Disney’s Fiscal Full Year and Q4 2019 Earnings Webcast

[peter11435]

Disney also has made major price increases in every aspect of their parks experience and introduced several brand new up-charge events over the past year. They have double sold 2 of their parks on more dates than ever before and charged more per ticket during the most attended times of the year.

At the same time they fired employees from entertainers to front line CM's. Those that did stay on frequently had their hours cut.

They are a business. They know how to hide losses.

Universal has not been immune to price increases. And they also double sell their park.

 

[MisterPenguin]

In the past, they’ve closed blocks of rooms for “refurbishment” to improve the occupancy percentages. I’m not talking about the real refurbs at Pop, Yacht and Beach, etc. I’m talking about closed rooms.

In order to make their room occupancy look better every quarter and year, then they would have to 'hide' not only the same amount of rooms by pretending they're under refurbishment, but do to so more and more. That is not feasible. It's a pretty dumb conspiracy theory.

Also, Disney would not expose itself to severe penalties for lying on financial statements.

 

[bartholomr4]

1. No, it couldn't easily go over 90%. Those in the industry understand that hotel occupancy is red-lining at 90%. You can't go much higher than that at all. It's much easier for it to miss and settle down a few percentage points than it would be to exceed 90%.

2. Jacksonville Jaguars couldn't sell out their stadium for nearly a decade. As many know that meant the game was subject to blackout from local TV broadcasting. Someone decided to put tarps over huge sections of the stadium and suddenly they were "selling out" the stadium and the games could once again be broadcast. Similarly, Disney knows how to move numbers around like anyone else. Likely they are not counting all of the unsold DVC "rooms" at Riviera as part of their occupancy totals. So, at the moment they might just be counting purchased Riviera DVC holdings as "occupied" rooms. If so, that would make the number "100%" occupied of the rooms available. Additionally, they do not count areas they are refurbishing towards their totals. Room demand down? Time for a "refresh" of a wing of the hotel. Now it's not counted in the total.

4. I have seen some of the largest discounts on DVC rental web sites in the past few months. Some flash sales have offered rooms such as:

Saratoga Studio: $120 (multiple dates)
Saratoga Studio Preferred: $150 (multiple dates)
OKW Studio: $126, $139
OKW 1B Villa: $216 (multiple dates)
AK Studio: $99!!!
AK Savanna: $160
AK 1B Villa: $242 (multiple dates)

Those prices were offered by just one re-seller. Many more were offered at varied discounts by many other companies. Increasing hotel occupancy numbers by selling some at less than half the rack rate price (sometimes even 75% off) does not mean that they are in more demand than ever before. It means people like deals.


Another key point is that hotel occupancy does not indicate interest in the parks. Many, people stay in a Disney hotel without ever visiting the parks. Notice that they keyed in on hotel occupancy rates rather than daily park ticket sales numbers. Usually it's good to look at what big corporations don't focus on in their reports to find out what isn't doing so well, because if it was they would be talking about it.

We will get actual room counts once the 10Q is released. The models are the models and their forecast history is well established.

 

[MisterPenguin]

From Deadline.com: https://deadline.com/2019/11/disney...timates-on-eve-of-streaming-debut-1202780600/

Parks and Resorts, often a mainstay that keeps the company on track, experienced a wobbly quarter, with revenue up just 8%. Growth at Disneyland, the company said in its earnings release, was “primarily due to higher guest spending, partially offset by the cost of Star Wars: Galaxy’s Edge, which opened May 31.” The company also blamed “to a lesser extent, lower attendance.”

That's +8% revenue over last year's last quarter, and +6% over the past year..

However it's +17% net profit over last year's last quarter, and +11% profit over the past year.

Many online articles mention how Disney exceeded Wall Street's expectations. So, how are people trying to make this out to be a bad thing?

 

[MisterPenguin]

Lots of people cancel their rooms. Can't imagine 90% looking ahead won't turn into the same 85%. But I could be wrong.

Do we know whether in increase in future bookings is compared to last year's actual, or last year's future bookings?

 

[VaderTron]

Universal has not been immune to price increases. And they also double sell their park.

There is "not immune" to price increases and "let's increase everything and introduce new costs as well". Universal is the former. Disney is the latter.

Universal sells the park a handful of nights a year. Disney does it year round at multiple parks.

The point is that Disney manufactured more "increases" to their revenue than Universal did. And as I stated before this was also done by cutting entertainment, jobs, and employee hours. Universal was not reported as doing the same. They absorbed the costs associated with expansion with dignity, not by heartless cuts and firings.

 

[VaderTron]

Do we know whether in increase in future bookings is compared to last year's actual, or last year's future bookings?

They didn't say, but you don't imagine their projected bookings would be lower do you?

 

[peter11435]

There is "not immune" to price increases and "let's increase everything and introduce new costs as well". Universal is the former. Disney is the latter.

Universal sells the park a handful of nights a year. Disney does it year round at multiple parks.

The point is that Disney manufactured more "increases" to their revenue than Universal did. And as I stated before this was also done by cutting entertainment, jobs, and employee hours. Universal was not reported as doing the same. They absorbed the costs associated with expansion with dignity, not by heartless cuts and firings.

I would hardly consider HHN a hand full of nights.

 

[MisterPenguin]

They didn't say, but you don't imagine their projected bookings would be lower do you?

They probably wouldn't mention it at all if it were lower.

 

[VaderTron]

I would hardly consider HHN a hand full of nights.

Compared to MMNSSHP, AK and MK after hours parties, and MK early morning magic throughout the year? Yes, I would consider it a handful. A handful, a bag full...whatever you want to call it, Disney has many times more.

 

[scottieRoss]

@VaderTron
Nothing you say makes any sense. Nothing at all.
1. So according to your logic, Disney is sold out for rooms. That means success.
2. IF you understood DVC, you would also understand that DVC rooms that have not been declared to be sold still are rooms to rent. Therefore the sales status does not hinge on if the unit is sold or not. As for Jacksonville tarping seats, that is nothing like Disney closing rooms for refurb. These rooms are actually being refurbed quickly and returned to service. These rooms are not sitting idle.
3. Oops you don't have a 3
4. What the heck are you talking about with resellers and DVC rooms. Yes DVC reservations can be rented but I have no clue what you are talking about with the prices you are listing. Confirmed reservation rentals are a niche market that runs through discussion groups on the internet, not part of the full market for vacation planning and not rates discounted by Disney. It is fueled simply by people speculating on the market. As for DVC, occupancy is very high. Studios are not available for most nights at 7 months. So there goes that argument.

 

[seascape]

@seascape Believe me, I’m no doom-and-gloomer. However, I am a businessperson in the entertainment industry, and very realistic.

Looking at P&R, Disney reporter moderately successful numbers despite much-ballyhooed ticket and food increases and lackluster response to SWGE. If we ignore the accounting/PR spin and look back a few months, at the time, Disney reacted to those—successes?—by cutting entertainment, cutting frontline CM hours, and cutting mid-level management. Why? So they could show a better profit.

I will agree Disney messed up SWGE big time at Disneyland. They tried to make up for their completely screwing up the construction of RotR at Disneyland and having to dely the opening. As a result, they opened up SWGE at WDW early, before it was ready. What was the result, no increase in attendance but lots of merchandise and food sales. Was this good or bad. Overall, it was bad but the results were better than they would have been if they hadn't opened WDW before it was ready to make up for their screw up at DL.

So where does that leave us going forward. I contend that SWGE will be the huge success everyone thought it would be and that the delay in the long run will be beneficial as they had a very long soft opening. You and others are free to believe I am wrong but time will tell who is right. If I am wrong I will admit it but I hope those on the other side will do the same. I can't wait to book the SW hotel, evrn though I was more a Trekie than a SW fan.

PS. I love the Orville, the true future of Star Trek.

 

[VaderTron]

They probably wouldn't mention it at all if it were lower.

Well, they didn't tell us that 2018's occupancy rate was lower than it was in the past. For example, in 2015 the hotel occupancy rates were reported to be 89%. That means in 2018 Disney had 4% lower occupancy rates than they did 3 years earlier. But they didn't tell you that. They only shined the spotlight on the (remember projected) increase to 90% (only 1% projected increase over 2015 numbers) because it makes them look good. Likely, the room occupancy changed in their favor due to several factors including the All-Star Hotel refurbishment. That is a huge hotel complex that is very popular. Closing off access to portions of that hotel complex for refurbishments will definitely push people into otherwise unoccupied rooms at other resorts. Others getting refreshed are Art of Animation, Port Orleans Riverside & FQ, and Saratoga Springs. DVC hotel rooms are the easiest to keep near full capacity. So, the refresh of the largest value hotel complex and some popular moderates receiving soft finish refreshes allow for closing off total capacity at some of the areas most difficult to get fully booked.

 

[peter11435]

Compared to MMNSSHP, AK and MK after hours parties, and MK early morning magic throughout the year. Yes, I would consider it a handful. A handful, a bag full...whatever you want to call it, Disney has many times more.

Sure

 

[larryz]

Ha! At the 16:00 point, she's blaming ESPN!!!

 

[Sirwalterraleigh]

Disney has three cruise ships, an island, one resort expansion, one new resort experience, 2 new resorts, an entire park overhaul, 4 major attractions at WDW, a new land at DCA, a major new attraction at Disneyland and other international expansion under construction.

You are far too bright to use this word.

Gotta stop with this dog whistle for consumer irresponsibility...we really do.

 

[peter11435]

Others getting refreshed are Art of Animation, Port Orleans Riverside & FQ, and Saratoga Springs. DVC hotel rooms are the easiest to keep near full capacity.

FQ is complete and has been for a while. All stars has been paused frequently to maximimze available rooms due to higher than forecasted occupancy. Riverside is currently paused so that all rooms are available due to high occupancy.

DVC rooms are not the easiest to keep near full capacity. That’s not how that works.

 

[peter11435]

You are far too bright to use this word.

Gotta stop with this dog whistle for consumer irresponsibility...we really do.

What else would you call it? It’s not a hotel.

 

[Sirwalterraleigh]

Capital investments at Universal parks was up from $308 last year to $505 million this year ($257 million of this for Universal Beijing). CapEx is spread over time and depreciate. CapEx really isn't included in the change of attendance or the change in revenue or profit.

If you look at the amount of CapEx in the parks at Universal ($505 million) and CapEx in the Parks at Disney (4.1 billion), the increase in CapEx spending at Disney was almost greater than the total spending at Universal.

Comcast is spending 9 times as much in CapEx on its networks than it is on its parks.

And yet...Disney still has fallen way behind in adding or replacing dilapidated attractions when compared to their historical record.

The budgets are ridiculous. That’s the variable missing from your mostly correct analysis.

Go stand in abrams facade land and count where 1,000,000,000 went. Take your time.

 

[Sirwalterraleigh]

FQ is complete and has been for a while. All stars has been paused frequently to maximimze available rooms due to higher than forecasted occupancy. Riverside is currently paused so that all rooms are available due to high occupancy.

DVC rooms are not the easiest to keep near full capacity. That’s not how that works.

They’re Pre-Sold. That’s the beauty of it. It doesn’t matter that much if they are or they aren’t full. It’s just about ancillary spending gravy.

Deluxe rack rooms are the hardest to occupy...even with convention block.

They have been horribly overpriced for decades and everyone knows it