This morning, The Walt Disney Company unveiled their plan to “accelerate and expand investment” in their Parks, Experiences and Products segment. This acceleration in capital expenditure equates to roughly $60 billion over the next 10 years.
Today’s announcement stems from an investor summit held on Monday at the Walt Disney World Resort with Wall Street analysts. Chief Executive Officer Bob Iger and Disney Parks, Experiences and Products Chairman Josh D’Amaro hosted the presentation (slides below). Critics posit this summit was organized to shore up concerns in flat-lining growth at Walt Disney World and lackluster fan sentiment.
Before delving into the exciting details, note that much like the recent D23 fan event, this announcement only pertains to ‘developing a plan.’ Disney is under no legal obligation to live up to this commitment. Rising interest rates and global economic sentiment combined with acute financial stresses at Disney raise doubt on whether such an ambitious goal could be met if the executives were serious.
With that out of the way, Disney published the slide deck from the summit, with many interesting visuals.
Above, Disney shows Wall Street how increased capital expenditure has improved the domestic parks. Over the past 10 years, Disney increased capex threefold, and saw operating income increase fourfold. This graph demonstrates how theme park expansion greatly benefits the parks. This runs contrary to the behavior of Disney’s executives in recent years, who have significantly cut capex at Walt Disney World and Disneyland.
‘ROIC’ in the slide above means return on invested capital. This slide, which highlights the many intellectual properties Disney has recently inserted in the parks, further highlights how expanding the Parks results in improved operating income.
In the above graph, we get an idea of how upcharges have impacted per capita guest spending. Note, this is NOT showing operating income increases, only per-guest spending. You might notice that Disney’s price hikes did not improve per capita spending as much as “other commercial strategies,” an undefined category.
According to Disney, “Disney Parks has over 1,000 acres of land for possible future development to expand theme park space across its existing sites – the equivalent of about seven new Disneyland Parks.”
At the recent D23 fan event, Chairman Josh D’Amaro used the phrase ‘turbo-charging’ in regards to future plans. This phrase is also used in the presentation given to Wall Street. Disney is making a loose vow to double global capex. Where exactly this money will go is not defined.
Also in the presentation, Disney’s CEO and Disney’s Chairman touch on the expansion of the cruise line fleet, and performance at the international parks. You can review the full slide deck here.
