Disney’s Theme Parks Are Struggling as Operating Profit Declines

Consumers just aren’t feeling the magic right now when it comes to vacationing at the world’s most popular theme parks. Faced with slower demand, Disney’s operating profit at its theme parks fell in the third quarter.

For the three months that ended on June 29, Disney reported $2.2 billion in operating profit, a 3% decline compared to the same period last year. With that, Disney doesn’t expect the fourth quarter to be much different.

“While we saw a slight moderation in demand, I certainly wouldn’t call it a significant change,” Disney’s CFO Hugh Johnston noted on a conference call, per CNN Business. “I don’t think I’d refer to it as protracted but just a couple of quarters of likely similar results.”

Disney claims attendance at the parks was steady and spending per guest actually increased. Yet, consumers remain nervous about inflation and a flopping U.S. economy.

Higher prices are likely to blame for Disney’s operating loss at the theme parks as some consumers are thinking twice when pulling out their wallets. Meanwhile, more affluent consumers are traveling elsewhere. According to CNN, Disney’s international parks saw increased attendance as well as more booked rooms.

“The lower income consumer is feeling a little bit of stress. The high-income consumer is traveling internationally,” Johnston said.

Disney’s parks have been the lifeblood of the company, often taking up the slack when its streaming business was bleeding money. To maintain momentum, Disney plans to invest quite a bit in expansion. Over the next decade, Disney is spending $60 billion to bring new experiences to both its parks and cruise lines, with many new attractions opening next year.

Per The Hollywood Reporter, about $1.9 billion is allocated to Disneyland and Disney California Adventure. Another $17 billion is going to Disney World in Florida, with plans to revamp EPCOT and transform Animal Kingdom’s Dinoland U.S.A. into another attraction named Tropical Americas.

While Disney’s theme parks suffered a profit decline, the company’s streaming business is booming. In the third quarter, its direct-to-consumer (DTC) streaming services turned a profit. Together, Disney+, ESPN+, and Hulu made $47 million.