The Walt Disney Co.'s first fiscal quarter of 2010, which ended Jan. 2, ended nearly flat with the previous year. Disney reported net earnings of $844 million, although overall revenue rose 1 percent to $9.74 billion. The overall numbers beat analysts’ predictions, particularly after two losing quarters. Disney’s modest improvements were largely due to its television and interactive divisions and the cost-cutting measures of the film studio and domestic home entertainment units.

Disney’s performance, particularly its parks and resorts division, is considered a sign of consumer confidence in the economy. In this area Disney continues to struggle. Revenue for Walt Disney Parks and Resorts remained flat, at $2.66 billion, while operating income decreased 2 percent, to $375 million.

“At this point, we have limited visibility regarding the economy and its impact on our businesses,” President and Chief Executive Officer Bob Iger said during a live Webcast conference call with investors. “Thus we will continue to focus on controlling costs while creating great content and experiences and building our brands.”

Walt Disney Parks and Resorts see increases in attendance but less guest spending
Profits for the theme parks and resorts were affected by numerous factors. Disneyland Paris experienced decreases in guest attendance. Walt Disney World’s attendance figures remained flat with those of a year ago, down 1 percent, while Disneyland experienced increased attendance of 15 percent. Combined, attendance at the U.S. theme parks increased 4 percent. All three theme parks experienced drops in resort occupancy and spending, as well as decreases in guest spending in food, beverages, and merchandising.

Also affecting profits were Disney’s heavy use of discounted tickets and savings on accommodations, as well as special promotions for dining and vacation packages, for the U.S. theme parks. These offers helped Disney maintain attendance levels but contributed to lower average guest spending and ticket pricing.

What does the first-quarter performance of Walt Disney Parks and Resorts mean for Disney theme park guests?
Disney officials indicated they will eventually reduce the number of discounts and promotions, but stopped short of setting a timeline or establishing numbers.

“Advertisers and customers are making their buying decisions at the last minute,” said Senior Executive VP and CFO Jay Rasulo, which creates challenges with regards to long-term planning. Rasulo noted Disney will likely alter discounts and promotions slowly and that current policies concerning offers would not undergo significant changes. “We look at every quarter as we can, gauge the response to the consumer, and act accordingly.”

Disney referenced a change to an earlier Walt Disney World Resort promotion that offered seven nights’ stay of the price of four. Now the promotion offers seven nights for the price of five for some rooms.

To encourage guests to continue traveling to the U.S. theme parks, with or without heavy discounts and promotions, Walt Disney World Resort's Magic Kingdom and Disneyland Resort's California Adventure theme parks are undergoing major expansions that are expected to attract visitors.

For travelers planning to visit a Disney theme park in the near future, the first quarter report means that discounts and promotions will probably be available for the near future. But that can be expected to change as the economy improves.

examiner.com