Disney’s executives have noticed strong attendance at the company’s theme parks, but the numbers are normalizing after hitting record highs in recent months. CEO, Bob Iger, mentioned that despite this normalization, they are still seeing signs of healthy growth in the business, particularly in future bookings. In light of this, Disney is planning heavy investments in their cruise business, as it has a lot of potential for growth and provides an opportunity for excellent returns in the future.
As part of their plan for growth, Disney announced that they would almost double their expenditure on their experiences business, investing $60 billion in expanding their theme parks and cruise lines over the next decade. The majority of this investment will focus on increasing capacity. They have already increased their capital expenditures by 8% to $2.6 billion, with a primary focus on improving park attractions and expanding their cruise ship fleet.
During the second quarter of their fiscal calendar, Disney’s experience business saw strong results, with a 12% increase in segment operating income and a margin expansion of 60 basis points. Domestic park revenue was up 3% compared to the previous year, with Walt Disney World Resort driving higher operating income. Despite higher operational costs, the company managed to offset this with higher average ticket prices. However, Disneyland Resort saw lower results, but they have expansion plans underway in Anaheim, California.
Disney also saw improved operating income from Hong Kong Disneyland Resort, thanks to increased attendance, average ticket prices, and spending on food, beverage, and merchandise. A new exhibit, World of Frozen, has generated additional interest since its debut in November 2023. Disney executives are optimistic about robust operating income growth for the Experiences business for the full fiscal year, highlighting their anticipation of a successful year ahead in this sector.
Overall, Disney is adjusting to a normalization in theme park attendance after record highs and is now focusing on their cruise business for future growth. With heavy investments planned in expanding their experiences business, particularly in theme parks and cruise lines, Disney is positioning itself for continued success in the industry. Despite the slowdown in attendance numbers, the company remains positive about the opportunities and healthy growth prospects ahead, signaling a strong outlook for the future.
