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

Los Angeles Times

17-04-2025

As trade tensions and tariff-fueled fears of a recession roil the economy, stock analysts warn that Walt Disney Co.'s theme parks could take a hit.
Typically, amusement park attendance in the U.S. is tied to the health of the American economy. When people feel better about their financial situation, they're more likely to spend on discretionary purchases, such as a Disney vacation, said Laurent Yoon, senior analyst at Bernstein.
'When the economy is not doing well, the parks' performance tends to follow that trend,' said Yoon, who wrote a note to clients late last week about the pressures on the company, including the parks' exposure to economic shifts.
Over the last few months, consumer sentiment has plunged amid fears of a trade war and President Trump's tumultuous changes on tariff policies. This month, a University of Michigan survey found that consumer sentiment in April dropped 11% from March, marking the fourth straight month of declines.
'Economic hope and economic optimism are big drivers of the American economy,' said Martin Lewison, associate professor of business management at Farmingdale State College in New York. 'When that optimism dries up, it changes consumption behavior.'
This could affect future bookings for the Disney parks. Visitors who have already scheduled trips tend not to cancel, but those who were considering a vacation may put it off if they're concerned about their personal financial situations, said 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.
Trade tensions between the U.S. and other nations have already led to some anti-American backlash. Canadians, for example, have been boycotting American products in stores and canceling their plans to visit the U.S. after Trump has repeatedly called for annexing Canada as the 51st state.
Overall international travel to the U.S. is expected to decrease by 5% this year, with a 15% decline from Canada, according to Tourism Economics, a Philadelphia-based travel data company.
Although Disney does not release visitor tallies, international tourists are a vital source of business for Walt Disney World in Orlando, Fla., and Disneyland Resort in Anaheim, even if they have not returned in the same numbers as before the pandemic.
'International visitors are really important,' Reif Ehrlich said.'They tend to spend more and stay longer so they're really profitable.'
In 2023, about 8% of Orlando's visitors were from other countries, according to data from the Visit Orlando trade association. International visitors (not including Canada) stayed about eight nights and spent a little more than $1,110 per person on their trip, the association said.
Anaheim attracted a total of 25.8 million visitors in 2023, according to the Visit Anaheim marketing association. Those visitors spent $6.5 billion, an increase of 7.5% compared with 2022, the group said.
Disney was already feeling the heat from rival Universal's new Epic Universe theme park, which is opening next month in Orlando. Disney executives have fielded questions during nearly every earnings call about plans to compete against the new theme park and repeatedly said bookings were positive.
The theme parks are key to the Burbank-based media and entertainment company's overall finances. Disney's experiences division — which includes its theme parks in the U.S. and around the world, as well as its cruise line, merchandise and luxury travel experiences such as the Aulani resort and spa in Hawaii — has long been the economic engine that powers the company.
Last year, the division brought in almost 60% of the company's operating income.
Disney plans to invest $60 billion over 10 years into the division to lure new visitors and give frequent guests a reason to come back. That includes major expansions to Disneyland Resort and Walt Disney World.
Shares of Disney closed at $82.77 on Wednesday, down 2.6%.