Disney World Expects Fewer International Visitors In The Next Few Months

A fiscal report released today which shows how much the Walt Disney World Company has earned in it’s first quarter and expects to earn for the rest of the year reveals an interesting insight for UK visitors. The Disney Parks and Experiences sector, specifically Walt Disney World, is expecting fewer international visitors in the coming months.

Disney’s Report: What Does It Say?

Disney's Experiences division, which includes its theme parks and cruise lines, recently had a record-breaking quarter, bringing in $10 billion in revenue. In this report Disney address the reasons for their increased revenue last quarter and the challenges they predict will affect the rate of growth in the next quarter.

Success in Q1: Reasons

Firstly, here are the key reasons why Disney feel they had such a record breaking quarter in the parks:

• At the U.S. parks, the average guest spent 4% more money than they did last year.

• Disney added two new ships to its fleet, the Disney Treasure and the Disney Destiny, which allowed them to host many more guests.

• Last year, the parks were negatively affected by Hurricane Milton. Since there wasn't a similar disaster this year, the attendance numbers in the parks looked better by comparison.

The International Challenge in Q2

Disney expects fewer people from other countries to travel to the U.S. to visit parks like Disney World or Disneyland in the coming months. While they don't pinpoint one single reason, they note that things like political tension, new trade rules or tariffs, and changes in the global economy often lead international visitors to stay closer to home.

Here is what the report says:

The term "headwinds" is business-speak for challenges that slow you down. In this context, when Disney talks about "headwinds," they mean things that are making it harder for international visitors to visit the US.

Disney don’t give one single reason for their predicted slowdown in international visitors, instead they list several risks that usually cause this:

• Money

• Political reasons

• Changing tastes

The change in taste perhaps a nod to the substantial growing pull of EPIC Universe and Universal for UK visitors.

Even though they are still predicting making a lot of money, Disney's profit growth is expected to be "modest" in the next few months. There are other reasons, beyond the drop in international tourists contributing to this.

Why A Slow Down Is Predicted: Other Challenges

Continuing with the list of challenges the Walt Disney World Company said other challenging factors were:

These costs impact revenue. Here’s a more detailed look at why:

• Just like when you open a new business and have to spend a lot of money on equipment and training before you make money, Disney is currently spending heavily on new projects. Specifically, they are paying for the changes in Disneyland Paris and the expansion of the cruise ship fleet.

• It is becoming more expensive for Disney to operate. Because they have added more cruise ships and bigger attractions, they have to spend more on staffing, (operations support), and deal with the general rising prices of goods, (inflation).

What This Means For UK Visitors

Disney's strategy isn't to stop or retreat; it's to spend money on better attractions for the future which is great news for UK visitors.

Here is how Disney outline adjusting its strategy:

• While Disney expects a slower second quarter (Q2), they are still predicting high-single digit growth for the entire year. This suggests their strategy is to power through the current expected quiet period, expecting business to pick up significantly in the second half of the fiscal year.

• Rather than cutting back because of fewer international guests, Disney is spending more on things that attract visitors.

• They increased their spending on new cruise ships and new theme park attractions to $3.0 billion, (up from $2.5 billion last year).

• The idea is that new guest offerings, like the Disney Treasure and Disney Destiny ships, will keep domestic demand high even if international travel is down

• Smart Pricing and Content: The company's general strategy involves making pricing decisions and investing in intellectual property (IP), like the Zootopia and Avatar franchises, that people want to see in the parks. By using popular characters and movies, they aim to keep the parks a must-visit destination regardless of global economic changes.

Magic In A Minute

Disney World parks are very popular and people are spending more than ever, but Disney expects a brief slow down in profits because of the high cost of building new things and a predicted drop in international visitors who might be a bit more cautious about visiting the U.S..