Disney Announces $60 Billion Expansion with New Cruise Ship Sailing from Tokyo by 2028
By Dawn Chmielewski and Lisa Richwine
URAYASU, Japan (Multibagger) - Walt Disney Co. (NYSE: DIS) has unveiled ambitious plans to launch a new cruise ship from Tokyo starting in fiscal 2028, adding a ninth vessel to its growing fleet. This new ship is part of a massive 10-year, $60 billion expansion strategy for Disney's theme parks and cruise operations.
Disney's Expanding Fleet
The new vessel, modeled after the largest ship in Disney's fleet, the Wish, is a collaborative effort with Oriental Land Company (OLC), the operator of Tokyo Disneyland. Currently, Disney operates five cruise ships and has plans for three additional ships, including one that will set sail from Singapore in 2025.
A Lucrative Venture
The newly announced ship, which will accommodate up to 4,000 passengers, is expected to generate approximately 100 billion yen ($621.77 million) in annual sales within several years of its launch, according to OLC.
Thomas Mazloum, president of Disney Signature Experiences, stated, "Launching from Japan will make Disney vacations at sea more accessible to Japanese guests, who we know are some of our biggest fans."
Cruise Industry Rebound
The cruise industry is experiencing a significant rebound following the global COVID-19 pandemic shutdown. According to the Cruise Lines International Association, passenger numbers are projected to reach 34.7 million this year, a 17% increase from 2019.
Josh D'Amaro, chairman of Disney Experiences, emphasized that the new ships will extend Disney's themed entertainment to regions far from its theme parks, such as Melbourne and Vancouver. Disney's unique positioning in the cruise market caters specifically to families, a segment previously underserved.
"Forty percent of the people on those ships today will say, 'The only reason I'm on a cruise ship today is because Disney's here,' which means we're creating a market," D'Amaro noted.
Financial Impact
Disney's experiences business, encompassing its domestic and international parks and cruise line, contributed more than one-third of the company's revenue in the March quarter and nearly 60% of its operating income.
However, Disney's stock faced a downturn in May after Chief Financial Officer Hugh Johnston warned of a "global moderation" in travel in the fiscal third quarter and other impacts, including higher wages and pre-opening expenses related to two new cruise ships and the new vacation island, Lookout Cay.
UBS analyst John Hodulik suggested that the rising tide for Disney's cruise lines could help mitigate any softness in the company's domestic theme park business. Currently, the second-quarter booking occupancy for all five ships stands at an impressive 97%.
"The rapid expansion of Disney's cruise capacity helps de-risk the medium-term outlook for the parks business," Hodulik stated.
Future Prospects
Disney's recent investments include three new areas at Tokyo DisneySea, themed around "Frozen," "Tangled," and "Peter Pan," as well as a "Frozen" themed land at Hong Kong Disneyland and a "Zootopia" experience in Shanghai. The company is also expected to announce plans for new attractions at Disneyland in California and Walt Disney World in central Florida at its D23 fan convention in August.
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Breakdown and Analysis
What This Means for You
- Investment Opportunity: Disney's $60 billion expansion indicates robust growth potential. Investors should consider the long-term benefits of Disney's diversified entertainment portfolio.
- Travel and Leisure: For families and Disney enthusiasts, the new cruise ship launching from Tokyo offers an exciting new vacation option, making Disney cruises more accessible to Japanese and Asian markets.
- Economic Impact: The anticipated revenue from the new vessel underscores Disney's significant economic contributions, potentially benefiting regional economies through job creation and tourism.
- Stock Market Insight: Disney's stock fluctuations highlight the importance of understanding market dynamics and external factors, such as global travel trends and operational costs, that can influence company performance.
By expanding its cruise line and theme park offerings, Disney continues to innovate and capture new markets, ensuring its position as a leading entertainment powerhouse. Whether you're an investor, a Disney fan, or someone looking to understand market trends, these developments present valuable insights into the future of travel and entertainment.