The Mouse House sets sail with timely cruise expansion
New cruise ships don’t exactly go up overnight. That makes Disney’s timing all the more fortuitous. Walt Disney Co.
has been in the cruise business for nearly 30 years, but it has long been a drop in the industry’s ocean: The five ships it operates have a combined passenger capacity of about 5% of market leader Carnival. But three more ships are coming online over the next 18 months, including a 208,000 gross ton behemoth called Disney Adventure that will be the Magic Kingdom’s first entry into the flotilla of megaships that have been hitting the seas lately. The three new vessels will more than double Disney’s cruise capacity by the end of next year, Bernstein analyst Laurent Yoon estimates.
The timing couldn’t be better: Disney’s land-based theme parks have hit a bit of a rough patch. Revenue growth has slowed notably following a strong two-year run fueled by pent-up demand after the pandemic’s lockdowns. The company warned in its fiscal second quarter report in early May that operating profit for the Experiences segment that includes parks and cruise ships would fall well short of Wall Street’s forecasts for the June-ending quarter.
Disney cited “some normalization of post-Covid demand" as a factor, which was enough to sink the stock: Disney shares are down around 15% since that report. Rival theme-park operators United Parks, Six Flags and Cedar Fair have averaged a 25% gain since their respective reports. Theme parks play a particularly important role in Disney’s business model these days.
Read more on livemint.com
