Disney looks to parks to cruise through downturn

Oil prices are soaring. Home foreclosures are rampant. And many think a recession is at hand. So, where are people heading?

Apparently, they're still going to Disney World.

Walt Disney Co. executives sought Tuesday to depict its parks and resorts division as resilient to the current economic malaise and credited its underlying strength with helping to propel a 22% jump in the company's fiscal second-quarter profit. And executives say bookings for the rest of the year continue slightly ahead of last year, despite the country's gloomy fiscal forecast.

"While we don't know where the marketplace will take us, we believe we're much better positioned in a difficult economic cycle than we were in the past," said Robert A. Iger, Disney's chief executive.

Investors have been concerned that the slowing economy would affect vacation travel, as it has in the past. The Sept. 11 terrorist attacks drove down attendance at all of Disney's parks, including Disneyland Paris and its sister park, Walt Disney Studios. The recession of the early 1990s prompted discounting at parks throughout Southern California.

But second-quarter revenue in the parks and resorts division was up 11% to $2.7 billion, in part because Easter this year occurred in March instead of April, the start of Disney's third quarter. This provided a favorable comparison with the year-earlier period.

The weakening dollar, which makes it cheaper for foreigners to travel to the U.S., gave a boost to tourism -- benefiting Disney World near Orlando, Fla. Orlando International Airport reported a 26% jump in the number of international passengers touching down in the city through February, according to Bernstein Research.

But international tourists account for only about 20% of the volume at Disney World, and Bernstein senior analyst Michael Nathanson projects a slowdown in revenue at U.S. parks in the second half of the year because of lower domestic consumer spending.

"Theme park growth is sensitive to the overall economic growth in general," Nathanson wrote in a report. "And in particular, to the growth in consumer discretionary spending."

Goldman Sachs analyst Ingrid Chung wrote that the effect of a recession could be delayed by one to two quarters because of advance travel bookings.