Huge Capital Expansion Announcement
On Tuesday, Walt Disney disclosed its intentions to double its parks business capital expenditure to approximately $60 billion within the next decade. The announcement was made by Disney CEO Bob Iger and Josh D'Amaro, the company's parks chief, during a meeting with Wall Street analysts and investors at the Walt Disney World Resort in Orlando, Florida.
Parks: Disney's Financial Pillar
The Disney parks segment has consistently served as a steady source of profit for the company, counterbalancing the impending profitability of the Disney+ streaming service, expected next year. Referring to the parks, Iger labeled them as "a tremendous business" for the entertainment giant headquartered in California. Since 2017, Disney's parks, experiences, and products sector has seen an annual growth rate of 6%, raking in an operating income of $32.3 billion in the previous year.
Past Investments and Their Impact
Historically, significant investments like the introduction of Cars Land at Disney California Adventure and Disney's Hollywood Studios in Orlando have bolstered attendance, as acknowledged in a recent Disney blog post.
Florida: Disney's Key Focus Amid Political Tensions
Iger has projected an investment of $17 billion in Florida over the next 10 years, despite current political disagreements with Governor Ron DeSantis, a Republican presidential hopeful. Furthermore, Disney has unveiled extensive plans for introducing new attractions at its Disneyland Resort located in Anaheim, California. Paul Verna from Insider Intelligence commented, "Despite political uncertainties in Florida, Disney remains committed to enhancing its premier US destination."
Aiming for Untapped Disney Fans
With over 1,000 acres reserved for future developments across its six global theme parks, Disney aims to captivate nearly 700 million consumers. These are identified as Disney enthusiasts who have yet to experience any of the company's theme parks.
Financial Backing for Future Ventures
The regulatory filing affirms Disney's robust financial status and borrowing capacity, ensuring sufficient funds for its growth ventures.
Global Park Attendance Trends
After observing a dip in visitors at Walt Disney World in Orlando, there has been a marked increase in footfall at global parks, notably at Shanghai Disney Resort and Hong Kong Disneyland.
Expansion of Cruise Line Capacity
Disney also envisions expanding its cruise line capacity twofold, with two new ships slated for 2025 and another in 2026.
Stock Market Response
Following the announcement, Disney's stock experienced a 3.0% drop in trading.