Disney is planning to super-size its theme park and cruise line businesses.
The Walt Disney Co. disclosed plans to boost capital spending in the Disney Parks, Experiences and Products business segment to nearly double in a 10-year period, as compared with the previous decade, to approximately $60 billion in aggregate.
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Disney’s stock price fell on the announcement, down more than 3% in early trading Tuesday.
Top Mouse House execs, including CEO Bob Iger and Josh D’Amaro, chairman of Disney Parks, Experiences and Products, are scheduled to discuss the plans Tuesday at an investor summit at Walt Disney World Resort in Orlando, Fla., with analysts and shareholders.
The plans, revealed in an SEC filing Tuesday, call for “investing in expanding and enhancing domestic and international parks and cruise line capacity, prioritizing projects anticipated to generate strong returns.”
The aggressive 10-year plan to upsize Disney’s parks and cruises comes amid the company’s efforts to slash costs in other areas. That included layoffs eliminating about 7,000 jobs in the first half of this year, part of Disney’s target of reducing costs by $5.5 billion (including an annualized reduction of $3 billion in non-sports content costs over the next several years).
Disney lays claim to having has the largest physical footprint of any global theme park travel business, comprising 12 parks across six sites globally and Disney Cruise Line, which visits 94 ports in 40 countries. “Notably, Walt Disney World Resort is twice the size of the island of Manhattan,” the company said in announcing the plans to increase capital spending, while “Disneyland is the most ‘Instagrammed’ place on Earth, and tens of millions of guests travel on Disney’s transportation networks each year.”
About 100 million people visit Disney’s theme parks each year, but “there is still enormous untapped potential for reaching more consumers,” the company said. According to Disney’s internal research, the addressable market for its theme parks is more than 700 million people — and that for every single guest who visits a Disney park, there are more than 10 people “with Disney affinity” who do not.
In an investor slide deck accompanying the filing, Disney said revenue in the Parks, Experiences and Products business hit $32.3 billion for the 12 months ended July 1, 2023, representing a compound annual growth rate of 6% since fiscal year 2017. The segment, referred to as DPEP, generated operating income of $9.2 billion over the one-year period that ended July 1, an 8% CAGR since 2017.
The company said Disney’s parks business has experienced growth “following previous periods of significant investment,” which included the additions of Cars Land at Disney California Adventure, Star Wars Galaxy’s Edge at Disneyland Resort and Disney’s Hollywood Studios at Walt Disney World, and Avengers Campus at Disney California Adventure and Walt Disney Studios Park in Paris. It also called out new Frozen-themed lands slated for Hong Kong Disneyland, Walt Disney Studios Park in Paris and Tokyo Disney Resort, as well as a Zootopia-themed land at Shanghai Disney Resort.
Disney said it “will explore even more characters and franchises, including some that haven’t been leveraged extensively to date, as it embarks on a new period of significant growth domestically and internationally in its parks and resorts.” The company said its parks properties have more than 1,000 acres of land for possible future development — the equivalent of about seven new Disneylands, it said.
Meanwhile, Disney Cruise Line — as previously announced — will nearly double the worldwide capacity of its cruise line over the next two years, adding two ships in fiscal year 2025 and another in 2026. The expansion plans include a new homeport in Singapore beginning in 2025 “to expand its reach further into the Asia-Pacific region.”
“We believe that the company’s financial condition is strong and that its cash balances, other liquid assets, operating cash flows, access to capital markets and borrowing capacity under current bank facilities, taken together, provide adequate resources to fund ongoing operating requirements, contractual obligations, upcoming debt maturities as well as future capital expenditures related to the expansion of existing businesses and development of new projects,” Disney said in the 8-K filing with the SEC.
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