News TEA/AECOM 2018 Theme Index Released

[winstongator]

Again. That 31,000 average was never in the park at the same time.

I agree. Before TSL opened, when everyone was saying that there was nothing to do at DHS, for a stretch, it was my family's most frequently visited parks. We never did full days there, but it was great for a morning or evening mixed with another park.

I don’t know if first swipe is the most accurate measure. There have been many days where I’ve done a very quick rope drop at either DHS or Animal Kingdom but then spent more time at either Epcot (for festivals) or the MK. It would be interesting to see first swipe attendance, any time in day swipe, and estimated park attendance through the day numbers. It would be easy to spot a festival weekend day at Epcot with the attendance spike at 11.

 

[donsullivan]

I agree. Before TSL opened, when everyone was saying that there was nothing to do at DHS, for a stretch, it was my family's most frequently visited parks. We never did full days there, but it was great for a morning or evening mixed with another park.

I don’t know if first swipe is the most accurate measure. There have been many days where I’ve done a very quick rope drop at either DHS or Animal Kingdom but then spent more time at either Epcot (for festivals) or the MK. It would be interesting to see first swipe attendance, any time in day swipe, and estimated park attendance through the day numbers. It would be easy to spot a festival weekend day at Epcot with the attendance spike at 11.

As it's been described to me, the whole first-tap thing comes out of Disney's revenue recognition practices- it was never a method of counting guests in the park. When a guest buys a ticket, Disney cannot record even one cent of that sale as revenue. From an accounting standpoint, it's a lot like a gift card where it is recorded as deferred revenue and can only be recorded as actual revenue when it is redeemed for purchase which in this case is admission to a park. This is a lot of the reason for all the changes with expiration dates and things on tickets in recent years. Whichever park the admission entitlement is redeemed at first during any given day, that is the park that records the revenue from that admission entitlement. Any other park that you might visit during that same day receives no revenue from your tapping for admission.

We know Disney records admission counts in each and every park all the time as part of their capacity and staffing management planning. However, they do not release that information publicly. The most they ever share is a quarterly percentage change vs the previous year and historically, that is pretty close to the TEA numbers.

 

[RollerCoaster]

The one figure that doesn't make sense is Disney Hollywood studios. How can that small park do an average of 31000 guests a day and not go into near daily phase closure?

I have for years frequently asked park executives what they think of this report and how accurate do they think the numbers are. The general consensus is the numbers are very accurate.

There have even been a few instances where parks have publicly disputed the figures when they were grossly misreported and made a public correction. This is just further evidence to back up the accuracy and how much this report is valued.

Attendance figures are not released by most parks, however, many who work in management are loose lipped about the numbers when asked. Park operators do frequently release figures in the form of percentages on how much attendance is up or down. Furthermore, actual attendance numbers and projections are frequently shared with industry groups and associations, business partners, city leaders, and others. They are not guarded like some may believe. The numbers are there to be found for someone who is looking.

I see no issue with the numbers reported for Disney Hollywood Studios. The park has plenty of attractions and large capacity shows to accommodate an average daily attendance of 31,000. Fantasmic alone has a viewing capacity of 10,900 per show! In 1999, 20 years ago, the park was estimated to have had 8.9 million visitors or a daily average of 23,836. Magic Kingdom that year was estimated to have had 15.2 million. Today, more than 20 million visit Magic Kingdom, so the growth at the Studios park would be in line with the other parks.

Guests come and go throughout the day and this is exactly how attendance can exceed park capacity. And while I despise FastPass+, Disney management has publicly stated that it has helped them increase park capacity, by better utilizing capacity at attractions that had less demand.

 

[RollerCoaster]

As it's been described to me, the whole first-tap thing comes out of Disney's revenue recognition practices- it was never a method of counting guests in the park. When a guest buys a ticket, Disney cannot record even one cent of that sale as revenue. From an accounting standpoint, it's a lot like a gift card where it is recorded as deferred revenue and can only be recorded as actual revenue when it is redeemed for purchase which in this case is admission to a park. This is a lot of the reason for all the changes with expiration dates and things on tickets in recent years. Whichever park the admission entitlement is redeemed at first during any given day, that is the park that records the revenue from that admission entitlement. Any other park that you might visit during that same day receives no revenue from your tapping for admission.

I'd be willing to bet that is not how Disney recognizes revenue on a per park basis. If you buy a one-day, one-park ticket it makes sense that the revenue would be reported to the park where it is used for budget planning and financial reporting purposes. However, a park hopper ticket is not a one-day, one-park ticket. It is a ticket that entitles the holder to visit one or all of the parks in a given day.

If budgets were planned on a resort wide basis then ticket revenue would just be recorded in total. However, I can't say for sure, but I really doubt that's how things work. I'd want to see how the various business units within the resort perform. Therefore if a park hopper ticket is scanned at my admission gate then I'm going to want a portion of that revenue regardless of where that person started their day. My guess is the per day value of the ticket is divided amongst the parks the person attends.

Some of you may be familiar with Vail Resorts' EPIC pass product. It's a season pass product for ski areas, but has a lot of similarities to a park hopper ticket. How the EPIC pass works is that there is a value assigned to each property for each day it is scanned. If an EPIC pass is scanned at a partner resort (not owned by Vail) that resort is paid money based on the agreed upon amount for each day a pass is scanned. For Vail's own properties those scans are also worth month. That's how the individual business units within Vail account for revenue for a shared product.

My point in bringing this up is that it's very likely that Disney uses similar practices for multi-day tickets, park hopping tickets and annual passes. Since everything is owned by Disney the number could easily be accounted for as a whole, but for making better business decisions it should be attributed to the various business units.

 

[Absimilliard]

I have for years frequently asked park executives what they think of this report and how accurate do they think the numbers are. The general consensus is the numbers are very accurate.

There have even been a few instances where parks have publicly disputed the figures when they were grossly misreported and made a public correction. This is just further evidence to back up the accuracy and how much this report is valued.

Attendance figures are not released by most parks, however, many who work in management are loose lipped about the numbers when asked. Park operators do frequently release figures in the form of percentages on how much attendance is up or down. Furthermore, actual attendance numbers and projections are frequently shared with industry groups and associations, business partners, city leaders, and others. They are not guarded like some may believe. The numbers are there to be found for someone who is looking.

I see no issue with the numbers reported for Disney Hollywood Studios. The park has plenty of attractions and large capacity shows to accommodate an average daily attendance of 31,000. Fantasmic alone has a viewing capacity of 10,900 per show! In 1999, 20 years ago, the park was estimated to have had 8.9 million visitors or a daily average of 23,836. Magic Kingdom that year was estimated to have had 15.2 million. Today, more than 20 million visit Magic Kingdom, so the growth at the Studios park would be in line with the other parks.

Guests come and go throughout the day and this is exactly how attendance can exceed park capacity. And while I despise FastPass+, Disney management has publicly stated that it has helped them increase park capacity, by better utilizing capacity at attractions that had less demand.

On the other hand, someone quoted to me a lower average number for Disney Hollywood Studios and it was a bit lower than the TEA numbers. For Knotts, TEA claim they did 4.1 million, which is in opposite to what Cedar Fair quoted around 6 million for the park in a recent earning call.

Looking at the various numbers, I think how they calculate it is to take the public figures released by companies and then divide it among the various parks based on historical trends. Oriental Land Co. released an attendance figure of 32.5 million guests, which is a record for them, for both parks. They divided it among both parks this year and came up with 17.9 million for TDL and 14.6 million for TDS. Last year, they had a very accurate hint to the actual figure for Tokyo DisneySea since Universal Studios Japan went public with their record attendance; for the first time ever, they beat Tokyo DisneySea, which placed it under 14.6 million, the attendance figure in 2017 for USJ. Unfortunately, with Comcast taking control of the park, Comcast won't release any more real number for them unless they beat Tokyo DisneySea. The same thing happened at Disneyland Paris since its gone private and the Walt Disney Company/Prince Al-Waleed won't release financial numbers and attendance anymore.

Hong Kong Disneyland and Ocean Park release real numbers since they are part of the Hong Kong government.

Edit: here is the actual quote from Cedar Fair on the topic of Knott's attendance:

Richard A. Zimmerman -- President & Chief Executive Officer

If I go back to when Universal opened Harry Potter, Knott's had an outstanding year in that year. We were prepared for it. But when I say we were prepared for it, we go into each year and Knott's is the best example. We are a house of brands and we respect those brands. We understand the heritage that those brands have in the marketplace and Knott's is our best example in Southern California, really going back and really leveraging the brand that exists in that market.

So we've seen significant growth since that time, but the year that the major expansion happen at Universal, Knott's had a tremendous year. When you look at the tourism market in Southern California, we referenced on our call in February. That's 49 million tourists coming in each year. Anything that brings more people to the market, we think is good for Knott's and we're excited to have more tourists come to Southern California marketplace. Knott's is coming off a year where they did over just over 6 million people last year. Tremendously healthy franchise. We're really proud of Jon Storbeck and his team and the guest experience they give out there. So we like the momentum and we think there's opportunity.

 

[totchos]

I honestly thought Volcano Bay would have beaten out the Disney Waterparks in attendance, especially being that its so new and you always hear its filled to capacity.

 

[ThemeParkTraveller]

Oriental Land Co. released an attendance figure of 32.5 million guests, which is a record for them, for both parks. They divided it among both parks this year and came up with 17.9 million for TDL and 14.6 million for TDS. Last year, they had a very accurate hint to the actual figure for Tokyo DisneySea since Universal Studios Japan went public with their record attendance; for the first time ever, they beat Tokyo DisneySea, which placed it under 14.6 million, the attendance figure in 2017 for USJ. Unfortunately, with Comcast taking control of the park, Comcast won't release any more real number for them unless they beat Tokyo DisneySea.

USJ has actually beaten TDS in attendance for 3 consecutive years (2015, 2016, 2017). 2018 finally saw TDS take back the #4 worldwide spot due to a combination of the 35th Anniversary boost and a general decline in tourism in Osaka due to Typhoon Jebi shutting down its international airport for an extended period of time (17 days until full functionality was restored).

It will be interesting to see the race between these two parks in the upcoming years. USJ is opening Super Nintendo World next year, but TDR will have the Olympics boost and also Soarin' and Beauty and the Beast as major additions to the resort.

 

[winstongator]

As it's been described to me, the whole first-tap thing comes out of Disney's revenue recognition practices- it was never a method of counting guests in the park. When a guest buys a ticket, Disney cannot record even one cent of that sale as revenue. From an accounting standpoint, it's a lot like a gift card where it is recorded as deferred revenue and can only be recorded as actual revenue when it is redeemed for purchase which in this case is admission to a park. This is a lot of the reason for all the changes with expiration dates and things on tickets in recent years. Whichever park the admission entitlement is redeemed at first during any given day, that is the park that records the revenue from that admission entitlement. Any other park that you might visit during that same day receives no revenue from your tapping for admission.

We know Disney records admission counts in each and every park all the time as part of their capacity and staffing management planning. However, they do not release that information publicly. The most they ever share is a quarterly percentage change vs the previous year and historically, that is pretty close to the TEA numbers.

Wow. That sounds like some dystopian corporate accounting. I once had a product-line director trying to convince me to work on a project that another product-line was already working on. His reply, "their development doesn't help my bottom line". I replied, "there's only one real bottom line. The rest are accounting constructs". That guy also asked me how bad the first harmonic distortion was on an amplifier. My boss and I looked at each other dumbfounded - the first harmonic isn't distortion, it's what you want.

It's interesting because for WDW the revenues blend, but the costs are definitely park specific. Capital expenses at one park can help revenue at other parks though.

How does my annual pass revenue get divided?

 

[donsullivan]

Wow. That sounds like some dystopian corporate accounting. I once had a product-line director trying to convince me to work on a project that another product-line was already working on. His reply, "their development doesn't help my bottom line". I replied, "there's only one real bottom line. The rest are accounting constructs". That guy also asked me how bad the first harmonic distortion was on an amplifier. My boss and I looked at each other dumbfounded - the first harmonic isn't distortion, it's what you want.

It's interesting because for WDW the revenues blend, but the costs are definitely park specific. Capital expenses at one park can help revenue at other parks though.

How does my annual pass revenue get divided?

it's not really unique to Disney but standard GAAP (Generally Accepted Accounting Practices) accounting rules that all companies use. Most any purchase where the actual good or service is not delivered when the purchase transaction takes place uses that deferred revenue model. The most common variation that everyone gets used to is Gift Cards. It is these rules that resulted in all the changes to policies of expiration dates, etc.. Having outstanding deferred revenue for decades for pass days people never used gets totally and completely unmanageable at that scale.

In 2014 a new concept got introduced in to the accounting rules called Breakage Revenue which set out concrete guidelines for the company being able to recognize the unused balance on something like this. In the Disney admission example, if you bought a 4 day ticket with a 14 day expiration and only used 3 days, Disney can recognize the unused portion of the ticket value the day after the expiration date while in the past they just had to sit on the deferred revenue forever in case the ticket might come back around for use at a later time. These new accounting rules are what triggered the introduction of expiration dates. This link provides a lot of detail on the fine nuances of the new rules.

The bottom line is that despite the typical rants of Disney ripping people off, when it comes to these sorts of things they are just following the normal GAAP accounting rules that every company is required to follow and those rules have changed over time.

 

[Brainleech419]

Lets look at possible themepark mergers. I say start with the reality that Merlin, Disney and Universal can't possibly merge. Then we should eliminate the Chinese companies. That leaves 4 possible companies in the top 10. Six Flags, Cedar Fair, Seaworld and Parques Reunidos. Then there is Herschend Family Entertainment, that owns Silver Dollar City and is partnered with Dolly Parton's Dollywood.

Universal should consider going after Cedar Fair and Disney should go after Seaworld. Cedar Fair would give Universal a second park in the LA market and many other regional parks that could feed into their destination resorts. Seaworld makes sense for Disney for several reasons. They need immediate capacity in Orlando and Seaworld would help even though it would need lots of investments over the next few years. They would also gain a Virginia park they can use some of their Disney's America plans for rides and attractions. As for Tampa and San Antonio they could sell them to Six Flags. Finally,San Diego could be kept or sold as there are reasons for both.

i think it would make more sense for ceder fair and the Herschend to buy off some of the six flags parks/ Seaworld parks then either disney or uni getting involved in any such merger

 

[winstongator]

it's not really unique to Disney but standard GAAP (Generally Accepted Accounting Practices) accounting rules that all companies use. Most any purchase where the actual good or service is not delivered when the purchase transaction takes place uses that deferred revenue model. The most common variation that everyone gets used to is Gift Cards. It is these rules that resulted in all the changes to policies of expiration dates, etc.. Having outstanding deferred revenue for decades for pass days people never used gets totally and completely unmanageable at that scale.

In 2014 a new concept got introduced in to the accounting rules called Breakage Revenue which set out concrete guidelines for the company being able to recognize the unused balance on something like this. In the Disney admission example, if you bought a 4 day ticket with a 14 day expiration and only used 3 days, Disney can recognize the unused portion of the ticket value the day after the expiration date while in the past they just had to sit on the deferred revenue forever in case the ticket might come back around for use at a later time. These new accounting rules are what triggered the introduction of expiration dates. This link provides a lot of detail on the fine nuances of the new rules.

The bottom line is that despite the typical rants of Disney ripping people off, when it comes to these sorts of things they are just following the normal GAAP accounting rules that every company is required to follow and those rules have changed over time.

I should not have used the that pronoun. The gift-card GAAP measure is fine. It's the within company, among departments fighting to recognize revenue that bothered me.

 

[seascape]

I think it would make more sense for ceder fair and the Herschend to buy off some of the six flags parks/ Seaworld parks then either disney or uni getting involved in any such merger

Cedar Fair and Herschend are more likely takeover targets than Six Flags. It was not that long ago that Cedar Fair was actually bigger than Six Flags but now Six Flags is drawing just over 32 million and Cedar Fair is just under 26 million and the market cap is 4.3 billion to 2.8 billion. Even Seaworld is just about to pass Cedar Fair in market cap as it is now 2.6 billion and attendance growing much faster than either Six Flags or Cedar Fair.

Now, getting back to Universal. They have been number 3 for years but next year will drop to number 4. In a few years Fantawild and Chimelong will also pass them. In fact if they don't do something other than the new park in Orlando and Beijing, Six Flags will pass then as they are only 18 million behind in total attendance, have multiple parks being built in China, buying up small parks in the US and have other projects being built or planned around the world. The problem Universal faces is their parent Comcast is deeply in debt and needs to spend billions to compete with 5G. But, it Universal wants to be a top player in the themepark industry it needs to expand or it can stay as a wonderful vacation resort with couple of locations but an overall minor player in the total industry in 7th place or possibly lower.

No matter how great Universal Florida and or Hollywood get they will never get near Disney's attendance. The proof is Universal Hollywood's pathetic 1% increase in attendance despite having massively expanded their park. Disneyland and California Adventure increase their attendance 2% and 3% respectively and SWGE was not open. Both parks will grow faster in 2019 and 2020 that Universal and In Florida all 4 Disney Parks will continue to grow faster than Universal's 2 parks in 2019, 2020 as nd 2021. By 2021 Disney will be back over 75% of the Orlando market and Universal in the teens since Seaworld and Merlin are also growing faster than Universal. Universal has a nice themepark business but no matter what people here want to think, they are not the major player some wish.

 

[RSoxNo1]

I honestly thought Volcano Bay would have beaten out the Disney Waterparks in attendance, especially being that its so new and you always hear its filled to capacity.

It's capacity is small.

 

[RollerCoaster]

Knott's is coming off a year where they did over just over 6 million people last year. Tremendously healthy franchise. We're really proud of Jon Storbeck and his team and the guest experience they give out there. So we like the momentum and we think there's opportunity.

The number included the waterpark and Halloween Haunt attendance.

 

[RollerCoaster]

Now, getting back to Universal. They have been number 3 for years but next year will drop to number 4. In a few years Fantawild and Chimelong will also pass them. In fact if they don't do something other than the new park in Orlando and Beijing, Six Flags will pass then as they are only 18 million behind in total attendance, have multiple parks being built in China, buying up small parks in the US and have other projects being built or planned around the world.

No matter how great Universal Florida and or Hollywood get they will never get near Disney's attendance. The proof is Universal Hollywood's pathetic 1% increase in attendance despite having massively expanded their park.

Attendance is only one figure. The figure that really matters is revenue per guest. Universal slaughters Six Flags with their revenue and will never be considered a small player in the industry. Who care if Six Flags' total attendance exceeds Universal. It also really doesn't matter if attendance at Universal is less than some operators in China either. It's totally irrelevant when you're looking at the performance of the parks.

As for Universal Studios Hollywood attendance was reported to be up 4% in 2015, 13.9% in 2016, and another 12% in 2017. You're calling an additional 1% pathetic? The park expansion was in 2016, not 2018. To have grown attendance as much as they did over 2015-2017 and now be maintaining it with another slight bump is impressive!

 

[seascape]

Attendance is only one figure. The figure that really matters is revenue per guest. Universal slaughters Six Flags with their revenue and will never be considered a small player in the industry. Who care if Six Flags' total attendance exceeds Universal. It also really doesn't matter if attendance at Universal is less than some operators in China either. It's totally irrelevant when you're looking at the performance of the parks.

As for Universal Studios Hollywood attendance was reported to be up 4% in 2015, 13.9% in 2016, and another 12% in 2017. You're calling an additional 1% pathetic? The park expansion was in 2016, not 2018. To have grown attendance as much as they did over 2015-2017 and now be maintaining it with another slight bump is impressive!

Disney's increase in attendance that last 2 years is 16.9 million. Universal had an increase of 2.7 million. Six Flags increased 2.9 million. Now where things get intense is how far the Chineese have come Oct Parks was 15.1 million behind Universal in 2016 but only 718,000 behind in 2018. You can continue to say China does not matter but both Disney and Universal know it does. That is also why Six Flags is a major threat to Universal. They have the advantage of size and negotiation power with ride manufacturers. Six Flags may never have the quality of Disney or Universal but as an investor I expect their profits and dividends to increase more and faster than Comcast's. Finally does Universal want to continue in business they are no longer a leader in? Brian Roberts does not like being number 2 in anything and in themeparks Universal will not even be in the top 5. The parks should be spun off or sold.

 

[RollerCoaster]

Finally does Universal want to continue in business they are no longer a leader in? Brian Roberts does not like being number 2 in anything and in themeparks Universal will not even be in the top 5. The parks should be spun off or sold.

Six Flags' annual capital improvement budget is half of what Universal typically spends on a single new attraction.

To argue that Universal is not a leader in the theme park industry is insanity. They've never been ahead of Disney in terms of attendance, but yet their gate pricing and revenue per guest is right on par with them. When Comcast acquired NBC-Universal there was immediate speculation that they would not like the theme park business because it's capital intensive and sell the parks. Well guess what? Comcast instead loves the theme parks and resorts. They've done just the opposite by heavily investing in the parks and resorts. There is no logical argument to sell the parks. Your obsession with attendance and who are the leaders in that category is meaningless.

 

[seascape]

Six Flags' annual capital improvement budget is half of what Universal typically spends on a single new attraction.

To argue that Universal is not a leader in the theme park industry is insanity. They've never been ahead of Disney in terms of attendance, but yet their gate pricing and revenue per guest is right on par with them. When Comcast acquired NBC-Universal there was immediate speculation that they would not like the theme park business because it's capital intensive and sell the parks. Well guess what? Comcast instead loves the theme parks and resorts. They've done just the opposite by heavily investing in the parks and resorts. There is no logical argument to sell the parks. Your obsession with attendance and who are the leaders in that category is meaningless.

You can claim attendance does not matter but it does. Every year themepark fans can't wait to read the report. The fans who love that their favorite themepark company did well cheer and those whose company did poorly say they don't matter. The fact is the report does matter and is very interesting in seeing where the industry is going. It is clear in analyzing the numbers one can see who is growing and by how much. Good attendance numbers depend on good new attractions. Attendance is the grade for the new attractions. If Disneyland and Hollywood Studios don't show major increased this year and in 2020 SWGE will be a failure. If Universal doesn't get an increase from the new HP rollercoaster it will be a failure.