Walt Disney Co.'s Parks and Resorts division reported double-digit revenue and income gains for the year, as it starts to see the effects of higher prices and reduced discounting.
The parks and resorts division reported a 10% increase in fiscal year-end revenue, to $11.8 billion, and a 18% increase in year-end operating income, to $1.6 billion.
For the fourth quarter ended Oct. 1, revenue increased 11%, to $3.1 billion, and operating income jumped 33%, to $421 million, compared with a year ago.
"These results reflect our strategy of continuing to increase pricing to normal levels," said Disney CFO Jay Rasulo on the company's year-end earnings call earlier this month.
"There are two major contenders to the increased margins," said Rasulo, who pointed out that in addition to higher ticket prices, there has been a "very strong response to our new cruise ship [the Disney Dream ... which] is contributing very well to our revenue."
Domestic park attendance for the quarter was up 1%, and per capita spending was up 9% on higher ticket prices, food, beverage and merchandise spending, according to Rasulo. Average per-room spending at the domestic hotels was up 9%, while occupancy dropped two percentage points, to 81%, a direct result of higher pricing and a reduction of promotional offers.
The parks and resorts division continues to be one of the areas Disney is investing in most significantly. And that will continue, according to Disney CEO Bob Iger.
"We've been pretty clear about our capital expenditures, particularly in our theme park business, which we know is where we spend most of our capital," said Iger. He attributed some of the success the company has had in the parks and resorts division to making the products more accessible over the last decade.
He noted that by the end of fiscal 2011, about 40% of hotel rooms fit into what the company considers the value category, 30% in the moderate category, and 30% in the deluxe category.
"Interestingly enough, 10 years ago, it was about a third, a third, a third, so we've grown in the value segment, and we've reduced slightly in the deluxe," Iger said. "And I actually believe that's proved to be a great strategy, because we made our product far more accessible to more people."
Iger said that subsequently, Disney was able to move people from off-property, value-priced hotels to on-property, value-priced hotels and capture more of their vacation spend.
Overall, Disney reported a 7% increase in revenue for the year, to $40.9 billion, and a 21% increase in net income, to $4.8 billion. For the quarter, Disney's revenue rose 7%, to $10.4 billion, and net income rose 30%, to $1.1 billion.
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