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.
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It is not true that DVC can purchase annual passes at the moment. No new passes are available other than for FL residents.
Annual passholders don’t stay in the park because they live close is not actually true. I have tried several times to get reservations during off times and can’t get them under the passholder system. When I could then I couldn’t get park tickets for those days. It’s been frustrating to Have family come and try to meet them and not be able to get either reservations or park tickets. I seriously thought about letting my pass go this year out of shear frustration
I would love to resume being an Annual Passholder as ours expired and it was a month longer than eligible to renew so I couldn’t purchase a newer more expensive Incredipass when they paused them in November 2021. We are DVC and contrary to Chapek ‘s comments about Passholders not spending as much in parks, he is very mistaken. We actually spend just as much as we would go from Pennsylvania numerous times per year to the parks and eat in the parks at too. Now we go to actual parks once per year, if we go to DVC to spend points we eat outside parks as we drive so NOW we spend less at WDW each stay at a DVC resort.
My thought as to how Disney could modify the Annual Passes is to replace them with a pass that would give the purchaser 12 or 15 days of one park admission for each $1000.00 (USD) that they spend, with the caveat that they still need to make park pass reservations. These days would need to be used within 1 calendar year of the first day that the pass is used and 1.5 years from when it is purchased.
Park hopping, water parks, etc. could be added on for an additional price.
Discounts and other perks would be up to Disney, obviously.
Being DVC & Annual passholders we probably spend more in the parks. We love doing the special events & the tours. The one time visitor doesn’t normally do that. We probably spend more than most. In the last 12 months we have been there 4 times from PA.
My wife and I had our honeymoon at WDW, 1977, my daughter was married and honeymooned at WDW , 2006. We have visited WDW so many times over the years, I know more history of the place than the majority of the cast members! We are DVC, both my daughter and another son are DVC. We would love to be able to buy Annual Passes again. DVC members are the true fans of WDW, own a piece of WDW , yet are denied the ability to buy an Annual Pass. If I had known this years ago, I would never have purchased into the DVC membership. If asked , I tell any potential buyer to beware! I have read on other blogs where DVC members are upset and may sell their
My husband, myself, and my 3 kids are DVC members and would usually buy annual passes. I recent the fact that Chapek thinks that we spend less then other guests when we come to Disney. We are from NJ and my husband and I would come at least twice a year with our annual pass and my son and his family would also. Now with the park reservation system and not being able to buy annual passes, no fast pass and Magical Express we will come once every 2 years and find other places to go. If we do come to Disney we will stay at our resort and go to Universal. Good going Mr. Chapek you and your CFO you have managed to ruin the magic of Disney.
I am from Canada and if the annual pass was available to me I would get it. When we stay we stay on site and in a moderate resort. Our trips are usually 10-12 days. I am going the end of this month and again in April
Since the blatant restriction of the Annual Pass Program (choosing $ over all), I can’t unsee how Disney “uses” guests. I almost feel insulted that they think myself, a former Passholder who didn’t purchase before the 2021 cut-off, would be so quick to come back around in a recession and be ready to be used in Disney’s moment of need. I say “almost feel insulted” because I choose not to, instead reading between the lines of Disney’s abusive-like tactics and saying, “peace out.” I used to visit Disney property at least twice per year but became a local in 2020, attending the parks several times during the pandemic. Since that time, I’ve gone from Disney super fan to disillusioned Disney fan to observer of Disney to now, non-interested party. Disney’s greed has cured me of that impulse I’m sure many Disney fans have to keep coming back or face the fear of missing out (FOMO). Two years later, I say, “Thank you for your service, Disney.” The darkness of Disney greed has somehow sparked the light of truth within me, and I can now move on to greener pastures!
My wife and I were annual pass holders. When WDW was to close for the pandemic, we had to leave. Just before that my wife’s mother fell at the Saratoga Spring and was hospitalized. (She was 88 yrs old). My wife and I have had to take care of her, moving her from Buffalo to Massachusetts. During her illness we had to let our annual passes laps.
This month my wife and I are going to go to Disney. Staying in the tree house resorts. To give my wife a break from being a caregiver.
However come the end of January 2023 we have reservations at the Polynesian staying in the bungalows for 3 weeks. Bringing her back to WDW. (Sure would be great to have our annual passes back.
With this stay we’ll be having caregiver brought in to give my wife and I some time to enjoy the PARKS.
We normally go to WDW 3 – 4 time each year and stay anywhere from 5 -10 days each time enjoying the parks and other tours and specials put on by disney.
Our family members have continued to be Annual Passholders and will continue to do so into the future. Having an Annual Pass ALLOWS us to SPEND MORE MONEY in the parks AND because we live 3.5 hours away, it gives us more money as well to stay ON PROPERTY!!!!! For example, in August, my ex-husband and I went there for 4 days, comforting each other on the losses of our spouses to cancer. We stayed at the Animal Kingdom Lodge, overlooking the savannah for 4 days. We ate in 5 different restaurants, including California Grill at the Contemporary! We spent money on purchases for our 7 grandchildren and on things for ourselves. It is not fair to say that Passholders don’t spend nearly as much as non-Passholders! Yes, we have the advantage of saving $145 per day (with park hopper), but we still spend rather large amounts of money in the parks. As a matter of interest, on a visit to the parks again two weeks ago, we saw MANY families who were from out of state that were actually carrying packed snacks and lunches for their family members in an effort to save money in not purchasing food within the parks! I think that Chapek and his buddies need to get out INTO THE PARKS and talk to those of us who are paying their salaries! I think that they would be surprised at who is actually spending the money!
Frustrating that AP “spend less” (not worth our welcome) but can be relied upon to prop up Paycheck’s salary during a “soft economy” when “regular guests” pause travel.
As DVC members, we were not allowed to renew our passes because we missed the 30 day grace period by one day! Disney simply would not let us renew. Since then we have become Universal pass holders and will not go to the Disney parks anymore, therefore we aren’t spending money in Disney parks, not buying food, drinks or souvenirs. This new pass holder policy is not fair for DVC members who live far away and only come a few times a year! . We have spent above and beyond simply by being DVC members. No matter the economic atmosphere, we still make our DVC payments every month! To be told we can’t have annual passes because we don’t spend enough is ludicrous! It’s wrong on so many levels. Thanks for killing the magic!
We are 60 & 70 years young, without children or grands. We WERE Florida Resident weekday passholders for several years, staying on property 4-6 nights 3-4 times a year. We live 3.5-4 hours drive and are relatively flexible in our schedule, but missing the renew deadline in 2021 was a blessing! We will NOT pay the higher & higher pass prices. We will NOT fight to get a passholder reservation. We will NOT be stuck going to one park on a certain day, because once we get there we may find out it closes early for a function, or the weather is bad and we would rather go to a different park that has more covered or indoor areas that are closer together to dodge rain storms. We ALWAYS ate 3x a day in the parks, including at least 1 expensive sit-down meal per day. Since we didn’t have to buy overpriced, sub-par souvenirs aimed at kids/teens, we could splurge on nicer, higher quality keepsakes for ourselves on every trip. We are really put off with the new ride reservation system that costs more money. We really dislike the fact that you have to use your phone for more and more things….personally, I used to LOVE that I could get lost in the moment and not look at the phone all day! We are very disappointed at the way Disney is disregarding diehard fans like us and it is likely that we will never go to WDW again.