Disney CEO Says Disney World Annual Pass Program Could Provide “Flexibility”

If you want to know how The Walt Disney Company is doing as a whole, it’s a good idea to pay attention to its quarterly earnings reports. Four times a year, Disney executives speak to investors and shareholders about the company’s financial achievements and goals, and we often hear updates about what’s coming to the parks and streaming services as well.

Partners Statue

The most recent earnings call was the 2022 Q4 call, during which we learned that Disney lost about $65 million as a result of Hurricane Ian, guest demand for the parks is still often outpacing capacity, and executives are optimistic about what 2023 will bring. We also caught a brief mention of Disney’s annual pass programs that might provide a clue as to what changes we could see for these programs in the future.  

During this quarter’s call, someone asked about the potential for a recession in 2023 and what Disney could do to maintain growth in a slow economy. Specifically, they asked, “If there is a slowing U.S. consumer, what can you do to kind of maintain the revenue growth? […] So, in other words, what can be different this time versus previous downturns?”

Disney World entrance

Disney Senior Executive Vice President and Chief Financial Officer Christine McCarthy responded to the question. She mentioned tools that the company has previously used to encourage demand during slower economic atmospheres, like offering discounts at the parks.

Christine McCarthy ©The Walt Disney Company

She also noted that Disney now has new tools to better measure guest demand, specifically the Park Pass Reservation system. This system can also be used to adjust capacity and thus spread out visitors, preventing too many spikes and lulls in park attendance. McCarthy said, “We manage attendance now. We can track it real time.”

Crowds in EPCOT

After acknowledging those potential tools, McCarthy mentioned one other thing that could change during a recession: Disney’s Annual Pass programs. This could include both the Annual Passholder program at Disney World and the Magic Key Holder program at Disneyland. McCarthy said, “We also have reimagined our annual pass business model. […] And we could also have some more flexibility in using our annual pass program.”

Annual Passholder card

What do her comments mean for the Annual Pass program, and how does that compare to what we’re seeing now? Let’s dive in.

Current State of the Annual Pass Program

Disney World’s Annual Pass program consists of various tiers of passes, each of which has a different price, blockout date schedule, and capacity for passes held at any given time. Most of those tiers have been unavailable for purchase since late 2021, although current passholders can continue to renew any of the 4 tiers.

©Disney

The tiers that are unavailable for new purchases are the Pirate, Sorcerer, and IncrediPass tiers, and the Incredipass is the only one available for people who aren’t Florida residents (although the Sorcerer pass is available to non-Florida residents who are members of the Disney Vacation Club). The lowest tier — the Pixie Pass — is available for new purchases.

Disney World Annual Passholder Popcorn Bucket

Disney fans have been clamoring for sales to resume, but (until now) Disney has been very quiet about the potential for this program to return in full force. Many people have been concerned about whether the program would return at all, especially after a Disney executive implied that annual passholder guests aren’t as profitable, since those visitors tend to spend less money in the parks than other guests.

Annual Passholder Entrance

But the comments from McCarthy provide a hint that things could change soon for this popular program.

What a Recession Could Mean for the Annual Pass Program

With McCarthy’s mention that Disney could “have some more flexibility in using [the] annual pass program,” we can now assume that Disney is still planning to fully bring back this program sometime in the future. It’s clear that executives are talking about how to best use the program, and the start of a recession could make it more likely for the program to return.

Annual Passholder sign

McCarthy also mentioned that the Annual Pass business model has been “reimagined,” which probably refers to previous changes that we saw to both the Disney World Annual Pass Program and the Disneyland Magic Key Holder program. The Disney World program changed quite a bit in August 2021, and we saw several updates to Disneyland’s program in August of this year.

50th Anniversary designs for Annual Passes

However, this “reimagining” could also refer to new changes that Disney has not yet announced — we’ll be watching for any updates to the program.

Welcoming Passholders

So what does it mean that Disney has “more flexibility” in using the Annual Pass program? It sounds like Disney sees this program as a possible tool to help keep consumer demand and park attendance high in the case of a recession. If the economy softens soon (as most experts are predicting it will), Disney may look to Annual Passholders rather than other guests to fill the parks.

Animal Kingdom Entrance

During the recent earnings call, Disney CEO Bob Chapek said that demand for the theme parks has been consistently strong, and the limited availability on the Disney parks’ park pass reservation calendars confirms that statement. However, the upcoming recession could mean lower demand in the future, so Disney must plan for their response if that happens.

Crowds in Hollywood Studios

If demand and guest attendance begin to drop, Disney may rely more on Annual Passholders to fill the parks and provide needed revenue. These guests are loyal fans who consider Disney a staple in their lives, so they’re more likely to visit even during a time of economic recession. Because they don’t have to pay for park tickets, they may feel better about paying for other parts of the vacation, like hotel stays and food. That is revenue that Disney will need especially during the slower times.

Entrance to Magic Kingdom

Disney has indicated that these “super fans” aren’t as financially valuable as other guests at the parks, mainly because Annual Passholders usually stay in the parks for fewer days, buy fewer souvenirs, and often don’t need hotel rooms (if they live close by). Other visitors (especially international visitors) tend to stay longer, buy more food and souvenirs, and pay for hotel stays. However, demand from those other visitors may wane, especially because their Disney vacations are more expensive than the vacations are for Annual Passholders, which means people may hold off on the extra expense.

Annual Pass Magnet

If that happens, Disney could rely more on Annual Passholders and the Park Pass Reservation system to make sure the parks are filled and revenue is acquired. Disney can use that Park Pass Reservation system to manage and track capacity and thus ensure the parks are full.

Crowds in Magic Kingdom

Disney hasn’t yet announced when or if all the Annual Pass sales will resume for Disney World, but we’ll be watching carefully for updates on that front. Stay tuned to DFB for all the latest Disney news!

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Are you a Disney World Annual Passholder? If not, would you buy a pass if sales resume? Let us know in the comments.

The post Disney CEO Says Disney World Annual Pass Program Could Provide “Flexibility” first appeared on the disney food blog.

source https://www.disneyfoodblog.com/2022/11/09/disney-ceo-says-disney-world-annual-pass-program-could-provide-flexibility/

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