(CNN) – Disney Parks are the latest business to face slowing consumer demand in the face of higher prices.
Disney’s parks business underperformed expectations and profit fell somewhat last quarter. Although the company said attendance remained steady and people were spending more, it also acknowledged a slumping economy was weighing on travelers who had once buoyed the company while its movie and streaming business was struggling.
While many Americans have pulled back on everyday purchases such as fast food, they still choose to spend on travel and leisure. But consumers forgoing vacations could be a worrying sign for the economy as the job market’s luster fades: Last month, the unemployment rate ticked up to 4.3%, nearly a percentage point higher than it was at the start of the year.
It’s not just Disney that’s seeing a pullback – Bank of America Institute reported credit card transactions on travel ticked down in June. Researchers attributed that to price decreases, though, and said “the underlying picture for travel remains robust.”
Inflation also helped drive the decrease in income at Disney’s domestic parks, and new technology and rides ate into profit, according to the company.
Even with higher prices, people are reluctant to cancel vacations, especially with a company that has brand recognition as strong as Disney’s, CFO Hugh Johnston said Wednesday on the company’s earnings call.
“While we saw a slight moderation in demand, I certainly wouldn’t call it a significant change,” Johnston said. “I don’t think I’d refer to it as protracted but just a couple of quarters of likely similar results.”
Disney’s park issues come on the heels of disastrous Airbnb earnings, which sent the home rental company’s shares tumbling Tuesday after it reported slowing demand from US consumers.
Disney’s international parks and cruises, though, are seeing different results: Disney’s international parks had increases in attendance and more rooms booked. Guests are also spending more at the parks. The company noted that attendance at the parks was comparable to this time last year and spending per guest was up.
“The lower income consumer is feeling a little bit of stress. The high-income consumer is traveling internationally,” Johnston said on the call.
Marriott also reported stronger results at its luxury resorts compared to its cheaper chain hotels.
A bright spot for Disney
Disney’s streaming service turned a profit for the first time, a feat only Netflix has been able to achieve consistently. The media giant announced price hikes across the board for Disney+, Hulu and ESPN+ on Tuesday.
The company’s entertainment business has also rebounded from the Covid era, when customers weren’t visiting movie theaters.
“We’ve returned ourselves to the standard of excellence that we had when we were producing multiple billion dollar films per year, and we had the three biggest films in the biggest film in May, biggest film in June and biggest film in July,” Johnston said on CNBC Wednesday.
