Disney predicts lower demand at domestic theme parks into 2025

Many visitors to Disney World and Disneyland this summer have remarked on how not-crowded the parks seemed to be. Well, that feeling may be staying around for a while longer, as Disney said it expects lower crowds to impact its domestic parks for the next few quarters. 

The Walt Disney Co. this morning released its Q3 earnings report showing that the Experiences Division, which includes parks, the Disney Cruise Line, Disney Products and other experiences saw a 2% uptick in revenue to $8.386 billion, but saw operating income down year-over-year by 3% to $2.222 billion.

The operating income side of the business was dragged down by the domestic theme parks after that segment recorded a 6% slide compared to last year despite a 3% increase in revenue. International theme parks and consumer products were both up 2% in operating income this year.

Disney reported that it expects that “demand moderation” – lower crowds –  “we saw in our domestic businesses in Q3 could impact the next few quarters. While we are actively monitoring attendance and guest spending and aggressively managing our cost base, we expect Q4 Experiences segment operating income to decline by mid single digits versus the prior year, reflecting these underlying dynamics as well as impacts at Disneyland Paris from a reduction in normal consumer travel due to the Olympics, and some cyclical softening in China,” according to the report. 

Disney has previously talked about the softening of travel. During the Q2 earning calls Disney CEO Bob Iger mentioned how the post COVID travel bubble is bursting and travel is normalizing again. During this morning’s call Disney CFO Hugh Johnston mentioned how high income consumers are traveling internationally a bit more and lower income consumer are feeling a bit stressed and may not be traveling for vacation. 

While there is an expectation of a “flattish revenue number in Q4” coming out of the parks and few quarters of more of the same, “I don’t think I’d refer to it as protracted, but, just a couple of quarters of likely similar results,” he said. 

This weekend at D23: The Ultimate Fan Event, we expect a lot of announcements surrounding the parks and their future as announcements are expected on new lands and attractions and where  Disney will be spending some of the $60 billion it has pledged to expand the parks over the next 10 years.