Tokyo Disney Resort Visitor Analysis

In fiscal year 2023, TDR had 27.51 million visitors, an increase of approximately 1.25 times compared to the 22.09 million visitors last year. Since the number of visitors in 2023 is similar to that of 2008 and 2012, we will compare the visitor data from 2008 and 2012 with that of 2023 to analyze changes in visitor age distribution and origin.

As shown in the figure below, the number of visitors aged 18-39 in 2023 was 2.3 times that of 2008 and 2.1 times that of 2012; while the number of visitors aged 40 and above decreased significantly in 2023.

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. Notably, the number of overseas visitors increased by 3 times compared to 2008 and nearly 4 times compared to 2012.

Due to the discontinuation of annual pass sales and usage 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 the increase in average spending is due to increased spending per visitor within the park. You're probably wondering what the real reason for the increase in average spending is. 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 figure below shows the trend of changes in the price of Tokyo Disneyland adult annual passes and single-day tickets. From 2021 onwards, TDR implemented a dynamic 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 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 estimated ticket price was very close to the actual published price.

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 previously free fast pass system to a paid system. It is estimated that 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 Average Price

Next, let's look at the trend of changes in the average price of merchandise sales 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 5000 JPY (approximately 250 CNY) in 2023. This means that a family of four visiting Tokyo Disneyland spends more than 20,000 JPY (approximately 1000 CNY) on shopping.

We found that there is a discrepancy between the average spending per merchandise item reported in the financial statements and the average spending per merchandise item calculated by dividing total merchandise sales by the number of visitors.

Before and including 2019, this discrepancy arose because total merchandise sales included revenue from off-park stores (Bon Voyage). From 2020 onwards, this discrepancy arose not only because total merchandise sales included revenue from off-park stores (Bon Voyage), but also because it included online merchandise sales revenue (online sales began in 2020). Therefore, it is clear from the figure below that the "discrepancy" significantly increased after 2020.

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

③ Average food and beverage spending per guest

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

As shown in the figure below, the estimated average spending per guest on food and beverages after 2020, based on pre-pandemic trends, shows a significant difference compared to the actual average spending (dashed line represents the trend-estimated value, solid line represents the actual value).

Due to the rise in food raw material prices, Tokyo Disney also had to respond by increasing selling prices. The increase in food and beverage selling prices led to a rise in the average spending per guest on food and beverages.

④ Summary of Average Spending Per Guest Data

Excluding sales revenue generated by new policies implemented since the pandemic (cancellation of annual passports, "Fastpass" charges, online merchandise sales), a comparative analysis of the average spending per guest data for fiscal years 2023, 2008, and 2012 reveals that the average spending per guest in fiscal year 2023 reached a historical high of 13,735 JPY (approximately 686 CNY) (as shown in the figure below).

Next, we will attempt to compare the proportions of average ticket price, average merchandise price, and average food and beverage price within the overall average spending per guest. According to the figure below, the proportion of average merchandise spending in the total average spending decreased in 2023, while the proportion of tickets increased. This can be attributed to the rise in ticket prices, which led visitors to reduce their shopping budget. In other words, with annual passports no longer usable and Fastpass requiring payment, visitors tend to reduce their merchandise shopping.

Assuming the ticket prices for fiscal year 2023 were the same as those for fiscal years 2008 and 2012, and excluding factors such as the cancellation of annual passports, Fastpass charges, the start of online shopping, and rising food and beverage prices, we found that the average merchandise spending in fiscal year 2023 still accounted for a very high proportion of the total average spending, even surpassing the other two years (as shown in the figure below).

Tokyo Disney Resort Operating Costs

Since 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 fiscal years 2008 and 2012, where visitor numbers showed no significant difference, with that of fiscal year 2023. As seen in the figure below, compared to fiscal years 2008 and 2012, the procurement costs for merchandise and food & beverages in fiscal year 2023 significantly increased. Rising costs mean that the selling prices of food & beverages and merchandise must increase. Additionally, Tokyo Disney's labor costs also saw a significant increase in 2023. If the park's ticket sales revenue cannot cover labor costs, then the selling prices of merchandise and food & beverages will need to be further raised.

Tokyo Disney Resort has implemented measures to save operating costs, such as discontinuing the distribution of paper maps to guests. Furthermore, rising prices of some consumables have increased the cost of operational supplies. The increase in prices of parts and tools has also led to higher costs for park hardware maintenance and renovation.

Conversely, in 2023, Tokyo Disney controlled expenses for entertainment production, which, in a sense, established a methodical approach to cost allocation and usage.

Next, let's compare costs and sales. This involves cost ratios and expense ratios. Due to the pandemic, Tokyo Disney's expense ratios for fiscal years 2020 and 2021 were not within the normal range, so we will not consider them.

(Annual trends of cost ratio and expense ratio)

Based on past data, TDR's cost ratios and expense ratios for each year from 2018-2023 (excluding 2020 and 2021) have generally maintained similar numerical levels. Maintaining a stable expense ratio is an important prerequisite for operations. In other words, to maintain a stable cost ratio, when the cost of merchandise and food & beverages increases, selling prices must rise. Furthermore, to maintain stable facility renewal expense ratios and labor expense ratios, only ticket selling prices can be increased.

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 rose 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 improvement in the profit margin.

It is noteworthy that the profit contributed by each visitor to Tokyo Disney Resort significantly increased after 2022 compared to before the pandemic. Although the number of visitors to TDR in fiscal year 2022 was about 10 million less than during its peak, the profit per visitor was more than 1000 JPY (approximately 50 CNY) higher, and the profit margin surpassed pre-pandemic levels. Furthermore, in 2023, the profit per visitor continued to increase, and the number of visitors also steadily rose, leading the park to achieve its highest profit margin ever.

In-depth Analysis and Summary of Tokyo Disney's FY2023 Financial Report

Although the number of visitors to Tokyo Disney Resort in fiscal year 2023 has not yet recovered to pre-pandemic levels, sales 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 & beverages, and merchandise, yet visitors maintained high enthusiasm for spending, leading to continued growth in sales.

2) Increase in average ticket price per guest. Although annual passports 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 food and beverage costs, the park appropriately increased food and beverage selling prices. The average spending per guest on food and beverages has increased.

5) Methodical allocation and use of costs and expenses. Knowing that operations could no longer be conducted at pre-pandemic cost levels due to rising raw material and labor costs, the park managed operating costs with appropriate flexibility.

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) Ticket price per person: 9047 JPY (an increase of nearly 800 JPY compared to fiscal year 2023)

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

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

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

• 1) Under the current floating price system, increase the number of days when high-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, it may cost each visitor 20,000 JPY (approximately 1,000 RMB) or more to spend a day in the "dream kingdom".

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

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