The Walt Disney Co. (NYSE:DIS) reported weaker than expected returns from its theme parks, dampening the plans of CEO Bob Iger’s plans to use the company’s real estate holdings to boost revenue.
Disney’s latest quarterly report found theme park revenue up by 2% year-over-year to $8.4 billion, but operating profit dropped by 3% year-over-year to $2.2 billion. The company attributed the shaky figures to higher costs coupled with “moderation of consumer demand” that “could impact the next few quarters.”
“The lower-income consumer is feeling a bit of stress, and the higher-income consumer is traveling internationally a bit more,” said CFO Hugh F. Johnston in a conference call with analysts today, adding, “I would just call this as a bit of a slowdown that’s being more than offset by the Entertainment business, both what we’ve seen so far and our expectations for ‘Moana 2’ as well as ‘Mufasa.’”
The slowdown in activity at the Disney theme parks was not envisioned when Iger recently highlighted the company’s investment plans by pointing out it had wide swaths of real estate to build upon.
“We have thousands of acres of land still to develop,” he said during a presentation at the Morgan Stanley Technology, Media and Telecom Conference in March. “We could actually build seven new, full lands if we wanted to, around the world, including the ability to increase the size of Disneyland [Resort] in California, which everybody thinks is kind of land-locked, by 50%. You can look at every single location that we’ve got, and there’s land, opportunity, but most importantly, we have so much IP to mine that there’s opportunity there to create experiences that we know people will love to have in our parks.”
Iger added that if “you look at the land that we have, you look at the demand that exists in the marketplace, and you look at the return on investment capital, it’s a no-brainer to invest that way.”
Still, the company remains on sturdy financial ground. For the latest quarter, Disney’s companywide revenue rose 4% year-over-year to $23.2 billion, which was slightly above Wall Street expectations.
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Of course their profits are down. When they cancelled Fast Past and instituted more “pay by ride” features and raised prices according to season and day of the week, I quit going. I had gone every year up until 2020 over the course of 20 plus years. Then after Covid, everything changed. Now try to figure out their schedule of prices? You have to be a math whiz or an engineer. And to make reservations to go on a ride days before you get there is nuts. No more the days of driving up to the parks, and arriving without making plans and reservations, months in advance. I feel they have gotten so profit driven the magic is totally gone. Disney isn’t what it used to be at all. A family of four needs to have tons of money to go to Disney these days and lots of extra time in their lives to make plans, months and months in advance. All these changes were for their profit and their convenience of staffing rides and restaurants, not for their customers.
I totally agree, I live in Florida and we had annual passes for at least 10 years ; stayed at every hotel at least once ; we would go up for just a day or extended stays ; always went to downtown Disney before we would head home ; totally different times and vibes ; we always enjoyed spending our money at Disney ;
It has certainly changed , my last visit was April of 2023 when I took relatives from Greece …