Disney is pinpointing key “levers” to combat the effects of the recession as theme parks falter

Disney is pinpointing key “levers” to combat the effects of the recession as theme parks falter

Disney (DIS) laid out the key levers it can pull to combat a potential recession – as the media giant’s theme park business showed signs of weakness in the fourth quarter.

On the conference call following the disappointing results, Disney CFO Christine McCarthy noted that the company has tools, new and old, that it can use to keep its parking business afloat should consumers pull back on their spending.

According to the executive, one of the tools includes discounting — something McCarthy has used in the past as an “effective lever for yield management.” Still, she said the company won’t take advantage of rebates to the extent it did during the last recession in 2009.

Christine McCarthy, Senior Executive Vice President and Chief Financial Officer, The Walt Disney Company smiles as she speaks during the Milken Institute's 22nd Annual Global Conference in Beverly Hills, California, U.S. on April 29, 2019.  REUTERS/Mike Blake

Christine McCarthy, Senior Executive Vice President and Chief Financial Officer, The Walt Disney Company smiles as she speaks during the Milken Institute’s 22nd Annual Global Conference in Beverly Hills, California, U.S. on April 29, 2019. REUTERS/Mike Blake

Recent advances include an updated reservations system that manages and tracks attendance, allowing the company greater flexibility to make adjustments in real time.

She added that a seasonal tiered pricing structure coupled with a reimagined business model for annual passes, as well as technological advances on the cost side (mobile ordering, contactless check-in) contribute to this flexibility.

Noting that Disney permanently eliminated a significant portion of operating costs at the parks during the pandemic, McCarthy told investors the move “now better positions us as we enter an uncertain economic environment.”

The company stressed that going forward it will actively evaluate costs and look for efficiencies to better streamline its operations.

Park operations are falling short of expectations amid recession fears

Disney’s theme parks, which quickly recovered from COVID amid increased attractions, price hikes and updated technologies like the Genie+ app, fell short of expectations in the quarter as recession fears weighed on consumer demand.

Revenue from the company’s parks, experiences and consumer products division was $7.43 billion (vs. $7.59 billion estimate) with operating revenue reaching $1.51 billion (vs $1.9 billion). 19 logs. The company said it has “no reopening date visibility” for the Shanghai location.

Despite the failure, McCarthy said the media giant expects a “strong” holiday season at the parks in the first quarter of 2023.

Alexandra is a senior entertainment and media reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com

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