The Walt Disney Co.'s parks and resorts division saw a decrease in operating income in its fiscal third quarter as the company continued to try to wean guests off discounts.

"We basically are trying to reduce the amount of discounting, promotional discounting, that we've been doing in the depth of the recession to maintain our volumes and carefully playing off our rates with our volumes," Jay Rasulo, Disney's CFO, said during the company's third-quarter earnings call Aug. 10.

"With the expectation that we would make near-term trade-offs between rate and volume similar to last quarter, per capita guest spending was up by 5%," Rasulo said.

He added that attendance at the company's domestic parks came in 3% lower than prior-year levels, with Walt Disney World down 2% and Disneyland down 4%. But when adjusting for the calendar shift of the Easter holiday week, the company estimated that combined attendance was down by only 1% compared with last year.

Operating income for the parks and resorts division was $477 million for Q3, an 8% drop from the $521 million the company reported for the same period one year ago. The company's other segments all saw income improvements, the greatest of which was a 43% jump in the media networks division for the quarter, from $1.3 billion last year to $1.89 billion this year.

The parks and resorts division also lagged in revenue, reporting only an 8% increase, to $2.83 billion, from $2.75 billion in the same period a year prior. Disney's other segments reported revenue increases of between 19% and 74%.

Rasulo said that the company hoped "to be back to sort of a normal level of promotional activity in fiscal 2011. ... The economy continues to characterize itself as a fairly uncertain place, so I think it would be imprudent to give a timetable for when our park business would return to what we've come to know as more normalized margins. But at the same time, we don't see any structural reason why that can't happen."

Disney President and CEO Bob Iger told analysts that the fact that the domestic theme parks were down only about 1% in bookings was "very encouraging" compared with prior third quarters, when the parks saw close to a 10% drop in bookings. Moreover, the division is employing less aggressive discounting, and "that suggests an improvement," Iger said.

While the parks and resorts division appears slower to recover than its other division, the Walt Disney Co. reported strong earnings overall, driven largely by the box office success of Disney's "Alice in Wonderland," Pixar's "Toy Story 3" and Marvel's "Iron Man 2" as well as that of ESPN, which benefited from World Cup programming and the NBA Finals.

Disney reported a net income of $1.3 billion for the third quarter ended July 3, a 40% increase compared with $954 million for the same period a year prior. Revenues of $10 billion for the quarter represented a 16% increase over the year-ago period.

This report appeared in the Aug. 16 issue of Travel Weekly.

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