Theme: Slowdown in the U.S. Leisure Industry
The U.S. leisure industry is experiencing a significant slowdown, affecting companies like Disney, Airbnb, and Hilton. Disney’s operating income at its American theme parks fell in the third quarter of 2024, citing easing consumer demand and macroeconomic factors as contributing factors. While revenues from domestic parks saw a slight increase, operating income decreased by 6%, attributing it to higher costs and a moderation of consumer demand that exceeded expectations.
This slowdown in the leisure industry is not unique to Disney. Other companies, including Hilton and Airbnb, have also reported a decline in the general travel and leisure sector in the United States. Hilton CEO Christopher Nassetta noted that the leisure market has been “normalizing” after reaching elevated levels following the pandemic. People now have less disposable income for travel, impacting companies in the industry.
The consulting firm PricewaterhouseCoopers (PwC) also highlighted the softening of leisure demand for American hotels. Growth in leisure demand has slowed, with domestic travelers seeking international experiences and inbound traffic failing to recover to pre-pandemic levels. Hotel occupancy rates have declined for two consecutive quarters, and PwC expects economic uncertainty, geopolitical tensions, and the upcoming elections to potentially affect hotel performance in the coming year.
However, there are some positive aspects for travelers. The U.S. Travel Association reports that travel costs have decreased, making it more favorable for travelers compared to the pre-pandemic period. The Travel Price Index fell in June, driven by lower airline, gas, and hotel costs. This decrease in prices may be enticing for people planning trips.
In fact, a survey by Allianz Partners USA found that Americans are planning longer stretches of time off this summer. The survey revealed that 73% of Americans have committed to traveling away from home for at least one night between May and September, with 41% planning multiple getaways at least 100 miles away for a minimum of one night. The survey also noted that the amount spent on a three-night trip has almost doubled over the past two years, indicating a desire for extended vacations.
Overall, the U.S. leisure industry is facing a slowdown, affecting companies like Disney, Airbnb, and Hilton. Factors such as easing consumer demand, higher costs, and a moderation in leisure demand have contributed to this decline. While travel costs have decreased, economic uncertainty and geopolitical tensions continue to impact the industry’s performance. However, the desire for longer vacations suggests that people are still eager to travel despite these challenges.
