Disney Parks and Resorts’ free-night and birthday offers helped deliver guests but not margins, Walt Disney Co. reported in its second-quarter earnings call on Tuesday.
The Parks and Resorts division reported a 12% decrease in revenue for the quarter ended March 28, from $2.7 billion to $2.4 billion. Operating income for the division slipped 50%, from $339 million to $171 million.
Attendance at Walt Disney World Resort in Orlando dropped 1% compared with last year's second quarter, and attendance at Disneyland in Southern California was up 2%, said Disney CFO Tom Staggs.
"We made a conscious decision to put in place promotions that would drive attendance," said Disney CEO Bob Iger. "This strategy has had a predictable impact on margins, but it also had the intended effect of bringing people to our parks."
Customers spent less at the domestic parks due to lower hotel room rates and lower average ticket prices. Lower guest spending and a drop in attendance negatively impacted Disneyland Resort Paris.
Disney Vacation Club suffered from higher per-unit cost of sales, fewer term extensions and fewer unit rentals.
Disney executives said the company's parks and resorts were "as adept as they've ever been, and perhaps more, so at managing their cost base." They added that third-quarter bookings for Parks and Resorts are modestly above last year's.
Company-wide, Disney's second-quarter revenue dropped 7%, from $8.7 billion to $8 billion. Net income slumped 46%, from $1.1 billion to $613 million.