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Wall Street Analyst Describes Better Trend for Bookings at Disney
World's Value Resorts than for the Moderate and Deluxe Resorts

By Jason Garcia, The Orlando Sentinel, Fla.McClatchy-Tribune Regional News

Sept. 16, 2011--Citing concerns about weakness at Walt Disney World's mid- and high-priced hotels, a Wall Street analyst on Friday lowered his earnings projections for the Walt Disney Co.'s theme-park division.

"Based on our tracking of hotel occupancy at Walt Disney World, we believe the value resorts are seeing slightly better trends than moderate/deluxe resorts" for the fall and early winter, UBS Investment Research analyst John Janedis wrote in a note to investors.

Moderate and deluxe rooms together account for approximately 60 percent of Disney World's hotel inventory.

UBS said it now expects Walt Disney Parks and Resorts to generate $1.62 billion in earnings before interest and taxes during Disney's next fiscal year, which begins next month. That's about 2 percent lower than the firm's previous estimate of $1.66 billion.

Disney has been steadily raising prices at its U.S. hotels and theme parks in hopes of conditioning travelers to no longer expect the deep discounts Disney offered during the deepest part of the global recession. And checks by UBS indicate that rates are up across the board at Disney hotels -- including by roughly 3 percent at the lowest-priced, value hotels, such as Disney's All-Star Resorts.

UBS said rates are up by mid-single-digit percentages at Disney's moderate hotels, such as Disney's Port Orleans Resort, and by low- to mid-single-digit percentages at its deluxe hotels, such as Disney's Grand Floridian Resort & Spa.

"However, we think occupancy levels are flat to down [year over year], particularly at the deluxe resorts and only slightly better at the value/All-Star resorts," Janedis wrote. "Given the relative price points -- with deluxe-resort average rates 200 percent greater -- the mix could also be having somewhat of an impact on parks margins."

Disney World has approximately 21,600 hotel rooms in its inventory, not including Disney Vacation Club time-share units, which are also rented out to travelers. Of the hotel inventory, about 8,400 rooms, or 39 percent, are value rooms.

About 7,500 rooms, or 35 percent, are moderate and about 5,600 rooms, or 26 percent, are deluxe. The share of value rooms will swell further next year with the opening of Disney's Art of Animation Resort, Disney World's first new hotel since Disney's Pop Century Resort, another value hotel, opened in 2003.

The occupancy rate in Disney's U.S. hotels -- which includes roughly 2,400 rooms at Disneyland in Anaheim, Calif. -- was 81 percent during the third quarter of the company's fiscal year, which ended July 2. That was down one percentage point from a year ago. But per-room spending, which includes the average nightly room rate, jumped 14 percent for the period.

Management said in August that fiscal fourth-quarter bookings were running 2 percent behind last year's pace, while room rates were up by a mid-single-digit percentage. or 407-420-5414


(c)2011 The Orlando Sentinel (Orlando, Fla.)

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