Disney Executive Admits Parks Are at Capacity; Attendance Can't Increase Without Expansion

Recently, Walt Disney Company CFO, Hugh Johnston, spoke about the company at the Moffett Nathanson’s Media, Internet & Communications Conference, and he brought something up about park capacity that we found really intriguing.

After talking about seeing Disneyland Paris have a really good moment right now, thanks to the addition of World of Frozen, he turned to talk about the domestic parks and what they’re seeing with capacity right now. According to him, without an expansion, the company can’t focus on increasing attendance at their domestic parks right now, because they’re “at capacity.”

Leading up to the conversation about capacity, Johnston was asked if the company is seeing any change in capacity due to rising gas prices. Johnston’s response was that the company, so far, hasn’t seen any chance in attendance due to rising prices, but he admitted that the company is “not immune to the macros.” He mentioned that if gas were to go all the way up to $8 a gallon, they will expect to see some issues, but “right now, we’re seeing nothing either in the data that we have looking backward or in the bookings that we’re seeing going forward.”

He continued on to say that, once someone has committed to a Disney trip and told the family about it, it’s much harder to back out of or cancel “without some severe repercussions,” so people tend to not do that if they can help it. Johnston was then asked about the balance between attendance growth and pricing, to which Johnston replied that “it’s not going to be one or the other in over any 3- or 4-year time frame. It’s going to be both. And necessarily, it needs to be both.”

Johnston continued, saying that when you’ve got a big fixed asset like the Walt Disney Company does (the parks), they use promotional activities to make sure the parks are always full (for example, Cool KIDS’ SUMMER in Disney World this summer). Due to that, “capacity utilization on these parks is really, really high almost all the time,” thanks to the use of discounts, promotions, etc.

However, here comes the kicker. Johnston continued on to say, “So we don’t necessarily — without expansion, we don’t necessarily have the ability to grow attendance massively because it’s already filled up.” He mentioned that they could pack more people into the parks, but then guest experience declines, which is both bad for the brand, and the company already doesn’t think it’s a good idea.

Finally, he mentioned that with so many new attractions opening soon, it’s likely that they’ll see a higher demand and therefore attendance without needing to supply discounts or additional deals. Does that means as we get closer to opening dates for the new Monsters, Inc. Land in Disney’s Hollywood Studios, Tropical Americas in Disney’s Animal Kingdom, and/or Villains Land and Piston Peak in Magic Kingdom, we won’t see as many discounts? It’s possible, but there’s no way to know for sure just yet.