Disney confirms drop in summer theme park attendance

August 9, 2016, 3:11 PM · The Walt Disney Company confirmed that attendance at its US theme parks was down 4 percent in the three month period ending July 2, compared with the same period one year ago. Despite the attendance drop, theme park revenue increased 6 percent, to $4.3 billion, and operating income was up 8 percent, to $994 million, according to the company's most recent earnings report.

Disney didn't break down attendance at the Walt Disney World Resort in Florida versus the Disneyland Resort in California. However, anecdotal reports from fans suggest that theme park attendance across the board has been softer in the Orlando area this summer than it has in Southern California. A strong US dollar has made it more expensive for international tourists to visit the United States, which tends to hurts the Orlando parks more those in Southern California, which are more reliant upon local visitors.

In addition, tourism from Brazil — another traditionally strong market sending visitors to Orlando — has dropped significantly due to economic and political turmoil in that country. The Pulse nightclub shooting in Orlando certainly didn't help inspire visits, nor did a fatal alligator attack at Disney World immediately after that.

Finally, and perhaps most significantly, Disney's big price increases have limited demand on both coasts and Disney's revamp of its ticket and annual pass pricing has helped steer people away from the summer months toward traditionally less popular times of the year.

Disney World this summer opened a Frozen-themed revamp of its old Maelstrom ride in Epcot as well as a new version of its popular Soarin' travelogue in the same park. In addition, it expanded nighttime hours at Disney's Animal Kingdom and added a new Star Wars-themed fireworks and projection mapping show at Disney's Hollywood Studios. However, Disney canceled press events promoting these additions, then went silent for a week on all social media after their debut, following the Pulse shooting and alligator attack.

Disney World yesterday announced 20 percent discounts on select Disney resort hotel rooms in November and December and Universal Orlando recently lifted summer blockout dates in an effort to boost attendance. However, fears about the spread of the Zika virus in Florida still threaten the state's tourism prospects.

In California, the Disneyland Resort should get a boost this month from the impending closure of the popular Disneyland Forever and Paint the Night shows, but attendance might weaken after those shows close, especially with lower annual pass renewal rates since the price increases and program changes last year. Meanwhile, observed attendance gains at Universal Studios Hollywood following last spring's opening of The Wizarding World of Harry Potter appear to be at least partially offsetting the presumed attendance softness for Universal in Orlando.

Replies (32)

August 9, 2016 at 5:12 PM · I'm guessing they'd still be pretty happy with this result. Despite significant challenges they've still managed to increase profits with only a very mild drop in attendance.

When breaking the attendance down I'm sure most of the drop is accounted for by drop in annual pass visitors, which are likely the lowest spenders.

I do hope the drop in attendance though sparks the need for more vigorous development, particularly in WDWs lesser parks.

August 9, 2016 at 7:03 PM · It's going to be even harder hit when UK visitors take a sharp decline, with the fall of the pound.
August 9, 2016 at 9:50 PM · At least in the U.S., Disney needed to lower attendance. The park overcrowding was decreasing customer satisfaction while increasing other costs. Trading attendance for margin made business sense and they have done that successfully. The real challenge is keeping attendance up in the off season with the higher prices and here they have demonstrated how to do that. Attendance may be down but revenue is still increasing. As long as enough people are willing to pay, they will keep it up.
August 10, 2016 at 4:49 AM · I hope this trend continues thru this winter for when I visit in December. The last time we went in '12 the crowds were horrible.
August 10, 2016 at 6:06 AM · This seems expected given the raise in prices, lack of new attractions, and number of closed attractions at both resorts due to construction of Star Wars and Toy Story. Now is the best time to go, because once Star Wars is done, there will be record crowds. They should also build Star Wars Land at Disney Studios Paris or Hong Kong. Star Wars would lead to record attendance there too, just not anywhere near close to what it will do to DHS or Disneyland Park.
August 10, 2016 at 7:07 AM ·
Disney has been doing great in the movies industry. But as I have said in the past:

1. Drop ticket prices instead of the opposite.
2. Stop what you are doing and build re-Hollywood studios as a complete Star wars land.
3. Maybe finally build a new Adult ride.

August 10, 2016 at 7:23 AM · a lot of uk people visit florida and i can see a decline until brexit sorts it self out and the pound dropping sharply.
wont stop me tho im there in december and next sept/oct
August 10, 2016 at 8:19 AM · I didn't go to Disneyland this year. The price increases returned me to old habits of a generation ago like visiting Disney as a once a few years treat despite the fact that I moved to within a 15 minute drive to Disneyland Anaheim. Other parks are offering generous discounts. Can't pass them up.
August 10, 2016 at 9:11 AM · Brian Emery, you are thinking like a fan and not a businessman. Prices are up, profits are up despite lower attendance. There will be another price increase next year, people will still come, and the cycle will continue.
August 10, 2016 at 9:52 AM · Hey Two Bits - actually no....
You can make more $$$ by lowering prices and having more customers.

And come on - If Disney would build a total complete Star Wars land, would that not be a wise investment?

People and not coming and it is a true downward trend, yes the US dollar is hurting Disney.. If Disney was even with regards to attendance, and has an increase for Theme park tickets, that would make more sense..

Movies are the saving grace here for Disney the past few years.

August 10, 2016 at 10:32 AM · Brian, just no. They are making more money and don't have to worry about as many people. That is their business strategy whether you like it or not. Phase out the middle class and cater the the upper class that spend more. It's currently working.
August 10, 2016 at 11:37 AM · "3. Maybe finally build a new Adult ride."

I suppose now's a good time for Disney to announce their new Sausage Party ride.

August 10, 2016 at 11:45 AM · While all these points are valid points for the drop in attendance, this article left out one key factor for the drop in attendance. That one factor is the many fans who have simply become upset with WDC. From the removal of Aladdin, to the shorter operating hours at Disneyland, and finally to the removal of the Tower of Terror, many fans like myself have decided to finally pull the plug on renewing their long held AP. And trust me there's actually quite a few fans who've become disenfranchised. Don't believe me? Just go check on Micechat or WDWMagic and see what people are saying about renewing their AP. For many people, it has very little to do with cost of the AP, and more to do with the fact that Disney has angered their fan base.
August 10, 2016 at 11:54 AM · Before I accept Disneyobsession's analysis I want to know how many AP holders there are for Orlando and what percentage they constitute of the total WDW attendance. My suspicion is that it's a vanishingly small percentage of overall business and that whether fans visit or stay away makes stuff all difference to Disney's Orlando bottom line....
August 10, 2016 at 12:26 PM · Barry - Ever hear of J. Paul Getty? His theory was to make a small about from a large number of folks. And for his time, he was the wealthiest person in World.

James: Made me laugh, Thanks...

August 10, 2016 at 12:34 PM · Disney is a different niche for amusement parks....Disney wants to be the higher end of entertainment and want the experience to be Magical. Having a large number of folks at the park so that it's filled to capacity is not Magical.

There are other parks that would match your business strategy.

August 10, 2016 at 12:54 PM ·
August 10, 2016 at 12:59 PM · I used to love Disney World and had premium season passes. It was expensive, but I felt at the time it was worth it. I tried the My-Magic Plus app. and all the fast passes were gone at 7PM at night. (Usually the time I arrive) It was just not a good. I found Pineapple Dole-Whip on-line and can make at my house now...sorry no reason to go now. I'm going to Universal and have been impressed with what they have been doing in their parks.
August 10, 2016 at 1:01 PM · Cut costs, cut quality, raise prices, dumb down content, cater to the lowest common denominator, maximize profits for the next quarterly report...

All the principals that Walt Disney held dear.

August 10, 2016 at 2:19 PM · Disneyobsession, I'd love to believe you're right, I don't believe you are. Fortunately I'm sure the marketing and bean counting people at Disney are sure to know the cause for drop in attendance, and ignite customer dissatisfaction that'll be the strongest argument for new development. However given the small drop and the existence of these other known reasons I think it's unlikely.

Brian, prices going down aren't going to help the profitability (unless its on select dates). Prices are less of a deterrence for many than crowds - I'd gladly sick it up and pay $5 more a day if it meant less queues. Disney analysts would have a pretty good idea where they are on the supply demand curve, which is why prices are going up. J Paul Getty was in his very different industry, where different factors affected pricing.

August 10, 2016 at 4:04 PM · @Brian
J Paul Getty was in a different business. His ability to add oil capacity (he made is money in oil) in a period of increasing oil demand created huge demand. He also had low mineral rights costs thanks to a shrewd deal with the Saudis allowing him to add production at a nearly unlimited rate.

Disney resorts, on the other hand, doesn't have that advantage. It's resort capacity is limited and demand is very fickle. The huge drops in attendance on 2002 and 2009 demonstrates the risk. Further, the resorts have been created to make them not very substitutability, unlike one brand of oil for another (Universal Is the only substitute and they feed off of each other). ESPN is another example as their product is being substituted out by Millenials. The limited ability to control costs in a downturn and higher risk of adding capacity makes the business very different. As a result, margins are the business driver, not production costs.

August 10, 2016 at 4:07 PM · Robert, can you explain the difference between theme park revenue and operating income?
August 10, 2016 at 4:51 PM · James wins. Also thank you for that economics lesson from the mid 1900's, Brian. While I won't dispute the theory, I think there is something to be said about the growing gap between two classes in this country and one companies decision to capitalize one. Which appears...at this moment...to be working.
August 10, 2016 at 8:21 PM · Attendance drops are to be expected at the WDW parks as people hold off on planning trips while construction crews are out in force. However, I do tend to agree with Barry that WDW bean counters would rather have fewer visitors spending more money, than the opposite. Why wouldn't they? Operationally, if you can cater to a select group of wealthy folks and still beat your revenue numbers, then why wouldn't you?

Brian, "adult ride"? Can you name one year-round theme park attraction in all of Orlando that is aimed exclusively at adults? Maybe Spaceship Earth? The Great Movie Ride? Hall of Presidents? One Man's Dream? The movies in the World Showcase? Epcot is probably the most adult of all the Orlando parks - but it still has a good number of family oriented attractions. Is there anything that caters exclusively to adults at Universal? Hulk? The soon to be removed Dragon Challenge? Both rides have a 54" height requirement, but no, they aren't adult rides. That horror make up show at Studios? Maybe, but let's face it, the Universal parks largely cater to teens, preteens, and adults who read kids' books. What about SeaWorld? Maybe Manta, Kraken, and Mako because of their 54" height requirement, but the rest of their attractions seem very family oriented. I am not sure what you mean by "adult ride". Perhaps you mean "thrill ride"? If so, I would agree, Orlando needs more thrill rides, more coasters for sure... seems like only SeaWorld is interested in catering to the coaster fans, which is a real shame. If Disney and Universal put their imagination and deep pockets to it, they could build an amazing, record breaking adult coaster that would easily best even Fury 325 and Maverick (two of my favorites), but alas, they are not focused on the Coaster Boy market. And can you blame them? People seem very happy with the current crop of highly themed, narrative, mildly thrilling, screen/projection based attractions that cater to a wide variety of people and age ranges. Why build an adult oriented thrill ride when the whole-family market is much more lucrative?

August 11, 2016 at 10:12 AM · Hey James: How about just outside Orlando BGT... Great park with many adult rides.

Now Barry, I was simply making a similarity on how this can and will make monies. And apparently you need a lesson from the 1900's. Anytime you drop prices folks get excited and want to patronize said business..

Perhaps you have actually bought something just because it was on sale.
How about a stock - even buy one when it was down?

August 11, 2016 at 1:21 PM · Got it, Brian... You're talking big boy coasters / thrill rides. So BGT has Shiekra, Montu, Kumba, and Falcon's Fury that might qualify as more adult oriented. About the same number as SeaWorld.
August 11, 2016 at 1:40 PM · Hey James: Montu is my favorite..
Disney knows what demographic to go after and is great at it.
I just like to stir the pot here sometimes and watch the Disney fans go nuts...

Lately Disney movies have been fantastic and they have been making so much $$$$$$$$.... I give them a lot credit..

I would just love to see a company drop a ticket price if numbers are dwindling. It's not just about entry tickets. Once you have your captive audience it's Food, drinks, snacks and souvenir's....

August 11, 2016 at 6:13 PM · I have noticed how light crowds have been even for a Friday and Saturday.
August 14, 2016 at 1:37 PM · It's so funny to see the criticisms of Disney when they are the premiere theme park and entertainment company in the world and will go down in history as such. We have been in the golden age of theme parks for the past six decades and no one has done it better than them. From theme park design, to the way guests are entertained the moment they step through the gates, every other successful company has borrowed something from Disney.

Disney can't sustain itself if it keeps on building incredibly expensive attractions each year (especially at Walt Disney World) when so many other factors come into play. Infrastructure, growing security demands, labor, etc. Theme Parks are a business and Disney is very good at it. If you don't like the way the Disney Parks are run then blame our current economic system, not the company. Imagine being at your job and your company not maximizing its profit, or brand, to the best of its ability. Your company would find it hard to compete in today's marketplace.

I'm a Disney shareholder and I have seen my stock value increase by over 50 percent in the last decade. This trend began with Eisner and has successfully endured and succeeded with Iger. The criticisms, or business suggestions, I often read on fan boards from "fans" are often devoid of exactly how theme parks actually operate in the 21st century. Disney not only continues to excel in their field but also to push the envelope for the future. No one also has as much on the line as Disney. With today's fickle customer and current atmosphere of fear, all it would take is one small incident to destroy the industry as we know it. We have it really good right now.

I travel the world and no one gives better service than Disney. Actually, if you've been to Toyko Disney Resort, then you'll find that they provide better "Disney" service than you'll find in the states. Incredible! While the actual theme park fans want everything right now, Disney is planning 10-20 years down the road (and in some cases even more). With their recent acquisitions, they have the IP's to carry them through the next 3-4 decades easily. I'm reminded of that every time I buy my kids toys for Christmas or their birthdays. They're the same toys I got as a kid (Millenium Falcon anyone....)

August 15, 2016 at 8:09 AM · James Rao - Soon to be removed Dragon Challenge? What did I miss?
August 16, 2016 at 4:04 AM · @, you missed this heartbreaking article about IOA basically becoming nothing but a Harry Potter park. Ugh. Enough already.

@, Disney makes about a billion dollars PROFIT every quarter. They can do anything they want to continually expand and grow their parks - anything.

August 16, 2016 at 4:29 AM · we live in England, we have been to Orlando Heaps of times. gripe 1. 14 day pass 2007 £141. 2016 £330 car parking for none Disney guests.

£18 PER DAY X 10 VISITS OVER 14 DAY PERIOD £180 ON TOP OF RIP OFF TICKET PRICES. WE Brits won't be ripped off. we are returning this year Universal horror nights 14 day pass included, 7 night Horror nights £217
Disney 14 day pass £330 . Magic kingdom closes early 10 times during our stay to rip all customers off with raised prices for Mickeys not so reasonably priced Halloween Party.

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