Last week, we wrote about Universal’s theme parks, and how the new Super Mario World attraction produced a significant lift in attendance to its Hollywood theme park. New attractions are key to driving growth and returns for the destination theme parks. (Parks that attract out-of-market visitors versus just regional or local guests.) This week, Disney held an investor meeting where it unveiled plans to spend $60B on new attractions and parks. The company provided the slide below to make the case for that increased investment--a 14% operating income CAGR since fiscal 2012 after tripling investment in its parks versus a 5% operating income CAGR prior.
Source: Disney Parks, Experiences and Products: Highlights and Updates Presentation (September 2023)
Where to spend those dollars? Management highlighted more than 1,000 acres of land available for possible future development at their existing parks (including the land availability to double the size of Disneyland and the Magic Kingdom) as well potentially new parks.
The $60B allocated for new attractions and parks is to be spent over a ten-year period. Pre-pandemic, Disney spent about $4B per year in capital expenditures on the parks. The new plan takes that up by around +22% (or +$900M, assuming a +6% CAGR) to a $4.9B starting point. Comcast/Universal was expected to invest around $1.5B annually after its new park EPIC was opened. Obviously, $4.9B vs. $1.5B is a pretty sharp contrast. Does the $1.5B move higher? That seems reasonable. Recall that Universal’s EPIC park is approximately a $2.5B investment. How much of Disney’s $60B goes into the 1,000+ available acres and how much goes into new markets? Our hunch is a good amount goes into new markets. Texas and Tennessee seem like good candidates. Does anyone have lots of non-developed land near a large airport there?