Disney (DIS) is starting to lose some of its magic as some of its customers are beginning to stand their ground against hiked prices.
After the entertainment giant quietly increased prices for tickets and other services at its Disney World and Disneyland theme parks, customers have been pulling back on their spending, and it's starting to hurt Disney’s pockets.
Related: Disney World cuts classic character from meet-and-greets amid scrutiny
In its second-quarter earnings report for 2024, Disney revealed that while its revenue at its theme parks in the U.S. increased by 3% year-over-year, its operating income (how much a company makes after expenses) in the sector decreased by 6%.
Disney claims that while it is battling higher costs due to inflation, it also saw a “moderation of consumer demand” at its theme parks that “exceeded” its previous expectations. It also said that the slowed demand could continue to impact its operating income for 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,“ said Disney in the report.
Image source: Shutterstock
While discussing the report during an earnings call, Disney Chief Financial Officer Hugh Johnston said that the company is seeing a shift in behavior between low-income and high-income customers.
“The lower-income consumer is feeling a little bit of stress,” said Johnston. “The high-income consumer is traveling internationally a bit more.”
More Disney:
- Disney cast members violate a controversial rule at theme park
- Disney World shuts down classic ride amidst controversy
- Disney has an unexpected new theme park rival
While Disney’s U.S. theme parks faced a softening in demand, its international theme parks saw a 5% year-over-year increase in revenue and a 2% increase in operating income, which the company partially attributes to higher guest attendance and spending.
Disney's theme parks quietly become more expensive
An increased number of consumers across the nation are indeed feeling extra stress on their wallets due to record inflation and higher costs of living overall. So consumers pulling back on their spending, especially after Disney recently implemented a series of price hikes, doesn’t come as a surprise.
Related: Disney World replaces 'offensive' character at popular attraction
In late 2023, Disney hiked prices at both Disneyland and Disney World by between $5 and $65, depending on the ticket. Parking prices at Disney World also increased from $25 to $30, and its annual passes were also subject to a price increase.
In February, Disney also revealed higher Disney World ticket prices for 2025, where a chunk of the lowest single-day, single-park ticket prices increased by $10.
Consumers face debt after Disney trips
A significant amount of consumers who visit Disney’s theme parks have suffered significant financial debt as a result of their trips. According to a recent survey by LendingTree, 24% of visitors and 45% of parents who visit Disney theme parks have gone into financial debt to cover the cost of their trips.
The survey also found that, on average, parents who take their young children on a Disney vacation end up with about $1,983 in Disney-related debt, and the main source of the debt is unexpectedly high trip costs.
About 65% of the survey respondents said that food and beverages at Disney parks were a significant expense, while 48% highlighted transportation and 47% said accommodations.
Related: Veteran fund manager picks favorite stocks for 2024
