In Disney’s fiscal Q3, there was a noticeable moderation in the demand for Disney theme parks. This trend, which the company anticipates will persist for the next few quarters, did not impede revenue growth in the Disney Parks, Experiences, and Products division. The revenue for this division increased by 2% during the quarter, reaching a total of $8.2 billion. Surprisingly, domestic park revenue saw a 3% increase, while international park revenue experienced a 5% increase. However, consumer products revenue declined by 5%.
Despite the overall revenue growth, the operating income for parks and experiences decreased by 3%, amounting to $2.3 billion. The operating income for domestic parks fell by 6%, while the operating income for international parks and consumer products witnessed a 2% growth. Disney attributed the decline in domestic park operating income to increased costs resulting from inflation and additional investments in technology and new offerings.
Interestingly, guest spending at Disney Cruise Line and theme parks has been on the rise. Disney Cruise Line continues to experience strong demand, indicating a positive outlook for the company in the cruise industry. During the earnings call, CFO Hugh Johnston described the increase in guest spending as a “slight moderation” in demand. Moreover, he foresees similar results in the coming quarters.
Johnston pointed out that lower-income consumers are facing financial challenges, leading to a shift in spending patterns. Conversely, higher-income consumers are increasingly opting for international travel experiences. These evolving consumer trends are expected to continue in the foreseeable future. Interestingly, Comcast Corp., the parent company of Universal, also reported similar findings with a normalization of theme park attendance.
While the demand for Disney theme parks may be moderating, the company’s revenue and guest spending trends paint a more positive picture. By adapting to changing consumer behaviors and market dynamics, Disney is well-positioned to navigate the evolving landscape of the theme park industry.