Disney (DIS) said Monday it will continue to raise certain theme park prices while warning that new competition from Comcast’s (CMCSA) Universal could dent sales.
“We have to be smart about pricing, particularly being sensitive to the consumer and the consumer who’s more focused on the value end of the offer,” Disney CFO Hugh Johnston said at a UBS media conference in New York City.
Johnston explained the company tends to hike prices at the “premium end” while keeping value options relatively untouched.
Premium offerings at the parks include things like park-hopper privileges and “lighting lane” passes, which allow guests to skip regular standby lines at select attractions. The parks are also more expensive during “peak season” or “peak days,” when demand is at the highest.
“Where we’re delivering more value, we feel comfortable taking more price,” the executive said.
Disney shares lagged on Tuesday along with the broader markets, with the stock falling close to 2%. Shares are up around 27% since the start of the year, roughly matching the year-to-date gains seen by the S&P 500 (^GSPC).
Investors have recently grown concerned over a potential slowdown in Disney’s theme parks business as prices rise and demand wanes. In August, the company underperformed expectations at its domestic parks, reporting a 6% year-over-year drop in profits for the three-month period ending June 29.
But those trends reversed in its latest quarter, with Johnston revealing that operating income within the experiences division — which includes parks, cruise ships, and consumer products — is expected to rebound next year, with growth estimated between 6% and 8%.
“Right now the consumer seems to be doing fine,” he said at the conference. “So from that perspective, we’re quite confident we’ve got good visibility in terms of the guide.”
But a new theme park from Universal, dubbed Epic Universe, could be a headwind to growth. The park is expected to open in Orlando in May 2025.
“In terms of Epic, we actually have built in some negative [impact],” Johnston said. “Whether it will be as significant as we built into it remains to be seen but we’re pretty cautious and conservative on that.”
Still, the executive noted bookings for next summer are up year over year, adding, “We’ve got a lot of time to go, but at least … the data that we have suggests that that’s positive and not negative.”
Cruises will also serve as a “significant” tailwind for the overall experiences division, with analysts doubling down on the business in recent months.