Disney World and Disneyland. The quintessential American vacation. There is something about the energy in a Disney park at dusk that is.
I hate to use the word magical, but it kind of. There's something about it. A place where magic comes to life.
Where childhood memories are made. A trip to Disney for parents and for little kids is really a rite of passage in this country, practically. From the early days of Frontierland and Pirates of the Caribbean to modern day additions like Star Wars Galaxy's Edge, the Disney parks have brought in guests from far and wide.
I mean, who can forget their first step onto Main Street, U. S. A.
? The castle, the characters, the food, the balloons, the I'm sorry, this balloon cost. How much?
What's happening now is Disney is an incredibly expensive and incredibly like, magical experience. Disney's park prices are up. More on average than in a normal year.
And a one day base level ticket to Disney World was averaged $89 in 2012, and averages averaged $147 in 2022, and that the growth rate of that cost has been about 5% annually. But in its Q3 2024 results, Disney reported disappointing park numbers, with operating profits dropping 3% year-over-year, a concerning trend from one of the company's biggest moneymakers, and another blow to a stock that's down more than 15% in six months. The price hikes at parks was enormous over the last few years.
Same for some of the food. You know, just every every time they could they would either make packages smaller, higher priced whatever. If that consumer is just pushing back on that.
Disney blamed the slip in performance on a softening consumer environment, saying demand isn't where they thought it would be. An issue it said could linger for several quarters, meaning Disney parks are not immune to what is becoming an industry wide issue. Universal's parent company, Comcast, saw a nearly 11% drop in theme park revenue, driven by lower attendance in that same quarter.
Certainly, there are going to be questions about the health of the consumer and whether the company got ahead of itself in its pricing. Above the entrance to the Disneyland park, there was a quote from Walt that says, to all who come to this happy place, welcome. And we focus our energy on the all.
But is it really? Or is it a trip to Disney just getting too expensive for inflation-weary American families? Parks is huge as an investor for Walt Disney Parks because it's about about 40% of their total revenue, but it's two thirds or 65% of their total operating profit.
When it comes to Disney's profits, its park business plays a huge role. In Q3 2020 2024, Disney's domestic parks brought in $5. 8 billion, a 3% increase from the year prior.
However, its operating income for the same period actually slid 6% year-over-year. Everything post Covid is going through the roof because a lot of these physical venues closed for a year or two because of Covid, and now they have to make up also a lot of increases in labor costs. Given the linear television has been disappointing Disney and everybody else in that business for the last decade.
It stands to reason that Disney might have responded to that by pricing at parks a little more aggressively in order to prop up its financial results. While Disney acknowledged a slowing consumer environment as reasoning for a drop in demand, it also noted saw an uptick in guest spending at the parks due to its higher prices. For things like food or merchandise, or upgraded park passes like Genie plus, ways to skip lines.
There are lots of ways Disney gets you to spend more, even when traffic stagnates. Over the past ten years, the average cost for a Disney World single park ticket has inflated more than 56%, well above the national rate of inflation. And that, of course, doesn't include the cost of food, merchandise, lightning lanes, hotels and airfare.
At a glance looking at how the Disney experience has evolved, it's gotten a lot more difficult for the average person to jump into. This is Jake Williams. He's a YouTuber and travel blogger and set out this year to answer the same question — has Disney gotten too expensive?
So he went to Disney World and compared the price of a one day trip in 2024 to that same trip in 2017. So when we add everything up the hotel, the park, the park, add ons, all the food, the total cost for a single day at Disney for two adults came out to a jaw dropping $886 USD. The exact same trip in 2017 would have cost a total of $567.
That's almost a $320 difference between two trips. That's a 44% increase in just seven years, far outpacing inflation, which is around 24% since 2017. The park experience also feels more crowded and worse overall, despite there being less people in the parks this year.
We're back to a point where things should be returning to normal, but usually we don't see the consumer experience following that trend. But while prices on everything from hotels and photo passes to Mickey ears and churros have been climbing, Disney Parks has kept its lowest ticket tier stable since 2019 at Walt Disney World. That's $109 for a single day single park ticket on off peak days.
When you begin to think about, you know, inflationary pressure and disposable income and some of those components that weigh on consumers, we hear that very clearly and we react to that with, again, offers or ways for people to go from, well, I was going to come on Thursday and the price is one number on a Thursday, or I could come on a Tuesday and the price is a different number. There's flex flexibility and options for our guests. And I think that's what they're now being more careful and thoughtful as they make their choices.
Another frustration from Disney goers — over the past ten years, the parks have been chipping away at previously free amenities, things like the fast pass system, which was replaced in 2014 by MagicBands, and then again by Disney Plus, and now Lightning Lanes, which now start at $30 per ticket per day. And those previously free MagicBands given to resort guests are now only available to purchase. Even the free shuttle bus between the Orlando airport to Disney World resorts has been replaced with a private for-cost bus company.
When you look at all the stuff that they've they've been making a lot more expensive or just eliminating complimentary altogether, that to me seems anti-consumer. You know, there's no benefit to the consumer. But what about guests that are going for more than one day?
With Disney World four parks and Disneyland's two, guests often visit for days at a time packaging park hoppers, lightning lanes, resort stays, and character dinners. The average cost of a five-night Disney World vacation in 2024, with all the bells and whistles, comes to around $5,000. Comparatively, a high-end trip to Mexico costs around $6,000.
Disney has positioned a multi-day trip to Disney World as a form of upper middle class luxury travel, and priced it accordingly. The median annual income in the United States is $74,580, meaning a family of four bringing in an average salary would need to pay almost an entire month's income for a multi-day trip to Disney World. Continues to be a premium experience.
That puts pressure on the more price sensitive cohort of customers that want to go there and struggle with the cost. Of course, Disney isn't the only theme park to raise prices. A one day single park ticket at Universal Studios Orlando now ranges between $119 to $179, an increase of up to $20 in just one year.
Keeping pace with Disney World one day ticket average of $147 and an average three day, four night trip for a family of four to Universal orlando comes in at around $4,700, comparable to an even longer five night trip at Disney World. But while parks like Universal Studios Orlando see significantly less guests annually, it's also been able to stabilize its annual visitation post-pandemic, where Disney World in Orlando has yet to see its visitation fully recover. Universal can rise above it because it rides on Disney's coattails.
Disney parks are the primary driver of visitation to Orlando, and once people make the decision to visit, Universal is an attractive stop for a lot of them. And in that way, it's interesting to consider whether Universal would succeed without a Disney nearby. I think it's fair to say that attendance and prices would be lower, that the business wouldn't be as good if it weren't drafting off of the visitation driven by Disney.
So then that begs the question — if it's gotten too expensive to go to Disney, how are people paying for this? The power of the Disney brand and their connection with so many American families is so strong that there's always going to be people who are willing to go into debt to go to one of these parks. A recent survey of 2000 people by LendingTree found 45% of parents with children under 18 who visited a Disney park took on debt to do so.
If we broaden that out to all Disney goers, almost a quarter of all visitors take on some form of debt to visit the parks, a trend that's actually not exclusive to Disney parks. Another survey found 36% of U. S.
travelers plan to take on debt for their summer trips this year. There's so much pressure to a degree that parents put on themselves to make this happen. And there's also kind of the keeping up with the Joneses thing as well.
It is expensive just to get in the park at Disney. Then you have hotels and airfare and on down the line. Disney World or Disneyland, depending upon your location, is basically a tax on being a parent.
But just how much debt are people taking on? The average family with young kids is taking on a little less than $2,000 in debt, and all Disney goers who are taking on debt are taking on between $1600 and $1700. For many park goers, the added debt is worth it.
59% of those who took on debt for Disney said they had no regrets, with a Disney trip falling into what some would consider good debt. For a lot of people, the pandemic kind of changed their views on things, and they made them think of how fragile life can be. So if there's something that they want to do, whether it's going to Disney or starting a small business or anything in between.
A lot of people are still saying, you know what, I'm just going to jump in. No better time than now. And this brings up another question — do higher prices actually change people's minds about going to Disney?
Well, according to that same survey, yes. When it came to people who had never visited a Disney park, over half 60% of respondents said cost was the number one factor. Most of the spending at Disney World is done by middle and upper middle class families.
Clearly, a lot of Americans are willing to take on a little bit of debt for this sort of trip. We also see that for maybe more Americans, that extra cost, that extra debt that they'd be bringing on is just a bridge too far. But what about Disney's super fans, the die hards, annual passholders, Disney Vacation Club members?
Are higher prices turning them away? I'm a long-term Disney passholder, and, you know, a traveler of probably 50 or 60 trips in the last 25 years or so. So when I first was able to go as a young adult, you know, I was just blown away.
And it really started a love of, you know, allocating a few of my vacations a year would be to go to Disney. This is Brian Brennan. Brennan was a Disney Passholder for almost 20 years, a Disney World devotee that would take several trips to Orlando every year.
The math would work out to where, oh, it's a better option for me to be a passholder, get some discounts on dining. I get free parking, so the perks times the number of days going, you know, made it financially viable. That is until this past year when he decided not to renew his annual pass.
Then they took the fast passes away. Then they took the extra magic hours away. And then suddenly you wake up one day and you go, you know, the 10% refund that I'm getting on discount at restaurants isn't necessarily adding up to the value when all those other things have gone away.
There is a sunk cost fallacy with with Disney where people have put so much time, so much of their identity is associated with Disney in the parks. It's hard to admit when the company is diluting what you love. And after canceling his annual pass, Brendan has started using his money to travel elsewhere.
Lately, I've found a lot of value in going on a cruise. I'm going to go on this beautiful ship, and they're going to give me all of my meals and all of my drinks, and they're going to take me to Bermuda. And I couldn't even, you know, get into a Disney moderate resort.
Forget the food, forget the tickets, you know, the same prices that. If you have enough money to afford to come to the Walt Disney Parks every year, you also have a lot of other choices. So you're probably not coming every year.
And that's the problem for Disney, catering to wealthier travelers means catering to people that often have more options when it comes to where they travel, meaning Disney parks are now competing with luxury vacation spots, places like Vail or the Bahamas, where a high-end vacation costs just a couple thousand more. If you price it out, you can do a lot of stuff with the price that it costs to go to Disney. When going to a domestic theme park is costing more than, say, like, hey, we could spend a week in Paris, you know, it really is going to start making that choice more difficult.
I think what we're seeing is consumers have a lot of choices, and they're making thoughtful decisions as to where they want to go, which means it's a competitive environment, which means that we need to be smart and thoughtful about making sure we're listening to what their needs are and how do we appeal to their needs. The idea here is to make this wonderful beloved resort, or really any of our parks around the world, you know, accessible to as many people as we possibly can. There are areas where Disney parks have started to make changes.
Every decision they make at this, at this corporation is what would Walt do? And so when when Bob Iger answers that question, Walt would not do that. He changes something.
Since returning to the helm of Disney in 2022, CEO Bob Iger has already made steps to reverse some Covid-era changes that weren't the most popular with guests. Things like bringing back free parking for resort guests and retooling Genie Plus into Lightning Lanes, with the new app offering additional perks to guests staying on Disney property. The notion that we give more privileges to people who stay in our resort and stay seven days than we do people who don't stay in our resorts or only stay two days.
Like that's really smart because it keeps money in the Disney ecosystem and at the end of the day, they're trying to create Disney super fans. Disney is playing an extremely long game, a generational long game with the end goal of making lifelong Disney fans. And if families are priced out, that means less trips, less magic, and less lifetime super fans.
Disney already announced it is raising ticket prices again by $5 to $10 for some tickets in 2025. If you have seven days with your kid in a Disney park, the odds are you might you might be a super fan. But more likely, your kids are going to be super fans forever.
And that's what they're going for. And that's one group Disney Parks are actively working not to price out, kids. We have a $50 kids ticket.
Children under nine can come to this park for $50. We have our lowest entry point ticket is $104. And by the way, hasn't changed in five years.
The reality is, Disney parks are still the most visited theme parks in the world with 142 million visitors across all its parks in 2023. That leads us to the big question, does it matter? Disney is still the top global theme park operator in the world, so are rising price is enough to make a serious dent in their visitation?
One of the things that we're getting time and time again is our guest satisfaction is terrific. Our intent to return, our intent to visit. You know, people want to come here because of the totality of what we offer and the value that we deliver.
That is that there is not a breaking point, that people will continue to pay the Parenthood tax that is Disney. If people don't vote with their wallet and aren't vocal about these changes across the industry, not just Disney, across the whole travel industry, then nothing's ever going to change.
