Disney, Airbnb, Jet Fuel, and More!
Editor’s Note: Have a great weekend, everyone!
But first, let’s get to it!
Disney Has a Problem With Its Parks
This, Walt Disney (NYSE: DIS) reported fiscal third-quarter earnings that beat Wall Street’s estimates.
However, operating income for Disney’s theme parks here in the U.S. dropped by 6% on a year-over-year basis. International parks reported a 2% increase in operating income.
According to Disney, the decline in profitability at its U.S. theme parks is due to higher costs from inflation, along with spending on technology updates and new offerings for visitors.
Disney’s parks have long been a cash cow for the House of Mouse. And according to the company, attendance and visitor spending has remained steady.
Still, there is reason to be concerned that cash-strapped consumers — who have already demonstrated an unwillingness to spend more at fast-food restaurants such as McDonald’s (NYSE: MCD) and coffee shops such as Starbucks (NSDQ: SBUX) — may start limiting the money they spend visiting theme parks such as Walt Disney World and Disneyland.
And given last week’s unexpectedly downbeat unemployment report, there’s cause for concern here.
Still, Disney plans to spend roughly $60 billion on upgrades at its parks over the next 10 years.
Will that add to theme park spending?
Or will it drain Disney’s bottom line?
Costco Cracks Down on Membership Mooching
Inflation may have cash-strapped consumers flocking to discount retailers such as warehouse giant Costco (NSDQ: COST).
However, Costco has embarked on new crackdown measures to prevent anyone who isn’t a paying member from entering its stores.
According to the retailer, it is now out to catch shoppers from using the membership cards of friends and family members by requiring them to scan cards upon entrance.
“Over the coming months, membership scanning devices will be used at the entrance door of your local warehouse,” Costco said in a statement. “Once deployed, prior to entering, all members must scan their physical or digital membership card by placing the barcode or QR Code against the scanner.”
The scanner will check the photo on the card against the face of the person attempting to enter. Costco advises members whose cards do not have photos to bring a valid photo ID or — better yet — have their picture added to their account at the membership services counter.
The stricter policies follow the news that Costco is hiking membership fees by $5 to $65 in U.S. in Canada for the first time in seven years.
But given that many retailers are seeing dropoffs in sales, shouldn’t Costco be content to have more foot traffic — albeit unauthorized?
Well, Costco’s business model is surprisingly more like that of Netflix (NSDQ: NFLX) than that of Walmart (NYSE: WMT).
The lion’s share of Costco’s profits comes from annual membership fees. Last year, the company reported an annual 8% increase in revenue from these fees, earning $4.6 billion.
Critics — including myself, I’m not ashamed to say — scoffed at Netflix’s password crackdown measures and membership rate hikes last year.
But surprisingly, those tougher measures have led to both an increase in the number of subscribers to the video streaming service — as well as a boost in profits.
Airbnb’s Warning Spooks Investors
Meanwhile, shares of Airbnb (NSDQ: ABNB) plunged this week following its second-quarter earnings report.
The home stay company reported earnings that missed analyst expectations.
But more ominously, it reported that it’s seeing indications that demand from U.S. customers is waning.
Although revenue rose 11% on a year-over-year basis to $2.75 billion — beating Wall Street’s estimates of $2.74 billion, according to LSEG — the company’s net income fell 15% year over year to $555 million, or 86 cents per share.
Analysts had been hoping for earnings per share of 92 cents.
Still, according to Airbnb, users booked 125.1 million Nights and Experiences — its best-ever second-quarter result.
“We saw continued growth across all regions compared to [second quarter] 2023, with Asia Pacific and Latin America again leading the way,” Airbnb said in a letter to shareholders.
In addition, the company reported third-quarter revenue guidance of $3.67 billion to $3.73 billion.
However, that range is lower than the $3.84 billion in sales that analysts were expecting for the quarter, according to FactSet.
Airbnb also warned that it is expecting its Nights and Experiences category to show a moderation in growth on a year-over-year basis.
Airbnb also warned of “shorter booking lead times globally and some signs of slowing demand from U.S. guests.
That was enough to send shares of the company down by the double digits of percent in trading on Tuesday.
Fuel Costs Remain Above Pre-Pandemic Levels
Fuel costs are among the biggest factors that influence airline ticket prices.
After COVID restrictions on travel were removed, the good old forces of supply and demand sent the price for jet fuel — kerosene — steadily higher. The price for a gallon reached a post-pandemic high of $4.12 in June 2022.
From that point until July 2024, the price of a gallon of jet fuel decreased by 42%, to $2.39 per gallon. However, jet fuel remains far more costly than it was before the pandemic occurred.
According to data from the U.S. Energy Information Administration (EIA), a gallon of the fuel remained between $1.80 and $1.90 in 2019.
Take a look:
You will find more infographics at Statista
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