The price of a one-day ticket to Magic Kingdom at Walt Disney World in Orlando was hiked up to $105 back in February.
But 3-figure price tag hasn’t stopped people from going there.
Quite the opposite, actually.
Disney’s Magic Kingdom actually saw an increase in attendance in all of the last five years except 2010 despite the fact that the price of admission also went up, according to a chart shared by Bank of America analysts led by Savita Subramanian.
And this shows how much pricing power Disney actually has.
For those unfamiliar, “pricing power” refers to the effect that a change in a firm’s product price has on the quantity demand of that product. So, for a company with little pricing power, if it increases its prices, demand for its goods will probably drop. (For example: if Gap suddenly started charging you $1,000 for socks, you’d probably never shop there again.)
So the fact that more and more people continue to attend the Magic Kingdom every year — even as prices continue to increase in a world where inflation and wage growth remains low — shows that Disney has some serious pricing power.
It’s worth noting that consumers are increasingly more interested in spending money on “experiences” rather than on things, which could partially explain why people are paying handsomely for tourist spots like Magic Kingdom right now.
It’s also important to emphasise that not every company is like Disney. In some industries, newer, cheaper, disruptive competitors — such as robo-advisors, Airbnb, or fast fashion companies like Zara — have put deflationary pressure on the old-school stalwarts.
“Pricing power may be most at risk for select industries with traditional business models like retailers and hotels, another reason we remain cautious on these areas within the Consumer discretionary sector,” noted the BAML analysts.
In any case, in a world where some companies keep slashing prices to keep up with the rising stars, Disney has successfully continued hiking the cost of tickets to Magic Kingdom.
NOW WATCH: Here’s why aliens might actually exist
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.