Tokyo Disney Resort Visitor Analysis

In fiscal year 2023, the number of TDR visitors was 27.51 million, an increase of approximately 1.25 times compared to 22.09 million last year. Since the number of visitors in 2023 is similar to that in 2008 and 2012, a comparative analysis of the visitor data from 2008 and 2012 with that of 2023 is conducted here to examine the changes in the age distribution and origin of visitors.

As can be seen from the age group (as shown in the figure below), the number of visitors aged "18-39" in 2023 is 2.3 times that of 2008 and 2.1 times that of 2012; while the number of visitors aged 40 and above in 2023 has decreased significantly.

Considering that annual passes were available at Tokyo Disney Resort in 2008 and 2012, it can be inferred that a larger proportion of visitors aged 40 and above were annual pass holders at that time.

In terms of visitor origin (as shown in the figure below), the number of visitors from the Kanto region decreased in 2023. It is particularly noteworthy that the number of overseas visitors has increased threefold compared to 2008 and nearly fourfold compared to 2012.

Due to the discontinuation of the sale and use of annual passes at Tokyo Disney Resort, the number of visitors from the Kanto region, where Tokyo Disneyland is located, has decreased significantly.

Tokyo Disney Resort Revenue Analysis

Since 2020 (the COVID-19 pandemic), the average spending per visitor at Tokyo Disney Resort has shown a significant upward trend. In 2023, it exceeded ¥16,000 (approximately RMB 738).

(The figure shows the trend of average spending per visitor at Tokyo Disneyland over the years)

We cannot simply assume that visitors increased their spending in the park, leading to the increase in average spending per visitor. Everyone must be curious about the real reason for the increase in average spending per visitor. To answer this question, I will analyze it from multiple dimensions, including ticket price, merchandise price, and food and beverage price, to deeply analyze the underlying reasons.

① Ticket Price

The trend of changes in the price of Tokyo Disneyland adult annual passes and single-day tickets is shown in the figure below. From 2021 onwards, TDR implemented a floating pricing system, where the daily ticket price varies depending on the peak and off-peak seasons, weekends, and holidays. It is clear from the figure below that the increase in ticket prices has led to an increase in the average ticket price. (The figure below uses the highest annual ticket price data.)

In addition, changes in the annual pass policy are also a major factor affecting the average ticket price. Tokyo Disney Resort stopped selling annual passes from 2020. We distinguish between periods when annual passes were available and unavailable, and based on the correlation between the two, we estimate the ticket price from 2011 to 2023 when annual passes were available and unavailable, and compare it with the actual annual ticket price data (see figure below). We found that in 2023, when annual passes were unavailable, the difference between the estimated ticket price and the actual published price was very small.

Although the difference is small, it still exists. So what caused the difference between the estimated ticket price and the actual ticket price? The revenue from "premium access" (fast pass service) included in ticket revenue is the reason for the difference. TDR's 2023 financial report shows that the sales of "premium access" account for less than 10% of total sales.

Tokyo Disney Resort implemented the "premium access" system in May 2022. Each visitor with a park ticket can purchase one fast pass for ¥2,000 (approximately RMB 100), regardless of age. In short, Tokyo Disneyland has changed the once free fast pass to a paid system. According to estimates, the usage rate of "premium access" in 2023 was 4.9%, while in 2022 it was 15.4%, a decrease from the previous year.

② Merchandise Sales Price

Next, let's look at the trend of changes in the average merchandise sales price at Tokyo Disney Resort through the financial report.

Since the pandemic, the average selling price of TDR merchandise has shown a steady upward trend, finally exceeding 5,000 JPY (approximately 250 CNY) in 2023. This means that for a family of four visiting Tokyo Disney, their shopping expenditure exceeds 20,000 JPY (approximately 1,000 CNY).

We found that there is a discrepancy between the average merchandise spending per guest data published in the financial reports and the average merchandise spending per guest calculated by dividing total merchandise sales by the number of visitors.

The reason for this discrepancy in 2019 and earlier was that the total merchandise sales included revenue from the off-park store (Bon Voyage). From 2020 onwards, this discrepancy is due to the total merchandise sales not only including revenue from the off-park store (Bon Voyage) but also online merchandise sales (online sales started in 2020). Therefore, it is clear from the chart below that the "discrepancy" significantly increased after 2020.

According to estimates, TDR's online merchandise sales revenue accounts for approximately 9.3% of total merchandise sales revenue.

③ Average F&B spending per guest

It is evident from TDR's financial reports that since the pandemic (after 2020), the average spending on food and beverage per guest at Tokyo Disney Resort has also shown a significant upward trend.

As can be seen from the figure below, the estimated average F&B spending per guest after 2020, based on the pre-pandemic trend, shows a very large difference from the actual average spending (the dashed line represents the estimated value based on the trend, and the solid line represents the actual value).

Due to rising food raw material prices, Tokyo Disney also had to respond by increasing selling prices. The increase in F&B selling prices led to an increase in the average F&B spending per guest.

④ Summary of average spending per guest data

Excluding the sales revenue brought by new policies implemented since the pandemic (annual pass cancellation, "FastPass" charges, online merchandise sales), a comparative analysis of average spending per guest data for FY2023, FY2208, and FY2012 shows that the average spending per guest in FY2023 reached a historical high of 13,735 JPY (approximately 686 CNY) (as shown in the figure below).

Next, we will attempt to compare the proportion of average ticket price, average merchandise price, and average F&B price in the overall average spending per guest. According to the figure below, the proportion of average merchandise spending per guest in the total average spending per guest decreased in 2023, while the proportion of tickets increased. This can be attributed to the increase in ticket prices, which led visitors to reduce their shopping budget. In other words, when annual passes cannot be used and "FastPass" requires payment, visitors tend to reduce their merchandise purchases.

Assuming that the ticket prices for FY2023 are the same as those for FY2008 and FY2012, and excluding factors such as annual pass cancellation, FastPass charges, the start of online shopping, and F&B price increases, we found that the average merchandise price in FY2023 still accounted for a very high proportion of the total average spending per guest, even exceeding the other two years (as shown in the figure below).

Tokyo Disney Resort Operating Costs

As the number of visitors varies each year, cost amounts are allocated per visitor to define and analyze the average cost per guest.

We will still compare and analyze the average cost per guest for FY2008 and FY2012, where visitor numbers showed no significant difference, with that of FY2023. As can be seen from the figure below, merchandise and F&B procurement costs in FY2023 significantly increased compared to FY2008 and FY2012. Rising costs mean that F&B and merchandise selling prices must increase. In addition, Tokyo Disney's labor costs also showed significant growth in 2023. If the park's ticket sales revenue cannot cover labor costs, then the selling prices of merchandise and F&B will need to be further increased.

Tokyo Disney Resort has already taken measures to save operating costs, such as discontinuing the distribution of paper maps to visitors. In addition, rising prices of some consumables have also led to an increase in the cost of operational supplies. The increase in prices of parts and tools has also led to an increase in the cost of park hardware maintenance and renovation.

Conversely, in 2023, Tokyo Disney controlled its entertainment program production costs, which in a sense formed a well-organized allocation and use of cost expenditures.

Next, let's compare cost expenditures and sales revenue. This involves cost ratios and expense ratios. Due to the impact of the pandemic, Tokyo Disney's expense ratios for FY2020 and FY2021 were not within the normal range, so we will not consider them.

(Yearly trends of cost ratio and expense ratio)

Based on past data, TDR's cost ratio and expense ratio from 2018-2023 (excluding 2020 and 2021) have generally remained at similar numerical levels. Maintaining a stable expense ratio is an important prerequisite for operations. In other words, to maintain a stable cost ratio, when merchandise and F&B costs rise, selling prices must increase. Furthermore, to keep the facility renewal expense ratio and labor expense ratio stable, ticket selling prices can only be raised.

Tokyo Disney Resort Operating Profit

Except for 2020 and 2021, which were affected by the COVID-19 pandemic, Tokyo Disney Resort's profit margin has fluctuated around 25% since 2012, but it has risen to 27% by 2023 (as shown in the figure below). Since the park has maintained a stable expense ratio over the years, it can be inferred that the increase in sales revenue led to an improved profit margin.

It is noteworthy that the profit contributed per visitor to Tokyo Disney Resort significantly increased after 2022 compared to pre-pandemic levels. The number of visitors to TDR in FY2022 was approximately 10 million fewer than during its peak, but the profit per guest was more than 1,000 JPY (approximately 50 CNY) higher, and the profit margin has surpassed pre-pandemic levels. Furthermore, the profit per guest continued to increase in 2023, and the number of visitors also steadily rose, thus the park achieved its highest profit margin ever.

Tokyo Disney FY2023 Financial Report In-depth Analysis Summary

Although the number of visitors to Tokyo Disney Resort in fiscal year 2023 has not yet recovered to pre-pandemic levels, sales revenue and operating profit reached historical highs. The reasons are summarized as follows:

1) Increase in sales revenue. Despite rising costs, Tokyo Disney chose to increase prices for tickets, food and beverage, and merchandise, but visitors maintained high enthusiasm for spending, leading to continuous increases in sales revenue.

2) Increase in average ticket price per guest. Although annual passes are no longer sold or used, the charging policy for 【FastPass】 has led to an increase in the average ticket price per guest.

3) Online shopping boosted merchandise sales revenue.

4) Due to rising F&B costs, the park appropriately increased F&B selling prices. The average F&B spending per guest has increased.

5) Well-organized allocation and use of cost expenditures. Recognizing that operating at pre-pandemic cost levels is no longer possible due to rising raw material and labor costs, the park has managed its operating costs with flexibility and control.

Finally, the financial report provides a forecast for the performance of Tokyo Disney Resort in fiscal year 2024 (April 2024-March 2025).

As shown in the figure above, Oriental Land Co., Ltd. forecasts for Tokyo Disney Resort in fiscal year 2024:

1) An average ticket price of 9047 yen (an increase of nearly 800 yen compared to fiscal year 2023)

2) Total sales revenue of 566.6 billion yen (an increase of 52.8 billion yen compared to fiscal year 2023)

3) Number of park visitors of 29 million (a recovery to 2019 levels)

It is not difficult to see that Tokyo Disney Resort aims to further increase its ticket prices. To achieve this goal, the operator has proposed the following policies:

• 1) Under the current floating price system, increase the number of days that higher-priced tickets are sold.

• 2) Increase the purchase and usage rate of "FastPass".

In addition, Tokyo Disney will further expand visitor spending with the "Fantasy Springs" area, which opened in June this year and has been an instant hit. In the near future, a day of fun in the "dream kingdom" may cost each visitor 20,000 yen (approximately 1,000 RMB) or more.

It must be said that the threshold for the dream kingdom is getting higher and higher...

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