Despite a looming threat of recession, Walt Disney Co. executives said last week that they were upbeat about the company's parks and resorts business in 2008.
Disney reported an 11% first-quarter increase in revenue in its parks and resorts segment, to $2.8 billion. Operating income for the first quarter, which ended Dec. 29, was up 25%, to $505 million.
"We aren't going to predict the economy," Tom Staggs, senior executive vice president and CFO at Disney, said during the company's first-quarter conference call.
But, Staggs said, "We are pleased with the current attendance at our parks. We feel the unique appeal of our theme parks will help us make the most of whatever economic environment."
Bob Iger, president and CEO of Disney, added that an important factor was Disney's "considerable leeway" to add costs or remove costs based on demand. "We'll adjust park hours, room offerings, etc.," he said.
"Our cruise business has shown itself to be very resilient against any economic condition. And we find that people tend to cancel a planned vacation infrequently. We're feeling pretty optimistic."
Gains in the parks and resorts businesses were attributed more specifically to income growth at Walt Disney World, Disneyland Resort Paris and Hong Kong Disneyland Resort.
Operating income growth at Walt Disney World was credited to increased guest spending, attendance, hotel occupancy and vacation club ownership sales. At Disneyland Resort Paris, the company also saw increases in attendance, guest spending and hotel occupancy, but income growth was also attributed to real estate sales.
Hong Kong Disneyland Resort, said Iger, "showed significant improvement. We were very bullish about Chinese New Year. ... Events seem to drive a lot of business to the park. We've done a lot of good work working with the travel trade to make sure that part of their itinerary is visiting the park.
"We definitely believe we have margin expansion potential in our parks and resorts in general as well as in our adjunct businesses," he said. "The cruise ships would be examples of that as well as the vacation club. There clearly is improvement potential in our international theme parks."
Iger declined to comment on rumors of plans for a park in mainland China.
Overall, Disney reported a 25% drop in first-quarter earnings, to $1.3 billion. Revenues for the quarter increased 9%, to $10.5 billion.
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