kind of outperformance is no accident. In a sketchy economy you always want to stick with best of breed. Corporations just don't get better than the juggernaut Bob Iger has been building at Disney over his 9 years as CEO.
More from Breakout:
- Travel Destinations
- Disney Land
- Disney Parks
- California Adventure