Movies

Disney’s parks are its economic engine. Tariffs could put a damper on it

BBG News

With economic instability caused by escalating trade disputes and worries about a potential recession, stock analysts caution that the theme parks operated by The Walt Disney Company might experience negative effects.

Generally speaking, visits to amusement parks in the U.S. tend to reflect the overall health of the American economy. When individuals feel more secure financially, they are often inclined to make non-essential purchases like a trip to Disney World, as suggested by Laurent Yoon, senior analyst at Bernstein.

According to Yoon, when the economy experiences difficulties, it’s common for the performance of the parks to mirror this downward trend. This insight was shared in a recent communication to clients, where he also discussed the challenges facing the company, such as the impact on the parks due to economic fluctuations.

Over the past few months, there’s been a significant drop in consumer confidence due to concerns about a potential trade war and President Trump’s unpredictable adjustments in tariff policies. This month, a survey conducted by the University of Michigan showed that consumer sentiment in April decreased by 11% compared to March, marking four consecutive months of decline.

Business

As reports surface about visa revocations and expulsions, tourism authorities at both the state and local levels in Los Angeles and California are growing more concerned over possible negative impacts on tourism.

According to Martin Lewison, a business management associate professor at Farmingdale State College in New York, economic confidence and positive outlook are significant factors fueling the U.S. economy. When this optimism wanes, it tends to alter consumer spending habits.

Planning a trip to Disney parks might be impacted due to this situation. People with pre-arranged visits are less likely to cancel, but those who were thinking about taking a vacation might postpone their plans if they’re worried about their financial stability, according to Jessica Reif Ehrlich, senior media and entertainment analyst at Bank of America.

Disney did not respond to a request for comment.

The company’s parks could also be vulnerable to decreased international tourism.

The friction in trade relations between the U.S. and various countries has sparked a certain anti-American sentiment. For instance, Canadians have been avoiding American goods in shops and reconsidering trips to the U.S., following President Trump’s persistent suggestions of annexing Canada as the 51st state.

This year, it’s projected that overall foreign travel to the United States will drop by approximately 5%. Specifically, travel from Canada is anticipated to decrease by around 15%, as reported by Tourism Economics, a travel statistics firm based in Philadelphia.

Despite Disney not disclosing the number of visitors, international tourists play a crucial role in generating revenue for both Walt Disney World in Orlando, Florida, and Disneyland Resort in Anaheim, California. These tourist destinations continue to rely heavily on international travelers, though they may not have returned as frequently as before the pandemic.

Reif Ehrlich emphasized the significant role of international tourists, explaining that they typically spend more money and extend their stays, making them particularly beneficial.

In 2023, approximately 8% of tourists in Orlando originated from outside countries, as reported by the Visit Orlando trade organization. These international travelers (excluding those from Canada) typically stayed for around eight nights and spent over $1,110 per person during their visit, according to the association’s data.

As a cinema enthusiast, I was thrilled to learn that in the year 2023, a staggering 25.8 million souls flocked to the vibrant city of Anaheim, as reported by the Visit Anaheim Marketing Association. These visitors collectively poured $6.5 billion into our beloved city, marking an impressive 7.5% rise compared to the previous year, as per their statement.

Disney has been under some pressure as they prepare for the upcoming launch of Universal’s Epic Universe theme park in Orlando, set to open next month. During almost every financial report discussion, Disney executives have faced questions regarding their response to this new competition, consistently assuring shareholders that bookings for the park have been promising.

The theme parks play a crucial role in the financial health of the media and entertainment corporation based in Burbank, California. Disney’s experiences sector, encompassing their U.S. and global theme parks, cruise line, merchandise, and luxury travel destinations like the Aulani resort and spa in Hawaii, has historically served as the driving force behind the company’s financial success.

Last year, the division brought in almost 60% of the company’s operating income.

Disney intends to allocate approximately $60 billion over a decade towards enhancing their division, with the aim of attracting fresh visitors and encouraging repeat patronage. This investment will encompass significant upgrades at both Disneyland Resort and Walt Disney World.

Shares of Disney closed at $82.77 on Wednesday, down 2.6%.

Read More

2025-04-17 13:32

Previous post How to Change Your Name in Brawl Stars
Next post Kris Jenner’s New Look Makes Fans Think She’s in Her 30s!