Q3 Earnings for TWDC

[Mouse Trap]

I am betting on a price drop on the next quarter results when MM+ is not bringing in profits. That's when I will buy again. I bought in last time around $25 and sold for nice profit but wish I held longer since it went much higher. damn!

Wishful thinking my friend. MM+ is not going to be some nail in the coffin to Disney's stock. Depending on what market theories you follow, the costs of MM+ are already priced in. If you want to make money, you buy now and not try to time the market.

 

[ParentsOf4]

Which equates to about 360 rooms out of service per night. Assuming they were all at WDW that would adjust the WDW occupancy to 79.4% of all rooms and 80.3% of all rooms made available.

The hotel occupancy rate was up 3% year-to-year, down 4% quarter-to-quarter. I expected hotel occupancy to decline quarter-to-quarter once MyMagic+ became widely available to offsite guests. (See my post here.)

IMHO, the 3% year-to-year gain is traceable in roughly equal parts to the smaller MyMagic+ onsite advantage that still remains, general theme park attendance improvement, and the 361 rooms at the Poly taken out-of-service for conversion to DVC (representing about 1.2% of total domestic room inventory).

Really, the exciting number for Disney Parks & Resorts was the 6.8% gain in Per Room Guest Spending (PRGS), from $279 to $298. I'm scratching my head trying to figure that one out. I was expecting a number under 5%. Maybe the Easter week shift from Q2 to Q3 resulted in higher average hotel rates?

 

[asianway]

The hotel occupancy rate was up 3% year-to-year, down 4% quarter-to-quarter. I expected hotel occupancy to decline quarter-to-quarter once MyMagic+ became widely available to offsite guests. (See my post here.)

IMHO, the 3% year-to-year gain is traceable in roughly equal parts to the smaller MyMagic+ onsite advantage that still remains, general theme park attendance improvement, and the 361 rooms at the Poly taken out-of-service for conversion to DVC (representing about 1.2% of total domestic room inventory).

Really, the exciting number for Disney Parks & Resorts was the 6.8% gain in Per Room Guest Spending (PRGS), from $279 to $298. I'm scratching my head trying to figure that one out. I was expecting a number under 5%. Maybe the Easter week shift from Q2 to Q3 resulted in higher average hotel rates?

All the up charge events

 

[ParentsOf4]

All the up charge events

The plethora of upcharge events should boost Per Capita Guest Spending (PCGS), which represents money spent at the parks.

The 8% gain in PCGS this quarter is pretty typical since 2011, when Disney started a campaign of aggressive price increases. On the face of it, it sounds like business as usual.

However, hidden in this quarter's number are two ticket price increases, one in the summer of 2013 and one earlier this year, averaging 12% for base tickets. Since tickets are perhaps the single biggest component of PCGS, it points to softness in other guest spending. Essentially, as Disney continues to raise prices, guests are adjusting by spending less elsewhere.

 

[Darth Sidious]

The plethora of upcharge events should boost Per Capita Guest Spending (PCGS), which represents money spent at the parks.

The 8% gain in PCGS this quarter is pretty typical since 2011, when Disney started a campaign of aggressive price increases. On the face of it, it sounds like business as usual.

However, hidden in this quarter's number are two ticket price increases, one in the summer of 2013 and one earlier this year, averaging 12% for base tickets. Since tickets are perhaps the single biggest component of PCGS, it points to softness in other guest spending. Essentially, as Disney continues to raise prices, guests are adjusting by spending less elsewhere.

Very analytical, I like it and I agree with your assessment.

 

[GoofGoof]

So what I got out of this call is:

1. We should see a bottom line impact from MM+ next quarter...I'll believe it when I see it
2. They aren't even going to talk about details on Star Wars in parks until "sometime next year". I assume this means no major construction or ground breaking until 2016 at the earliest. StarWarsLand in 2019 or 2020 seems likely
3. No new attractions that aren't linked specifically to a specific franchise or IP.
4. No major shift in capital investments. Let's hope that the allocation of that capital is shifted more heavily to P&R and specifically FL.
5. P&R numbers are strong again. Hotel occupancy is strong...again. I know, I know, next quarter it will be way down because the hotels are a ghost town right now

 

[Captain Neo]

Star Wars project announced D23 2015 will most likely open 2018

 

[The Empress Lilly]

361 rooms at the Poly taken out-of-service for conversion to DVC (representing about 1.2% of total domestic room inventory).

Really, the exciting number for Disney Parks & Resorts was the 6.8% gain in Per Room Guest Spending (PRGS), from $279 to $298. I'm scratching my head trying to figure that one out. I was expecting a number under 5%. Maybe the Easter week shift from Q2 to Q3 resulted in higher average hotel rates?

As room inventory decreases, PRGS increases. Poly's DVC conversion alone should increase PRGS by a significant amount then? Though slightly offset again by the removed Poly rooms being on the high end.

I have different numbers than you do. Mine say that Q3 is also largely a bounceback from a sharply declined PRGS in Q2 ($272) from Q1 ($286). http://csimarket.com/stocks/operatingstat.php?code=DIS

The plethora of upcharge events should boost Per Capita Guest Spending (PCGS), which represents money spent at the parks.

The 8% gain in PCGS this quarter is pretty typical since 2011, when Disney started a campaign of aggressive price increases. On the face of it, it sounds like business as usual.

Now that you bring that up. Disney has aggressively raised prices since 2011. Long before NextGen was rolled out. The aggressive increases have nothing to do then with any perceived NextGen failures caused by top management, as frustrated middle management tasked to find price increase and price differentiation opportunities whispers to everybody willing to lend them a listening ear.
Moreover, my impression is that price increases are mellowing down, and are also more and more replaced by the more subtle instrument of price differentiation. But I don't have ready numbers for that.

 

[ParentsOf4]

As room inventory decreases, PRGS increases. Poly's DVC conversion alone should increase PRGS by a significant amount then? Though slightly offset again by the removed Poly rooms being on the high end.

I have different numbers than you do. Mine say that Q3 is also largely a bounceback from a sharply declined PRGS in Q2 ($272) from Q1 ($286). http://csimarket.com/stocks/operatingstat.php?code=DIS

PRGS largely is a function of the season since Disney charges different hotel rates for different times of the year. Consequently, it's difficult to compare PRGS between quarters in the same year.

The following is from Disney's latest 10Q:

Really, the only good way to look at PRGS is year-to-year.

Now that you bring that up. Disney has aggressively raised prices since 2011. Long before NextGen was rolled out. The aggressive increases have nothing to do then with any perceived NextGen failures caused by top management, as frustrated middle management tasked to find price increase and price differentiation opportunities whispers to everybody willing to lend them a listening ear.
Moreover, my impression is that price increases are mellowing down, and are also more and more replaced by the more subtle instrument of price differentiation. But I don't have ready numbers for that.

Yes, recent theme park ticket and Disney Dining Plan price increases indicate Disney has downshifted from 'outrageous' to just 'painful'.

Seriously though, WDW has been pushing through 8% PCGS for over 3 years. In order for MyMagic+ to be considered a success, we're going to need to see a bump in PCGS (indicating MagicBand is succeeding in getting guests to spend more), a bump in attendance (indicating FastPass+'s preplanning is succeeding at keeping guests at WDW theme parks), or higher hotel occupancy (indicating the MyMagic+ advantages provided to onsite guests are encouraging more onsite stays).

Looking at the numbers from the last two quarters, I only see signs of higher hotel occupancy so far, and even this might be partially attributable to generally slower rack rate increases and more 'room only' discounts.

There are signs that WDW price increases have slowed down. So far, MYW base tickets are up 4.5% this year (compared to 7% the previous 3 years) while the Disney Dining Plan is up 4.6%, compared to 20% from the beginning of 2012 to the end of 2013.

 

[Mouse Trap]

If anyone else saw Iger's interview on CNBC, they brought up the question if Disney has been looking into purchasing CNN from Time Warner. They quoted a Wall Street Journal article which apprently stated Disney is the clear frontrunner in such deal especially with their financial firepower.

Of course Iger declined to comment, but he interestingly said they have never commented on a potential acquistion and then was quick to state his decline to comment did not mean they were shopping the deal. I could see CNN being a Disney component, but not sure if I can see a deal happening. EDIT: These comments were primarily directed towards Time Warner as a whole, with some emphasis on CNN.

Also did anyone else notice the "WHEN we add Frozen to the parks"? Obviously Froxen has already been added to the parks, but this little slip was probably a sure fire indicator we'll have a Frozen ride.

 

[Jeffxz]

Are DCL rooms counted in domestic occupancy?

 

[ABQ]

Are DCL rooms counted in domestic occupancy?

That's a very good question. Glancing through @ParentsOf4 's favorite short story, the 10q, I can't tell

 

[GoofGoof]

Are DCL rooms counted in domestic occupancy?

I don't think they are. I believe the hotel numbers as quoted include just Disney hotel rooms plus the rental of DVC rooms.

 

[alphac2005]

Iger quote that evoked a smirk, "we're very pleased with the growing popularity of MyMagic+." I guess it becomes more popular when you force it on your consumer. Laughable corporate double speak. Yes, it's more popular because it's now fully been integrated and nearly essential to use based upon the new rules of the game in Orlando.

@ParentsOf4 , it's notable that Iger seems to keep sliding the MM+ profitability questions to the forthcoming quarter (again). What fans should be interested in is as how the next price jumps are going to be (and soon) as they should be hefty as I'd assume Mr. Iger wants to have those numbers goosed up in Florida to "prove" that MM+ had led to increased profitability in this current quarter even though we know the truth in the numbers. Since February took them out of their standard price increase scheme, I wonder if they'll do the second increase of this fiscal year in August to get those numbers where MM+ looks like it's beginning to recover the investment cost. <COUGH>