Is Disney's American theme park no longer as popular?

Disney, a long-established entertainment giant, warned on Monday (February 2) that the number of foreign visitors to its U.S. theme parks continues to decline, indicating that the company’s dominant “experience” business segment may face challenges from being overtaken.

This is the latest American multinational company affected by Trump’s tariff policies. According to the U.S. National Travel and Tourism Office, influenced by tariffs imposed by the Trump administration on multiple countries and geopolitical tensions, the number of international visitors to the U.S. decreased by 6% last year. Of particular concern is the sharp drop in Canadian visitors—down about 19% in the first half of 2024 compared to the same period in 2023. Analysts say the decline in Canadian visitors to Disney is already a given, with some parks experiencing drops of up to 30%. This trend is expected to continue for some time. Data shows that currently, 25% to 30% of Disney’s U.S. theme park visitors are from overseas.

However, Disney’s latest earnings remain impressive. In its first-quarter fiscal year report released on Monday, Disney revealed that the experience segment, including theme parks, resorts, and cruises, remains the core profit driver, with revenue up 6% year-over-year to $10.01 billion, and operating profit also up 6% to $3.31 billion. Notably, the operating profit from Disney+ and Hulu streaming services surged 72% year-over-year to $450 million, far exceeding Wall Street analysts’ and Disney’s own expectations. Disney CFO Hugh Johnston attributed this growth to strong viewership of classic films like “Avatar” and “Zootopia” (both of which have sequels), as well as comprehensive entertainment programs such as ABC’s “High Potential.”

Regarding whether Disney’s U.S. parks will continue to be the company’s profit center, Dennis Spigel, founder and CEO of the International Theme Park Service Company, stated that future growth in Disney’s theme park business will mainly come from outside the U.S. The domestic theme park industry, with a 71-year history, has become mature, making annual growth increasingly difficult. Disney’s former CEO Bob Iger told investors on Monday that he remains “very optimistic” about Disney’s theme park business. He also highlighted international projects, such as the upcoming “Frozen” themed area at Disneyland Paris opening in March and a $10 billion indoor theme park in Abu Dhabi. Iger emphasized that the Middle East region holds significant development potential.

On Tuesday (February 3), Disney announced a new CEO: Josh D’Amaro, who will succeed the soon-to-be 75-year-old Bob Iger. Currently, D’Amaro faces significant responsibilities: not only must he continue to push Disney’s transition to streaming, but he also needs to address the expected ongoing decline of traditional TV business and further promote growth in the experience segment. Data shows that 15 years ago, Disney profited substantially from its cable TV business, but over the years, that segment has steadily declined. In early 2024, Disney planned to invest $60 billion over the next decade in theme parks and cruises to expand capacity. On Monday, Disney stated that profit growth in the experience business (including theme parks, cruises, and consumer products) for this quarter would be moderate, partly due to “domestic parks facing resistance in attracting international visitors.”