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Disney Shares Contingency Plan For Parks Slowdown Due To Upcoming Recession

Disney Shares Contingency Plan For Parks Slowdown Due To Upcoming Recession

News - WDW
09-Nov-2022

On the Walt Disney Company's latest earnings call, an analyst from MoffettNathanson asked Disney CFO Christine McCarthy about what levers Disney will pull in the event of a slowdown due to the upcoming recession. She replies suggesting that an obvious lever is discounting, but they're not going to use it to the extend they have in the past. Another lever is using the controversial park reservation system, hinting they can increase capacity on the busiest days that are selling out to make up for loss of guests elsewhere, also Disney intend to adjust the pricing tiers to encourage guests to come at quieter times by increasing the price for busier times. Finally, to encourage annual pass holders to return and put them back on sale.
Yes. So, talking about parks, Michael, what is different is compared to the last time we had a slowdown in the economy for managing our parks business, we have more commercial tools and levers available to us. One of the ones that’s quite obvious is discounting. That’s something that we have used in the past, and we will continue to use it because it is an effective lever for managing your yield, but we are not going to use it to the extent to which we used it during the last recession. Some of the other things that are new would be the reservation system. So, we manage attendance now. We can track it real time. On many days, we are fully booked now, but we can adjust that and be very flexible and real time on adjusting it if we so choose. The other thing is we have a tiered pricing structure that gives us a lot of flexibility. And we also have re-imagined our annual pass business model, and we could also have some more flexibility in using our annual pass program. We also have technology advancements, and this is more on the expense side. That provides us opportunities for cost flexibility. So, we have things like mobile ordering, contactless check-in, so those kinds of things give us levers on the expense side. But we do feel that we have, once again, harkening back to the opportunity we took during the pandemic. We did permanently remove a significant amount of operating expense at the parks, and that better positions us right now as we go into an uncertain economic environment.

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