Disney ‘Warns’ of Attendance Slowdown
Disney recently reported its second quarter fiscal 2024 earnings, with the company’s Experiences (Parks & Resorts + Consumer Products) reporting $8.3 billion in revenue. This covers the good & bad of these results as they relate to Walt Disney World & Disneyland, and why despite the strong performance for parks, CEO Bob Iger is warning investors of an attendance slowdown…and what that actually means.
During the main presentation, Disney CFO Hugh Johnston shared that this quarter’s growth was driven by growth of Disney Cruise Line and Walt Disney World on the domestic side, with Hong Kong Disneyland outperforming among the international side. With regard to HKDL, this makes a lot of sense. Hong Kong is undoubtedly seeing lagged pent-up demand since it reopened slower, meaning it has easier comparisons from the last couple of years. Add the new World of Frozen to the mix, and HKDL is likely to outperform for the next few years. As that little park has struggled for so long, we love to see it doing so well that it warrants mentioning on the earnings call.
Walt Disney World is the biggest surprise, as I believe this is the first earnings call in over a year with it being mentioned as a bright spot. For the last several calls, Disneyland was outperforming and Walt Disney World was weakening. Now, the opposite is true. Johnston also indicated that Disneyland’s results declined despite growing attendance and per-capita guest spending, due to cost inflation and higher labor expenses.
Looking forward, Johnston also said that although consumers continue to travel in record numbers and Disney is still seeing healthy demand as a result, the company is starting to see some evidence of a global moderation from peak post-COVID travel. He seemed fairly unfazed by this, noting that next quarter won’t see much growth, but largely due to one-offs like Disney Cruise Line launches (Lighthouse Point and the new ships), with higher labor costs and the aforementioned post-pent-up demand normalization also playing a role.
Despite this and demand impacts, Johnston expects year-over-year Disney Experiences operating income growth to rebound significantly in the fourth quarter due to “fewer comparability or timing factors.” That doesn’t exactly sound like the company is concerned about the Parks & Resorts business.
However, during the Q&A, CEO Bob Iger struck a slightly different tone. He was asked about his expectation for attendance after lapping COVID, and whether that would stabilize or soften into fiscal year 2025. Specifically, whether trends would be sufficient to expect attendance to have any kind of year-on-year decline?
“In terms of attendance, what we’re basically communicating is relative to the post-COVID highs, things are tending to normalize. The parks business did 10% growth in the quarter. And obviously, that’s an extremely high revenue number. That said, we still see in the bookings that we look ahead toward indicate healthy growth in the business. So we still certainly feel good about the opportunities for continued strong growth,” Iger explained.
“I certainly feel like the Parks business is still doing very, very well. Obviously, we’ve got the best in the business in terms of product. And people still have a strong desire to basically go on vacation and come to see us.”
If all of this sounds familiar, it should. This also isn’t the first, second, or even third time the company has directly addressed it and indicated that pent-up demand has been exhausted at some of the parks. No, the parks are not dead or ghost towns or totally empty, but they’re down as compared to the height of pent-up demand.
None of this is particularly surprising. We’ve been documenting the slowdown in crowds at Walt Disney World, which started last year following spring break. However, that trend reversed itself in early 2024! When the first two months were busier than expected, we started discussing Re-Revenge Travel at Walt Disney World in 2024. We’ve theorized there’s a second wave or reverberation of pent-up demand after every month last year after January was down as compared to 2022.
These results corroborate that, at least in part. Walt Disney World outperformed in the most recent quarter after being a laggard for the last year-plus. So why did Iger and Johnston make those comments about declines and normalization due to the exhaustion of pent-up demand? Most likely because the Parks & Resorts business is a lot more than just Walt Disney World.
As a reminder, this is something that dearly-departed CFO Christine McCarthy braced investors for exactly this during the same earnings call one year ago, in May 2023: “Please keep in mind that in the back half of this fiscal year, there will be an unfavorable comparison against the prior year’s incredibly successful 50th anniversary celebration at Walt Disney World. We typically see some moderation in demand as we lap these types of events, and third quarter-to-date performance has been in line with those historical trends.”
That warning came true, and Walt Disney World underperformed last year as every other park continued to outperform. Executives mostly attributed this to timing, indicating there was a drop in demand at the Florida parks even as Disneyland and international parks’ attendance stayed strong. This was because Disneyland reopened a year later than Walt Disney World. That along with every other destination experienced delayed pent-up demand as compared to Walt Disney World, since Florida reopened sooner than…pretty much everywhere.
Now, the opposite appears to be happening. Just like Walt Disney World “lapped” the 50th at this time last year and was thus facing unfavorable comparisons right as pent-up demand began exhausting itself, it has now once again lapped those weaker numbers and has easier comps. By contrast, many of the other parks–including Disneyland–find themselves in the same position that Walt Disney World was in one year ago.
None of these numbers are static–they’re all relative to the prior-year, which is a time when Walt Disney World was doing “worse” (as compared to the year before that), whereas Disneyland and the international parks were doing “better” (also as compared to the year before that). If we just zoom out a bit, the picture becomes prettier for all of the parks.
In other words, don’t feel too badly for Disney during these trying times of normalizing attendance and demand. Walt Disney World and every other destination is still performing well above pre-COVID levels–with revenue, operating income, and per guest spending all up considerably at every destination as compared to fiscal year 2019.
This is starting to normalize, as Disney has had to pull more “levers” to entice guests to visit. And by that, we largely mean better discounts. As we’ve mentioned repeatedly, Walt Disney World has pulled out the 2019 deal playbook for 2024. It’s basically back to normal on the deal front, and most of these discounts have been released earlier than normal by historical standards, and offer better savings than their counterparts from the last two years. Some are superior to 2018 or 2019, but baseline prices and perks have also changed since then.
It’s not just room-only rates or Free Dining to drive up occupancy. Walt Disney World also brought out the 4-Park Magic Ticket, V.I.PASSHOLDER Days, and more in an attempt to give demand a shot in the arm and buoy bookings. Discounts accomplish that, but they typically do so at the expense of higher per guest spending. Still, we’re talking about a decrease relative to the height of pent-up demand in 2022–pretty much everything is still up considerably as compared to the 2019 baseline.
Ultimately, the ‘warnings’ of Disney CEO Bob Iger and CFO Hugh Johnston were measured because the situation is still far from dire for the Disney Parks. This will be painted as a five-alarm fire by those cheering for Disney’s downfall, but that’s not reality. Especially not at Walt Disney World when compared to last year, which is what matters to most of you.
It’s still possible the Florida parks are down this summer as compared to last, but I wouldn’t bet on it. Anyone just now covering declines at Walt Disney World is literally over a year late to the party. That started in February 2023, became really noticeable in mid-April 2023, and continued for the remainder of last year. The monthly trend in 2024 (minus April) has stabilized or increased.
This year, the slowdown is going to disproportionately occur at Disneyland and the international parks (seemingly minus Hong Kong), as they were slower to see pent-up demand arrive and are now on the backside of that. Regardless, a slowdown from unprecedented demand is not a catastrophe, it’s a normalization. Of course, Disney would’ve loved to maintain record-breaking numbers or that growth trajectory, but even internally, they knew a slowdown was on the horizon.
All of this is what we’ve been expecting and hoping to see for a while. Pent-up demand lasted longer than anticipated, and frankly, it was a distortion that had unhealthy consequences for the broader economy (beyond Disney). Putting that in the rearview mirror may be bad for the company, but it’s good for consumers and the country as a whole.
I’m not a doomer grasping at straws looking for Disney’s downfall, but honestly, I hope that even Walt Disney World sees a decline (in attendance, revenue, per guest spending–all of it!) in the quarters to come. The numbers are still way up as compared to 2019, even assuming a healthy growth trendline. Disney not doing record-breaking numbers regardless of the guest-unfriendly decisions they make–and instead having to actually compete for customers and make positive changes–is a good thing!
Frankly, I don’t know why there’s this desire to paint that as a negative, when it should be construed as good for consumers and guests. As with the arrival of Epic Universe, it seems that disgruntled former fans want to see Disney taken down a notch and are engaged in a lot of completely unmoored wishful thinking. While I’d welcome even more of a “normalization” to bring numbers closer to 2019, I don’t want to see too much of a drop. The last thing the company needs before the blockbuster D23 Expo is seeing negative results out of Parks & Resorts that spook them out of announcing plans for the $60 billion investments.
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YOUR THOUGHTS
What do you think of the Walt Disney Company’s ‘warning’ that attendance is going to normalize in the post-pent-up demand environment? What about per guest spending at Walt Disney World and Disneyland, or other theme park results? Thoughts on a slowdown at Walt Disney World or Disneyland? Predictions about other “levers” the company will pull to boost demand and buoy bookings? Think things will improve or get worse throughout this year? Do you agree or disagree with our assessment? Any questions we can help you answer? Hearing your feedback–even when you disagree with us–is both interesting to us and helpful to other readers, so please share your thoughts below in the comments!
If inflation continues to outpace wage growth, Disney may see a more pronounced decline in attendance, particularly among middle-class families who have traditionally been a core demographic for the parks. This could lead Disney to re-evaluate its pricing strategy or offer more value-driven options to keep attracting guests despite economic pressures. As prices for basic goods and services rise, entertainment and leisure activities are often the first to be cut from household budgets. This shift could lead to a more stratified market where only higher-income individuals and families can afford premium experiences like a Disney park visit, while others seek out more budget-friendly options. Disney’s high ticket prices are emblematic of a larger issue where inflation is reducing the affordability of leisure activities for a significant portion of the population.
bottom line – as a long time WDW guest and former FL resident pass holder, the prices are just absurd. i don’t want to blow my budgetbon a long weekend in the parks just to spend half my time standing in lines.
The people who went to EPCOT on Monday, May 13th clearly did not get the “Attendance Slowdown” memo.
It was exceptionally crowded this day. All rides were stubbornly long the entire day. Soarin at 105 minutes?!? Remy at 145 minutes?!? By far the worst crowds of our week long trip (5/07 – 5/13). I’m stumped as to why this day was so crowded versus our other days. We did MK on 5/08 and 5/10 comfortably without Genie+. We did HS twice (but we did buy Genie+) and did Early Entry for all park days with no issues — except for EPCOT on Monday 5/13.
Scratching my head on this one.
145min for Remy, seriously? Did that one in Paris. It’s fun the first time, but it’s mostly screens and overall a bit of a letdown. NOT worth that wait, even for a first time ride.
Yes — Remy at 145 minutes! We do the Early Entry with the Skyliner (from Pop Century) and are first in line — we are “experienced” Disney AP holders. But watching the ride times on an otherwise unremarkable Monday in mid-May was the puzzle.
I didn’t mention other ride time but they were anywhere from 50 to 90 minutes for the more popular rides. And stayed near those times throughout the day. Crazy!
But how were the beer lines? Great weather in May usually, but you always need an ice cold refreshment in those grueling crowds and lines…
I was there in December and got to do Moana’s walkabout but it was still construction hell. Must be nice to have a lot more construction walls down!
Beer lines were manageable. I am partial to Germany’s Schofferhofer Hefeweizen Grapefuit beer. Cold and satisfying. Even better — at Hollywood Studios Tune-In Lounge is a loaded Schofferhofer (Schofferhoffer with a shot of Deep Eddy’s Grapefruit Vodka). Satisfying and potent.
Tastes great in the several 97-degree days we endured, and one 99-degree day.
Nice! Our favorite breakfast in the parks is a cold draft and a chilled Disney pickle. So one day at Studios, I posted a picture in several Farcebuch Disney groups. Some goofball replied and asked, in all seriousness, “where did you get a baked potato?” Now I don’t know where they live, but I’ve never gotten a lumpy green baked potato!
I’m with you! Monday was the day my husband, sister and I (as local passholders) chose to take my visiting mom to Epcot for the first time in 20+ years. We thought the same thing – weekday, shoulder season, should be quiet. We got Genie+ anyway because more often than not, when we don’t have it for the rare full day we spend in the parks, we wish we did. We booked Remy’s first and later got Test Track and Soarin. Frozen was sold out by the time we had our second pick at 11am. It was wild! (Somehow we got lucky and managed to only wait 35 minutes in standby when it said 50.) We ran out of time to use our Living with the Land LL because Soarin had a theater down. The aquarium building was the busiest I’d ever seen it. My mom wondered how so many young kids were not in school!
Other people pointed out baselining is everything with numbers.
The only thing to add is that the 2023 attendance report is due out next month, so we’ll have a new set of those numbers soon.
I woke up early last week to make my ADRs for an early July trip and was really happy I got what I wanted. And then I checked again that evening and everything was still available, including traditionally hard to get ones like Cinderella’s Royal Table, Space 220, Ohana, etc. Not sure if it’s a valid prediction of lower numbers for this summer, but I’ve never had such an easy time making ADRs before…
This has been the trend for about a year, give or take, and it only seems to be getting easier. Here’s my theory, from another post:
My personal theory is that, for most people, vacation budgets are limited. As a result, the added cost of Genie+ is not purely a new revenue stream for Walt Disney World–at least, not entirely. Rather, it’s a reallocation of spending, away from souvenirs or dining and towards line-skipping. Since that’s more “essential” to the park experience, those with finite budgets (most people!) are shifting funds from one thing to another, as opposed to simply spending more.
Of course, this isn’t everything–and there’s probably some degree of both happening (spending more and budget reallocation), but that’s nevertheless my theory. I think that pretty well explains why stuff is no longer flying off of shelves and ADRs have gotten much, much easier over the course of the last year–even for popular restaurants.
Same here…whatever the reasons, lower crowds or guests reallocating budgets away from dining, I was able to get ADRs for everything I wanted for a June trip – so easy! In addition to that, Disney’s redesign of the reservations system is a vast improvement – they actually show you what’s available, so that you’re not just taking stabs in dark! (I also wonder if their policy of requiring a credit card guarantee on all reservations- not just the most popular ones – is making things easier) Good job Disney, ADRs are no longer a nighmare!
Disney just doesn’t give the bang for your buck like it use to. Add in people have less disposable income also. Years ago you could do Disney your way and not their way. You could 7 nights on property and go where you wanted when you wanted. You didn’t have to get up on vacation at 7 am to get a Genie+ if that’s what you wanted. You can’t get restaurant reservations in advance to the places you want to eat.
I’ve been a fan since Disneyland opened their doors.. 74 now.,.I have every faith in them to do the right thing.
I agree with you.
Good. Those high crowds along with high prices made a Disney World trip almost useless, as far as we were concerned.
I dont care what Disney itself thinks it needs to earn in order to call itself “profitable”, but as of my last couple of trips recently, I felt we were getting close to nothing in return for the money we spent.
Maybe now that people are moving beyond that pent up feeling Covid inflicted upon us, Disney will have to reckon with the fact that there IS a line they can not cross.
I’m sure the unrelenting heat that is going to be the norm here soon, will also cause Disney to come down to earth as far as pricing and crowds.
There comes a time when enough is enough. I love Disney, but I’m not the least bit worried for the corporation. They’ve been price gouging and it needs to stop.
Kristen
look around you….everything has gone up..now
one only goes to DisneyLand once in a blue moon…and yes things have gone up….however your not going there everyday. …they are now in a transition…upgrading…doing what needs to be
done…bringing in new attractions for new generations… however they have to always
KEEP THE MOUSE!
I agree with you Kristne on the price gouging. The following was written by Nathan Kamal on 6/17/2024 as per his Article, “It’s Not Your Imagination, New Report Confirms Disney World Price Gouges Guests”: — “A new report from Finance Buzz confirms that the skyrocketing price of a trip to Walt Disney World is not justified by trends in inflation but is simple price gouging by the Mouse House. The prices for food favorites at Walt Disney World have inflated 61% on average over the last 10 years. The cost of food at Disney World has inflated more than the cost of a single park ticket, which has risen by 56%. Walt Disney World food prices have significantly outpaced the rate of actual inflation (32%). That means that the price of both food items and tickets has risen at nearly double the national rate. Per The US Inflation Calculator, the “annual inflation rate for the United States was 3.3% for the 12 months ending May, compared to the previous rate of 3.4%, according to U.S. Labor Department data published on June 12, 2024.” This squares with the report’s decade-long estimate of 32%.”
This is sad..The price of a ticket even at Disneyland is quite substantial. I don’t think I will be able to afford going to Disneyland again. I live in Southern California, and have always loved Disneyland since my child hood days. The memories will live on forever.
Might be interesting to know the demographics of guests. As we’ve had absurd inflation here for the last few years, foreign visitors may be making up a higher percentage as folks in these USA, Mexico and Canada may be visiting less due to having less discretionary income. On the other hand, Gen Z seem to be wont to spend more on vacations when younger, versus trying to save more for retirement. As Mike C noted, it’s complicated! Maybe not as difficult (apparently) as climate models or predicting the paths of hurricanes, but many variables come into play.
MCO has definitely seen an increase in international traffic, which I suspect is its own form of pent-up demand (people were slower to return to traveling internationally than domestically).
It also seems like a lot of Americans were heading abroad last year. With the dollar being historically strong, it’s a great time to visit other destinations (and again, a form of pent-up demand–see above). Great time to visit Tokyo Disneyland, with the yen being at 3-decade lows versus the dollar.
I would love to go do Tokyo! Leaving next Friday to Turkey for a week and then on to Prague. I think right now 100 Turkish lira is about $3! Haven’t checked the Czech koruna(sp?) rates yet but our friend in Turkey says it’s super cheap there. He just spent 3 nights in Ankara in a massive hotel suite for about $80 a night.
We did DLP 3 years ago and it was cool. That park is amazing, especially Big Thunder, Pirates, Space, etc and the castle, well you know all about it. The Studios there, well maybe now with the additions it is worth more than a half day.
Headed down to Epcot in a few days for my daughters 21st birthday. Here’s to hoping the crowds are low and the drinks are cold. Reports are saying attendance is low right now.
I would like to see the occupancy numbers for onsite resorts. DVC is adding a lot of rooms. (Mixed feelings about that). There is more competition for rooms in the area. If Disney is discounting rooms I bet the Occupancy rates have dropped a bit.
We have been going to WDW since mid 90’s. Gone is the time where there was an off season. I remember December being filled with mostly South American tour groups. I know those times will never return. The parks have always been a money machine I do not see that ever ending.
I do remember those massive Brazilian tour groups in the parks! Too many people, too few guides… Fun times!
It’s my understanding that occupancy has taken a hit versus ~2022, but keep in mind that there was a high percentage of rooms that were out of service then. Reduce supply while increasing demand, and it’s no shock that occupancy was historically high.
If using 2019 as the baseline, occupancy numbers are likely still strong.
Armchair analysts (of which I am one) are quick to attribute cause and effect to stats going up and down to sometime topical and easy, when in reality it’s difficult to impossible. People are complicated, deciphering why numbers go up and is even harder.
Your analysis, though, seems entirely likely, and I always appreciate your take on the numbers.
The prices for tickets add ones no more perks what do they expect?
I just hope it’s not crowded in 4 days when we arrive lol. Happy Mother’s Day to Sarah!