Disney’s US Parks’ Operating Income Falls, Predicts ‘Flattish’ Future Revenues

Disney's Magic Kingdom Park is pictured in this handout photo provided by Walt Disney World Resort, on Oct. 8, 2014. (Matt Stroshane/Walt Disney World Resort via Getty Images)

Operating income at Disney’s American theme parks fell in the third quarter of 2024, with the company reporting that easing consumer demand combined with macroeconomic factors are contributing to the decline.

Although Disney’s revenues from domestic parks saw a slight 3 percent increase for the quarter ending June 29, compared to the same period last year, operating income dipped by 6 percent, according to an Aug. 7 earnings report. Disney attributed this decrease to “higher costs driven by inflation, increased technology spending, and new guest offerings.”

In addition, revenues were negatively affected due to a “moderation of consumer demand” in a way that exceeded company expectations. Park revenue is expected to remain “flattish” in the fourth quarter, with a couple of quarters to see similar results, Hugh Johnston, Disney’s CFO, said during an earnings call.

Multiple other companies like Hilton and Airbnb have also pointed to a slowdown in the general travel and leisure industry in the United States.

The dip in Disney’s operating income comes after Johnston said back in May that the company was seeing “some evidence of a global moderation from peak post-COVID travel.”

While attendance at Disneyland and spending from visitors grew, the segment faced pressures due to “cost inflation, including from higher labor expenses,” he said at the time.

Meanwhile, Disney reported a 4 percent year-over-year gain in total revenues for Q3, 2024. Total operating income registered 19 percent growth while income before taxes improved from a loss of $134 million to over $3 billion.

Despite these positives, Disney shares fell after the earnings release. Shares ended Tuesday at $89.97. It was trading at $85.58 as of 01:35 p.m. EDT on Thursday—a decline of 4.87 percent.

Travel and Leisure

Hilton CEO Christopher Nassetta during a recent earnings call said that the leisure market has been “normalizing.”

Earlier, the market used to be at “very elevated levels,” he said, pointing to the funds people had in their banking accounts coming out of the pandemic. But now, people have less disposable income for things like travel, Nassetta said.

Vacation rental company Airbnb also recently stated in an earnings report that it has seen “some signs of slowing demand from U.S. guests.”

In an earlier May report, consulting firm PricewaterhouseCoopers (PwC) said that growth in leisure demand softened for American hotels. Domestic travelers are looking for international experiences while inbound traffic failed to recover to pre-pandemic levels.

Hotel occupancy rates have declined for two quarters since November, Warren Marr, US Hospitality & Leisure Managing Director at PwC, pointed out.

The firm expects economic uncertainty, geopolitical tensions, and the upcoming elections to potentially affect hotel performance through next year.

On the positive side, travel costs have decreased, according to the U.S. Travel Association.

In June, the Travel Price Index fell from the previous month, led by lower airline, gas, and hotel costs. Travel prices currently are “more favorable for travelers” than the pre-pandemic period, it said in a July 11 post.

An Aug. 6 survey by Allianz Partners USA found that people planned on taking “longer stretches of time off this summer.”

Seventy-three percent of Americans had committed to travel away from home at least for one night between May and September, it said, while 41 percent planned for multiple getaways at least 100 miles away from their homes for a minimum of one night.

The amount spent on a three-night trip has almost doubled over the past two years, the survey noted.

“From cityscapes and mountainsides to coastlines and canyonlands, this summer promises a jam-packed travel season as Americans look to plan multiple trips at a growing average length,” said Daniel Durazo, director of external communications at the firm.