Disney park attendance falls despite Galaxy's Edge debut

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The Millennium Falcon attraction at Star Wars: Galaxy's Edge.
The Millennium Falcon attraction at Star Wars: Galaxy's Edge. Photo Credit: Jamie Biesiada

Attendance at Disney's domestic parks was down 3% in the company's fiscal third quarter, even though the ballyhooed Star Wars: Galaxy's Edge was open at Disneyland for part of the quarter.

Speaking during Disney's earnings call Tuesday, CEO Bob Iger gave multiple reasons why attendance was down at Disneyland, where Galaxy's Edge has been open since May 31. He said some guests stayed home in anticipation of crowds from Galaxy's Edge, area hotels raised prices and Disney raised ticket prices. Additionally, the land opened with only one attraction, Millennium Falcon: Smugglers Run, instead of the two it will eventually have (Star Wars: Rise of the Resistance opens in January).

"All of those factors contributed to attendance that was below what we hoped it would be," Iger said. "That said, guest satisfaction, interest in the attractions, in the land, is extremely high."

He added, "We feel great about the product that we've created, and it's going to just take some time for things to work themselves out in terms of how the marketplace is reacting."

CFO Christine McCarthy shed some additional light on the attendance decrease. 

She said the decline in visitors at Disneyland was primarily caused by "lower annual passholder visitation as we managed demand for the first few weeks after opening Star Wars: Galaxy's Edge in order to maintain a high level of guest satisfaction." Disney blocks out certain dates to passholders.

At the Walt Disney World Resort in Orlando, McCarthy said based on survey data, Disney believes attendance decreased because guests are waiting to visit the park until after Star Wars: Galaxy's Edge opens there Aug. 29.

While attendance at domestic parks was down 3%, per capita spending was up 10% thanks to higher admissions and spending on merchandise and food and beverage, McCarthy said. Per-room spending at domestic hotels was up 3%, and occupancy increased 2 percentage points to 88%.

The parks achieved "record revenue" in the third quarter, she said, but operating income declined due to lower attendance and higher costs.

Disney reports its parks' financial results in the Parks, Experiences and Products category, which saw revenue increase 7% to $6.6 billion and operating income rise 4% to $1.7 billion, driven by Disney's consumer products businesses and Disneyland Paris.

In the fourth quarter, McCarthy said, "We anticipate strong segment operating income growth driven by the benefit from a full quarter of Star Wars: Galaxy's Edge at Disneyland and growth in merchandise licensing. So far this quarter, domestic resort reservations are pacing up 4% compared to prior year, while book rates are up 3%."

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