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Credit: Inside The MagicIn a shocking move, The Walt Disney Company blamed poor Americans as the main reason Disneyland California and Walt Disney World Resort theme parks have not seen high attendance recently.
Disney Sees Low Attendance Records, blames Poor Americans
According to recent reports from CNN and TheStreet, Disney Parks is facing challenges as consumer demand slows amid rising prices. The company’s parks business underperformed expectations in the last quarter, with declining profits.
Despite steady attendance and increased spending per guest, Disney acknowledged that a weakening economy is affecting travelers who had previously supported the company, especially as its movie and streaming segments struggled.
Americans prioritize travel and leisure as they scale back on everyday purchases, such as fast food. However, a potential dip in vacation spending could signal broader economic concerns as the job market shows signs of weakening. The unemployment rate rose 4.3% last month, nearly a percentage point higher than at the beginning of the year.
This trend isn’t isolated to Disney; Bank of America Institute reported a slight decline in credit card transactions for travel in June, though this was partly attributed to price decreases. Researchers noted that the overall outlook for travel remains strong. Inflation has also impacted Disney’s domestic parks, with new technology and attractions contributing to decreased income.
CFO Hugh Johnston’s remark that “the lower-income consumer is feeling a little bit of stress. The high-income consumer is traveling internationally” has sparked criticism among Disney guests. Many of them view the statement as tone-deaf to American families’ financial hardships.
With inflation continuing to squeeze household budgets, many lower-income consumers are finding it increasingly difficult to afford the luxury of a Disney vacation.
Johnston’s comment, highlighting the disparity between struggling domestic travelers and affluent international tourists, has been interpreted by some as an acknowledgment of Disney’s shift in focus toward wealthier clientele. This further alienates those who have long considered Disney a family destination.
The statement has exacerbated feelings of exclusion among guests already contending with rising costs across Disney’s parks and resorts.
For many, a Disney vacation represents a significant financial commitment that is becoming increasingly unattainable in the current economic climate. Johnston’s emphasis on the spending power of high-income consumers may be seen as a reflection of Disney’s broader business strategy, one that prioritizes profitability over accessibility, leaving many fans feeling marginalized during a period of economic uncertainty.
Inflation has also impacted Disney’s domestic parks, with new technology and attractions contributing to decreased income. Consumers remain hesitant to cancel vacations despite higher prices, particularly with a brand as powerful as Disney’s, said CFO Hugh Johnston during the company’s earnings call.
Johnston acknowledged a slight moderation in demand but downplayed it as a significant shift, suggesting that similar results could persist for a few more quarters.
While Disney’s domestic parks face challenges, the company’s international parks and cruise lines are experiencing different outcomes. Attendance and room bookings have increased overseas, with guests spending more during their visits. Johnston noted that lower-income consumers feel the pinch, while higher-income travelers opt for international trips.
Marriott has also reported more robust results at its luxury resorts than its budget hotels.
In other positive news for Disney, its streaming service turned a profit for the first time, a milestone previously only achieved consistently by Netflix. The media giant announced price increases for Disney+, Hulu, and ESPN+, alongside the continued recovery of its entertainment business post-COVID, with several blockbuster films leading the box office in recent months.