Disney Sees US Parks’ Operating Income Fall, Predicts ‘Flattish’ Future Revenues

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

Operating income at Disney’s U.S. 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 on June 29 compared with 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 because of 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 chief financial officer, said during an earnings call.

Multiple other companies, such as 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 in May that the company was seeing “some evidence of a global moderation from peak post-COVID travel.”

Although attendance at Disneyland and spending from visitors grew, the segment faced pressures because of “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. Total operating income registered 19 percent growth, and income before taxes improved to more than $3 billion from a loss of $134 million.

Despite these positives, Disney shares fell after the earnings release. Shares ended at $89.97 on Aug. 6. Disney was trading at $85.58 as of 01:35 p.m. EDT on Aug. 8—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.”

The market used to be at “very elevated levels,” he said, pointing to the funds that people had in their bank accounts coming out of the COVID-19 pandemic. But now, people have less disposable income for things such as 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 a May report, consulting firm PricewaterhouseCoopers (PwC) said that growth in leisure demand had softened for U.S. hotels. Domestic travelers are looking for international experiences, and inbound traffic failed to recover to pre-COVID-19 pandemic levels.

Hotel occupancy rates have declined for two quarters since November 2023, according to Warren Marr, U.S. hospitality and leisure managing director at PwC.

The company 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 in the pre-COVID-19 pandemic period, the association said in a July 11 post.

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

The survey found that 73 percent of Americans had committed to travel away from home for at least one night between May and September, 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,” Daniel Durazo, director of external communications at Allianz, said.