The next big growth opportunity for Disney
The Walt Disney Company is entering a new era of expansion in the experiential travel segment. With the upcoming launch of its sixth cruise ship, the Disney Treasure, scheduled for December 21, 2024, and plans for seven more ships by 2031, the company is showing a clear vision: cruises are set to become a key pillar of its growth.
The Disney Treasure, which follows the previous Disney Wish ship launched in 2022, is part of a strategic expansion of the fleet, which is expected to include a total of 13 ships by 2032. This segment, which falls under the experiences division that includes theme parks, is described by analysts as highly profitable. This is due to high occupancy and revenue per room, which experts say allows the ships to outperform the industry average.
"This is a high return on capital investment," comments Ben Swinburne of Morgan Stanley, "especially as the main target group is families." The Disney Treasure can accommodate up to 4,000 passengers and 1,555 crew members. Interest in the maiden voyage is huge, although prices start at $8,511 per person.
In addition, Disney will launch two more ships, the Disney Destiny and Disney Adventure, in 2025 and plans five more ships over the next six years.
The financial benefits of this expansion are significant, according to analysts. Cruise revenues are expected to more than double by 2027, reaching as much as $9 billion by 2032 with an operating profit of $2.3 billion. This growth is comparable to the results of Disney's sports division, which includes ESPN.
An important part of the growth is the experiences the ships offer. Treasure, for example, brings iconic attractions, characters and stories from Disney parks to sea. The company's CEO Bob Iger pointed out that more consumers are choosing cruising as a more affordable alternative to visiting theme parks.
Investors expect cruises to become a key part of the experiences division, which includes parks, ships and consumer products. This segment is expected to grow 6-8% next year, with Treasure itself being a significant catalyst. Cruise revenue is expected to become the main growth driver for the US portion of the division in 2026.
Although the pandemic has impacted the cruise segment's returns, pre-crisis operating margins of between 20-25% suggest strong profit potential. Analysts believe the long-term benefits of expansion will outweigh the cost of fleet expansion, and Disney will be able to strengthen its position in the cruise market.
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Source: Yahoo, Reuters.