Disney’s Bold Cruise Ship Expansion: What Investors Need to Know

Disney is making significant moves in the cruise industry, focusing on expansion with plans for new ships. The company’s sixth cruise liner, the Disney Treasure, is set to embark on its inaugural voyage on December 21, 2024, and Disney has announced intentions to introduce seven additional ships by 2031. This growth aligns with Disney’s broader experiences segment, which also encompasses its renowned theme parks.

Following a decade of inactivity in ship development, the Disney Wish was launched in 2022. Going forward, two ships, the Disney Destiny and Disney Adventure, are expected to set sail by late 2025, with five more ships to follow. Analysts are beginning to recognize the financial upside of Disney’s cruise business, noting that it may yield higher returns on investment compared to other non-Disney cruise operations due to their ability to attract families with high occupancy and revenue rates.

The Disney Treasure is capable of accommodating 4,000 passengers alongside 1,555 crew members, with prices starting at approximately $8,511 per person for its maiden trip, which has already completely booked its rooms.

Morgan Stanley analyst Ben Swinburne remarked that the growing cruise segment could significantly bolster Disney’s overall financial performance. He mentioned that Disney’s cruise revenue is projected to more than double from the end of 2023 to the end of 2027, according to their forecasts.

Recent commentary from Disney’s CEO Bob Iger underscores the strategic importance of these new ships. The Treasure will feature rides, characters, and themes drawn from Disney’s theme parks, effectively tapping into the trend of families seeking all-inclusive cruise experiences as an alternative to more costly park visits.

Investor sentiment has been cautious due to concerns about a potential downturn in the theme parks’ performance, but Disney’s CFO has projected a recovery in the experiences segment, with significant revenue growth anticipated during the upcoming year. The launch of the Treasure is seen as a catalyst for this rebound.

The expansion in the cruise segment is particularly relevant as analysts believe that by 2032, Disney’s cruise business could be generating approximately $9 billion in revenue, with operating income estimates nearing $2.3 billion, positioning this sector as a crucial contributor to Disney’s growth potential.

Overall, as Disney broadens its cruise offerings, investors remain focused on the implications for future earnings and the increased significance of these ventures in the broader company strategy.

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