Disneyland, the renowned California theme park owned by Disney (NYSE:DIS), is gearing up for a magical transformation with a proposed major expansion.
Subject to review by Anaheim’s planning commission, Disney plans to inject a substantial investment of at least $1.9 billion into the park over the next decade.
The proposed expansion aims to optimize existing space, notably a sprawling 50-acre parking lot, to introduce new attractions and entertainment options. Disney envisions a future where beloved stories such as Wakanda, Coco, Frozen, or Zootopia come to life within the park’s immersive experiences, drawing inspiration from the vibrant settings seen at Shanghai Disneyland.
This initiative marks Disney’s first significant endeavor to revamp its California theme park since the 1990s. While the nostalgia surrounding Disneyland’s original attractions is cherished, the expansion aims to cater to evolving visitor preferences while preserving the park’s beloved heritage.
Anaheim stands to gain significantly from Disney’s expansion plans, as the parks serve as a crucial tourism draw for the city and Orange County at large. Given that hotel revenues form a significant portion of Anaheim’s income, the proposed expansion could further stimulate economic growth and bolster community development efforts.
Disney Counts on Theme Park Business for Revenue Growth
Disney is experiencing a robust resurgence in its domestic and international theme park businesses. Recent additions such as the Frozen-themed land at Hong Kong Disneyland and Walt Disney Park in Paris, along with the Zootopia-themed land at Shanghai Disney, are expected to have bolstered the prospects of Disney’s theme park business.
In the first quarter of fiscal 2024, revenues from Parks, Experiences, and Products, accounting for 38.8% of total revenues, climbed 6.9% year-over-year to $9.13 billion. Domestic revenues reached $6.29 billion, marking a 3.7% increase year-over-year, while international revenues surged 34.9% year-over-year to $1.47 billion. Operating income for Parks, Experiences, and Products amounted to $3.1 billion, up 8.5% year-over-year.
Shares of DIS have gained 22.2% year-to-date, outpacing the growth of the Zacks Consumer Discretionary sector, which stood at 1.6%.
Disney’s vision for the California theme park involves creating immersive attractions akin to the acclaimed Star Wars: Galaxy’s Edge, offering visitors unforgettable experiences.
Furthermore, Disney plans to introduce new content to Star Tours – The Adventures Continue, with scenes inspired by popular Disney+ shows including Ahsoka, Andor, and The Mandalorian.
Despite facing stiff competition from Comcast (CMCSA) in the theme park business and challenges in its streaming segment, particularly Disney+, Disney remains focused on sports streaming, notably Live Sports on ESPN+, to attract more subscribers. Renewed sports rights deals and partnerships, such as the MLB rights deal through 2028 and an agreement with La Liga, highlight Disney’s commitment to enhancing its sports content portfolio.
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