A Wall Street Journal piece took Walt Disney's (DIS 0.46%) theme parks in Central Florida to task earlier this week. The headline of Jacob Passy's column claimed that "Disney World Hasn't Felt This Empty in Years," arguing that shorter wait times and aggressive discounting are signs that crowds are thinning for the country's leading theme parks during the typically potent summer season.
He's not wrong. I visit theme parks probably a lot more than other financial journos covering the industry. I've made roughly two dozen visits to Disney World over the last three months. I was even there last night. I've also made several visits to rival Central Florida gated attractions operated by Universal Orlando parent Comcast (CMCSA 1.73%) and SeaWorld Entertainment (SEAS +0.74%) in that time. I'm a kid at heart, one who doesn't mind paying up for annual passes for all of the major attractions.
Crowds have definitely been light these days. I've seen it with my own two eyes as I walked through the area's leading tourist haunts.
"Whether it's theme park fatigue, consumers tiring of three years of rising prices across all operators, or polarizing politics keeping out-of-towners away, something isn't right as we head into the crucial summer season," I wrote two weeks ago.
However, the Wall Street Journal piece is a travel column. The analysis is spot on, but the financial takeaway isn't there. Disney World isn't dead. For evidence of that, you just need to know where to look.
NYSE: DIS
Key Data Points
The wildest ride in the wilderness
Crowds are certainly light, but it doesn't mean that shareholder pockets will feel the same way as Disney, Comcast, and SeaWorld report their latest financials in the next four weeks. As a result of industry price hikes and new premium-priced features rolled out by Disney, the world's leading theme park operator can make a lot more money despite the lower turnstile clicks. Disney announced a couple of times last year that guests spending 40% more for a day at one of its domestic parks than they were in 2019, and price points and premium experiences continue to evolve and expand.
All of the theme park giants are paying their staffs considerably more than they were before the COVID-19 crisis hit, and other operating expenses have ratcheted higher. Guests have been willing to pay more -- for now -- and that's been enough to offset the rising input costs. If I'm wrong about that, you won't need to wait long to call me out. Comcast reports fresh financials in two weeks. Disney and SeaWorld will step up in early August.
Image source: Getty Images.
There are several reasons why the country's top theme park operators are experiencing sluggish attendance trends right now, particularly in Central Florida.
- The revenge travel trend that helped the industry recover in 2021 and 2022 has shifted from key domestic destinations to international getaways and cruising. It's not a coincidence that cruise line stocks have more than doubled in 2023.
- It's hot out there. The heat index has topped 100 degrees in Florida several days this summer. Locals are seeking air-conditioned escapism this season, but don't underestimate the power of neck fans or cooling scarves to take advantage of the lighter crowds.
- Political pressures could be squeezing guest counts on both ends. Some on the right have been vocal about steering clear of "woke" Disney, but some on the left are staying away from Florida in light of recent anti-inclusivity moves. A couple of tech and nursing conventions have pulled out of upcoming conferences in Central Florida, according to the Orlando Sentinel.
Prices have also inevitably moved higher across Disney, Comcast, and SeaWorld, explaining why the area's leading travel and tourism stocks are being more promotional in tackling the summertime slowdown. It's not just Disney. SeaWorld parks in Florida have been offering passholders new freebies to encourage frequent visits, and Universal Orlando just started offering new passholders three additional months of access. Let's check back in a few weeks to see the official financial reads on the early summer season. If the results are favorable, it may not be just the heat index that's moving higher.
