Followers questioning why Walt Disney World hasn’t executed something significant to “reply” Epic Universe in 2025 may need their reply: the corporate expects Common Orlando’s third theme park to be “really constructive” and “useful” to Walt Disney World’s attendance and backside line. This discusses the brand new assertion from the CFO and whether or not these projections are “really correct.”
This got here because the Walt Disney Firm held its fourth quarter earnings name this morning, releasing its quarterly report, full 2024 fiscal yr outcomes, and government commentary. Suffice to say, it was a banner yr for Parks & Resorts. The Experiences phase had report income and working revenue for the total yr.
In This autumn, Experiences income elevated $0.1 billion, or 1%, and working revenue of $1.7 billion was a decline of $0.1 billion, or 6% in comparison with the prior-year quarter. Home Parks & Experiences working revenue elevated in This autumn, on comparable attendance to the prior-year quarter, pushed by larger visitor spending, partially offset by larger bills and prices associated to new visitor choices pushed by Disney Cruise Line.
This principally aligns with expectations. Through the firm’s earlier earnings name, Disney CEO Bob Iger warned traders of attendance softness and “demand moderation” into 2025. That was nothing new, as the corporate has cautioned of a slowdown at Walt Disney World. They’ve beforehand attributed this to the tip of “revenge journey,” lapping the fiftieth Anniversary, and poor climate.
Particularly, Iger and CFO Hugh Johnston indicated that they anticipated working revenue to say no by mid-single digits versus the prior yr. “The portfolio is working effectively,” Johnston mentioned, whereas conceding there there was “softness within the home parks.” He additionally added that the decrease revenue client is “feeling stress,” whereas larger revenue shoppers are touring internationally extra.
Poor climate will certainly be at play within the present quarter. Disney warned that working revenue shall be adversely impacted by roughly $130 million on account of Hurricanes Helene and Milton. That’s a number of Walt Disney World journey cancellations!
Extra attention-grabbing was the ahead outlook for 2025. Within the Government Commentary, the corporate indicated that it anticipated fiscal 2025 progress for the Experiences phase in the course of the full-year to be 6% to eight% as in comparison with 2024, with progress weighted within the second half of the yr. (Notice that that is the second half of the fiscal yr, not the calendar yr–suggesting they’re anticipating Could via October to be high-growth.)
No clarification was supplied for the rise, but it surely’s secure to imagine not less than a few of that’s attributable to Disney Cruise Line fleet growth. Disneyland’s seventieth Anniversary will even present a pleasant increase throughout that timeframe. Disneyland Paris gained’t be weighed down by the Olympics, and will see a bounceback as there’s much less of an influence on the second gate.
Through the query and reply portion of the earnings name, the CFO elaborated on this additional when requested concerning the influence of Epic Universe opening on Could 22, 2025 at Common Orlando.
Johnston supplied the next in response: “We modeled [Epic Universe] into our expectations for the Disney Experiences outlook. The early bookings we have now subsequent summer season are literally constructive, in order that’s a constructive indicator. We’ve additionally seemed on the historical past of different sights and different theme parks opening in Florida, and it’s been useful for Walt Disney World.” Johnston defined that the forward-looking steering captured these indicators of early bookings and previous precedent.
It’s not completely stunning to listen to this response. Disney management has repeatedly been requested concerning the influence of Epic Universe by Wall Road. At one level, Iger mentioned this: “As we’ve seen up to now, when Common has expanded, it brings extra guests to Orlando. That’s fantastic. We’ve had competitors from them for a very long time. I’m aware of what they’re doing, however I’m assured. I like our hand. I’m assured in what we’ve constructed and I’m assured in what we’ll proceed to construct. It’s not one thing that ought to be distracting to us or anxiety-provoking.”
Round that very same time, the corporate put it bluntly: “Epic [Universe] is Common taking part in catch-up on a decade of nonstop improvement at Walt Disney World.” That echoed what CEO Bob Iger mentioned not too long ago about Epic Universe in the course of the annual shareholder assembly when he indicated that Disney had been conscious of Common’s plans for a brand new park for “greater than a decade.”
Iger pointed to a laundry record of additives at Walt Disney World throughout this identical interval as Disney’s “reply” to Epic Universe, together with Star Wars: Galaxy’s Edge, Guardians of the Galaxy: Cosmic Rewind, TRON Lightcycle Run, and different additions. “By staggering these main new launches, we’ve been capable of commercially and operationally optimize our new choices over time reasonably than unexpectedly. Primarily based on the visitor suggestions we’ve heard about via all of those additions I’ve talked about, we all know they’re extraordinarily well-liked and serving our company very effectively,” added Iger.
Unsurprisingly, followers haven’t been pleased with these earlier responses from Disney. Many nonetheless consider that Common’s Epic Universe goes to be very unhealthy for Disney, lead to Common “consuming Disney’s lunch” or surpassing Walt Disney World because the dominant participant in Central Florida.
Wall Road has shared a few of this sentiment, therefore Iger and Johnston continuously being requested about this by analysts. A type of, MoffettNathanson, launched an evaluation earlier this yr concluding that Epic Universe may trigger Walt Disney World attendance to say no by about 1 million guests within the two years spanning 2025 and 2026.
Conversely, Epic Universe may increase total attendance at Common’s three parks by greater than 8 million. Notice that this final quantity contains Epic Universe, that means that–not less than in concept–the brand new park may cannibalize attendance from each Walt Disney World and Common Orlando’s current two gates.
One other factor to notice is that Wall Road analysts get issues fallacious, however not less than they’ve extra of an incentive to be goal. Disney’s management, however, is perhaps extra inclined to conclude that Epic Universe shall be advantageous for Walt Disney World as a result of they’ve executed nothing to “reply” it. So if the Experiences division is predicted to report constructive outcomes as an entire, it behooves them to color that in a constructive mild.
With that mentioned, it’s additionally attainable that Disney has executed its homework and the forecast really displays progress for Walt Disney World. So which is it? Let’s check out precise historic precedent primarily based on publicly obtainable data.
Wanting again to the final time Common Orlando debuted a game-changing addition is instructive. The most effective analogue to 2025 is when the Wizarding World of Harry Potter (WWoHP) opened at Islands of Journey in 2010. That was a yr that Walt Disney World had nothing main to debut, and WWoHP was seen as a paradigm-shifting growth.
Within the lead-up to WWoHP, Walt Disney World’s public place was that “a rising tide lifts all boats” — {that a} stronger Common was useful to Disney as a result of it attracted extra folks to Central Florida. Essentially, Common Orlando’s attendance soared by 1.7 million company the opening yr of WWoHP, with Islands of Journey seeing 30% progress. Three of Walt Disney World’s parks dropped by 1-1.5%, whereas Animal Kingdom elevated by 1%.
The next yr (2011), 3 of the 4 parks at Walt Disney World have been up by 1% every, whereas EPCOT was flat. Islands of Journey as soon as once more surged–one other 29% improve–however each Common Orlando parks had decrease total attendance than any Walt Disney World park.
In 2012, Walt Disney World’s parks every elevated by ~2.2%. Attendance progress accelerated within the years after, however that’s additionally when Walt Disney World’s personal belated improvement cycle began bearing fruit. Subsequent yr via 2027 actually is an analogous setup to 2010-2012.
Primarily based purely on the numbers alone, Walt Disney World’s rising tide thesis was right: Common had considerably elevated its attendance by attracting a completely new viewers to Central Florida, which in flip benefited each.
Nevertheless, we must also add some historic context right here. These years have been the post-Nice Recession financial restoration, so it’s not as if these attendance will increase occurred in a vacuum. Walt Disney World additionally embarked upon aggressive discounting initiatives and advertising and marketing campaigns.
It’s attainable this progress might be principally attributable to the Wizarding World of Harry Potter. However I’m personally skeptical. Think about if Epic Universe opened in the course of the coronary heart of pent-up demand. Walt Disney World nonetheless would’ve overperformed, and it wouldn’t had nearly nothing to do with Common opening a brand new theme park. If something, WDW may’ve overperformed regardless of Epic Universe, and would possibly’ve realized the fallacious lesson from that.
Regardless, one factor is plain a decade later. Each Common and Disney have skilled super progress, to the tune of hundreds of thousands of company per yr every. To some extent, the rising tide thesis was right. There’s no denying it. The marketplace for theme parks in Central Florida has gotten bigger.
The Wizarding World of Harry Potter was “solely” one land again then, but it surely was a revolutionary one with a large built-in viewers. Epic Universe is a completely new park, so the size and scope is completely different–larger.
Disney has in all probability concluded that the one method to “win” is to not play the sport–to fall again on the “rising tide lifts all boats” mantra. It labored as soon as, it may work once more. Iger’s feedback take this a step additional, suggesting that Disney already performed the sport, however did it during the last decade and as they strategically noticed match. Nevertheless, it’s additionally honest to say that the 5-year plan introduced for Walt Disney World on the current D23 Expo means that Disney nonetheless has an oblique reply for Epic Universe coming strategically over time.
It’s additionally vital for followers to have self consciousness. Many people assume that, as a result of Epic Universe is the brand new factor to us and can seize our consideration in 2025, that’ll be true for everybody else, too. However we aren’t the one kind of company who go to Central Florida’s theme parks.
For many common company, the brand new additions from a single yr or two don’t exist in a vacuum. They aren’t the one promoting factors of the theme parks. Most individuals visiting in 2025 aren’t going solely on the premise of what’s brand-new.
Even for followers who go to semi-frequently, there are a number of different current, new-to-them additions. The whole lot from Hagrid’s and Star Wars: Galaxy’s Edge to Tiana’s Bayou Journey will nonetheless be “new” to some followers in 2025. That’s a variety of choices spanning a number of years, however not everybody visits yearly. Most individuals–even those that would self-describe as lovers or followers–don’t.
Then there’s the largest demo of all: first-timers. For this group, every little thing at each theme park in Central Florida is essentially new. When selecting which parks to go to, they aren’t merely choosing the brand-new additions, though these in all probability are granted extra weight because of advertising and marketing. They’re trying on the full menu, and what appears most interesting.
It shouldn’t be contentious to say that Walt Disney World is the extra established and time-tested theme park advanced. Even after Epic Universe, Walt Disney World nonetheless has yet another park, a dozen-plus further resorts, and extra recreation.
No matter how you’re feeling about current motion pictures, it additionally shouldn’t be controversial to contend that the Disney’s secure of characters created and bought within the final ~100 years is extra well-liked and enduring. Common has made super strides with well-liked character mental property within the final couple of many years, however they’re nonetheless not on stage taking part in fields.
That is the place issues get extra attention-grabbing when it comes to competitors for 2025 and 2026. Each Walt Disney World and Common Orlando have been aggressively including within the final decade. A lot of Common’s latest sights are improbable–Hagrid’s and VelociCoaster are two of the most effective curler coasters anyplace. Regardless of this, Walt Disney World has inarguably spent more cash on new sights and lands within the final decade.
With out query, the bump will disproportionately profit Common Orlando. It might be true {that a} rising tide lifts all boats, but it surely doesn’t achieve this equally. Share progress for Common Orlando as an entire will outpace Walt Disney World as an entire in 2025-2026. They are going to achieve marketshare.
If historical past repeats itself, Disney’s parks may see slight decreases–however the losses is not going to be commensurate with the expansion at Common. Acknowledged in a different way, Tremendous Nintendo World and Epic Universe as an entire will develop the viewers for Central Florida theme parks, even when theme park diehards (such as you!) visiting Common and skipping Disney results in a slight drawdown in attendance.
Nevertheless, I wouldn’t essentially guess on Walt Disney World seeing a drop in 2025. Epic Universe has all-ages enchantment, however I’d hazard a guess that the park’s predominant attracts (Tremendous Nintendo World, The way to Prepare Your Dragon, and Harry Potter) skew in direction of households. The brand new third gate can be much more family-friendly than Common’s two current gates.
As an entire, it’s plain that Walt Disney World does a greater job of catering to households than does Common Orlando. On the premise of latest additions, you might fairly argue that Common has been chasing Disney’s demographics during the last decade and Disney has been chasing Common’s. You would additionally fairly argue that Disney has executed a greater job of this–not less than, up till Epic Universe.
Nonetheless, the status nonetheless exists that Common is the place for youngsters and thrill seekers, and Walt Disney World is extra family-friendly. And that there’s a number of validity to this notion. Accordingly, I’d hazard a guess that most of the households planning 2025 journeys to see Epic Universe will pair that with visits to Magic Kingdom and Disney’s Hollywood Studios.
Undoubtedly no more than they go to Islands of Journey and Common Studios Florida–comfort is large, as are trip packages–however probably sufficient that not less than these two parks and perhaps even EPCOT don’t lose attendance in any respect in 2025. However, the state of affairs is just going to worsen earlier than it will get higher for Animal Kingdom. No denying that one. As we’ve been saying for some time, Tropical Americas ought to be fast-tracked…2027 is about 4 years too late for that growth.
It’s additionally honest to level out that Common Orlando has had a tough yr with attendance down 9.3% and Comcast revealing that income at Common’s theme parks has been down by double digits. Comcast attributed the lower to a scarcity of latest sights in Orlando, and indicated that this downtrend was prone to proceed till the opening of Epic Universe in 2025.
That is price mentioning as a result of, if Disney’s concept is that it’ll profit from the rising tide created by Epic Universe, it additionally stands to purpose that Walt Disney World is at present being adversely impacted by folks suspending journeys to Central Florida. The 2 theories go hand in hand, and can be extra pronounced with a brand-new theme park than a brand new land or attraction.
This is able to additionally clarify why Disney is anticipating progress weighted within the second half of the 2025 fiscal yr–as a result of the slowdown attributable to postponed journeys will turn out to be extra pronounced because the opening of Epic Universe attracts nearer. It’s really pretty simple to check a situation the place Walt Disney World is up significantly year-over-year in Summer time 2025 because of Epic Universe, Starlight Night time Parade, and a good comparability (this summer season was fairly sluggish–and even that might be defined by households ‘saving’ their summer season theme park journey for 2025 as an alternative of doing it in 2024).
In the end, I wouldn’t guess in opposition to the rising tides thesis given the core demographics of Epic Universe and the overlap with Walt Disney World vs. Common Orlando’s current gates. However I additionally wouldn’t guess on it! Common is being intelligent and strategic with its method to launching Epic Universe, and I’d be shocked if that doesn’t put a dent in Walt Disney World’s lodge occupancy numbers, at an absolute minimal.
No matter what Bob Iger or Hugh Johnston are saying throughout earnings calls and interviews, I’d have a point of concern if I have been them. Opposite to their claims, there isn’t a comparable historic precedent to 2025. Early bookings are instructive, however they’re nonetheless not conclusive–particularly on condition that Common simply launched its Epic Universe trip packages.
If I have been Disney, I’d wish to have extra counterprogramming than simply the Starlight Night time Parade and the stage exhibits at Disney’s Hollywood Studios. Having levers to drag that aren’t simply reductions can be savvy, as there are nonetheless unknowns and there’s no method the forecasting can have a excessive diploma of confidence. That is exactly why we wrote How Will Disney “Compete” with Epic Universe in 2025? and listed a few dozen playing cards they might play.
One factor we do trust in is that the followers who declare Common is “beating” Walt Disney World or vice-versa are fallacious. There’s area within the Central Florida marketplace for each to proceed rising and thriving, and Orlando has turn out to be a global vacationer vacation spot because of each Disney and Common. Given the properties featured, Epic Universe will in all probability develop the viewers for theme parks, reasonably than reallocate the prevailing pool of company. Disney’s evaluation might not be 100% correct, but it surely’s much more right than the doom and gloom or schadenfreude amongst followers who wish to see Disney taught a lesson after all the value will increase, cutbacks, and so forth.
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YOUR THOUGHTS
What do you consider the corporate’s evaluation that Epic Universe is “really constructive” or useful for Walt Disney World? Will the opening of Epic Universe in 2025 lead to considerably decrease attendance for WDW? Or do you typically agree with the angle {that a} rising tide lifts all boats? Suppose rising the marketplace for Central Florida theme parks is an ‘everyone-wins’ finest case situation? Do you agree or disagree with our evaluation? Some other ideas or commentary so as to add? Any questions we can assist you reply? Listening to your suggestions–even whenever you disagree with us–is each attention-grabbing to us and useful to different readers, so please share your ideas under within the feedback!
