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$20 Says These Price Hikes Won’t Hurt Disney Stock

6 views - published on June 8th, 2013 in Disney News tagged , , , ,

If we were formulation on holding a outing to any one of Disney‘s (NYSE: DIS  ) resorts this summer, ready to bombard out a bit some-more for a privilege: Earlier this week, Disney lifted a prices for a accumulation of a thesis parks, with increases trimming from 5% to scarcely 10%.

Disney stock, sleeping beauty castle

Disney’s Sleeping Beauty Castle. Source: Wikimedia Commons.

Predictably, consumers and media outlets comparison have cried out in protest, wondering how Disney can get divided with such a blatant nickel-and-dime approach.

That raises a doubt for investors: Will this cost travel negatively impact Disney stock?

It’s usually twenty bucks
An adult day-pass to Disneyland or California Adventure, for example, will now cost we 5 bucks some-more during a whopping $92. For children ages 3 to 9, a day-pass also increasing $5 to $86. Disney also implemented identical cost increases for Disney World as good as for a many some-more costly “premier” and annual passports, and even jacked adult a cost of parking passes by $1 to $16.

But let’s be honest here. While this means a standard family of 4 like my possess (with dual kids and dual adults) contingency now flare out another $20 only to travel by a gates during Disneyland, does anyone really believe a singular Andrew Jackson will break a solve to give a kids that experience?

After all, what’s another twenty bucks when many people have already quiescent themselves to a fact they’ll expected be spending hundreds, if not thousands, of dollars on their Disney-enabled vacations?

I’m (still) going to Disneyland!
What’s more, Disney has predictably lifted acknowledgment prices annually in a same conform for some-more than a decade, though that didn’t stop Disney batch from hitting an all-time high final month, interjection mostly to clever thesis park attendance, that gathering a 73% year-over-year handling income benefit for a segment.

In addition, as associate dope Rick Munarriz pointed out, Disney is holding a small reduction feverishness this year interjection to a fact that both Comcast‘s (NASDAQ: CMCSK  ) Universal Orlando and SeaWorld  (NYSE: SEAS  )  only only finished lifting prices for their possess particular Florida parks.

The bigger picture
But while a Universal and SeaWorld parks might really good suffer a identical turn of consumer seductiveness as Disney’s attractions, it’s tough to kick Disney’s extent and altogether intensity from a broader investment standpoint.

SeaWorld, for a part, now trades during a abounding 38 times final year’s earnings. That’s a poignant reward to a cost for possibly Disney batch or Comcast, that trade with many some-more reasonable price-to-earnings ratios of 19.1 and 16.4, respectively. Additionally, while SeaWorld does work 11 U.S. thesis parks, that means it a ability to support merchandising opportunities and a comparatively immature Media Enterprises segment, a freshly IPO’d company positively can’t exaggerate a same widely diversified operations employed by party giants like Disney and Comcast.

To be sure, Disney and Comcast any work their possess huge wire radio network businesses as good — though those segments will continue to face increasingly heated foe as streaming competitors like Netflix and Amazon Prime plan to adult a ante with more of their possess strange programming in a entrance years.

That said, keep in mind that Comcast recently took home a neglected respect of being voted a third-worst consumer-facing company in America, as told by a folks during Consumerist.com.

Disney, on a other hand, has been delighting consumers interjection to a massive library of characters from Disney Studios, Marvel Entertainment, Pixar, and, interjection to a latest acquisition, Lucasfilm. Once Disney is finished during a box office, it can interpret that success to a radio networks and to merchandising with a Consumer Products division, a latter of that grew income final entertain by 35% year over year.

Finally, remember that Disney can also sell a sell during — we guessed it — a mixed thesis parks, a acknowledgment for that those millions on millions of vehement consumers should have no qualms profitable some-more for.

In a end, that’s because we sojourn assured Disney batch should have no problems stability to set new record highs for a foreseeable future.