From wsj.com:
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Walt Disney Co.’s theme-park and resort unit has coasted through months of mounting U.S. economic woes, but an expected decline in consumer confidence could hurt even resilient vacation spots like Walt Disney World.
In late July, company officials said September bookings at Disney’s U.S. resorts were on par with last year, and that bookings for the holiday season were slightly ahead.The company hasn’t provided any updated booking information since then. But analysts and other industry observers expect the global economic situation to soften demand for rooms at the company’s resorts and attendance at its parks in early 2009.
So far this year, a weak dollar has succeeded in luring crowds of international visitors to Disney theme parks in Orlando, Fla., and Anaheim, Calif. During a July 30 conference call to discuss the company’s fiscal third-quarter earnings, Disney executives said that while overall attendance was down slightly at both parks, the business was generally defying predictions that it would be hit hard by high gasoline prices, the U.S. housing slump and general economic malaise.
“We aren’t immune to the challenging economy, but we continue to be pleased with the level of business activity we’ve seen so far,” Disney Chief Executive Bob Iger told analysts on the quarterly conference call. “The parks’ performance has been particularly noteworthy.”Mr. Iger added that visits to Walt Disney World area also are unlikely to be affected by a continuing reduction in airline-seat capacity, noting that less than 50% of visitors to Disney World arrive by plane, and those that do tend to book their seats early when seats are plentiful.
Disney officials declined to comment on what impact economic turmoil could have on the parks’ operations. Disney is scheduled to report its fourth quarter and full year fiscal earnings on Nov. 6.
For the third quarter ended June 28, revenue from the parks and resorts unit rose 5% to $3.04 billion, compared with the year-earlier period. Net income for the quarter was $1.28 billion, or 66 cents a share, up from $1.18 billion, or 57 cents, a year earlier. Revenue increased 2% to $9.24 billion.
[Headwind Threatens Disney Parks]In 4 p.m. composite trading Tuesday on the New York Stock Exchange, Disney shares were up 96 cents, or 3.2%, at $30.69.
The company typically offers promotions and discounts during “off-peak” periods, in the early fall, for example. But in July, Mr. Iger said the company hadn’t increased discounting, compared with the year earlier, and other officials said at the time that the average nightly rate at the company’s hotels was “at or above” what it was in 2007.
Analysts and industry observers, meanwhile, say Disney would be better-positioned to withstand a tourist slump now than during previous recessions because the Burbank, Calif., entertainment concern has diversified enough beyond the theme-park business to reduce its exposure.
“Disney looks very different now than it did in 1991 or even after Sept. 11, [2001] because now theme parks are only about 20% of their business, whereas in 1991 it was about 50%,” said Rich Greenfield, an analyst at Pali Capital in New York. “But the bigger issue of what’s going on in international markets certainly continues to raise concerns about sustaining attendance numbers.”
