Followers questioning why Walt Disney World hasn’t completed something significant to “reply” Epic Universe in 2025 may need their reply: the corporate expects Common Orlando’s third theme park to be “really optimistic” 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 increased visitor spending, partially offset by increased bills and prices associated to new visitor choices pushed by Disney Cruise Line.
This largely aligns with expectations. Throughout 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 top 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 properly,” Johnston mentioned, whereas conceding there there was “softness within the home parks.” He additionally added that the decrease revenue client is “feeling stress,” whereas increased revenue customers are touring internationally extra.
Poor climate will certainly be at play within the present quarter. Disney warned that working revenue can be adversely impacted by roughly $130 million as a consequence of Hurricanes Helene and Milton. That’s a number of Walt Disney World journey cancellations!
Extra fascinating was the ahead outlook for 2025. Within the Govt Commentary, the corporate indicated that it anticipated fiscal 2025 progress for the Experiences phase throughout the full-year to be 6% to eight% as in comparison with 2024, with progress weighted within the second half of the yr. (Word that that is the second half of the fiscal yr, not the calendar yr–suggesting they’re anticipating Might by way of October to be high-growth.)
No clarification was provided for the rise, but it surely’s secure to imagine at the least a few of that’s attributable to Disney Cruise Line fleet enlargement. Disneyland’s seventieth Anniversary may also present a pleasant enhance 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 affect on the second gate.
Throughout the query and reply portion of the earnings name, the CFO elaborated on this additional when requested in regards to the affect of Epic Universe opening on Might 22, 2025 at Common Orlando.
Johnston provided 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 optimistic, in order that’s a optimistic 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 shocking to listen to this response. Disney management has repeatedly been requested in regards to the affect of Epic Universe by Wall Avenue. At one level, Iger mentioned this: “As we’ve seen previously, when Common has expanded, it brings extra guests to Orlando. That’s effective. 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 must be distracting to us or anxiety-provoking.”
Round that very same time, the corporate put it bluntly: “Epic [Universe] is Common enjoying catch-up on a decade of nonstop improvement at Walt Disney World.” That echoed what CEO Bob Iger mentioned lately about Epic Universe throughout 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 listing of additives at Walt Disney World throughout this similar 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 all of sudden. Based mostly on the visitor suggestions we’ve heard about by way of all of those additions I’ve talked about, we all know they’re extraordinarily in style and serving our visitors very properly,” added Iger.
Unsurprisingly, followers haven’t been pleased with these earlier responses from Disney. Many nonetheless imagine 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 Avenue has shared a few of this sentiment, therefore Iger and Johnston continually being requested about this by analysts. A kind 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 enhance total attendance at Common’s three parks by greater than 8 million. Word that this final quantity consists of Epic Universe, that means that–at the least 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 Avenue analysts get issues improper, however at the least they’ve extra of an incentive to be goal. Disney’s management, however, could be extra inclined to conclude that Epic Universe can be advantageous for Walt Disney World as a result of they’ve completed nothing to “reply” it. So if the Experiences division is predicted to report optimistic outcomes as a complete, it behooves them to color that in a optimistic mild.
With that mentioned, it’s additionally potential that Disney has completed its homework and the forecast really displays progress for Walt Disney World. So which is it? Let’s check out precise historic precedent based mostly on publicly obtainable data.
Wanting again to the final time Common Orlando debuted a game-changing addition is instructive. The very best 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 enlargement.
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. Really, Common Orlando’s attendance soared by 1.7 million visitors 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 had 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 by way of 2027 actually is the same setup to 2010-2012.
Based mostly purely on the numbers alone, Walt Disney World’s rising tide thesis was appropriate: Common had considerably elevated its attendance by attracting a completely new viewers to Central Florida, which in flip benefited each.
Nonetheless, we also needs to add some historic context right here. These years had 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 campaigns.
It’s potential this progress may be largely attributable to the Wizarding World of Harry Potter. However I’m personally skeptical. Think about if Epic Universe opened throughout 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 discovered the improper lesson from that.
Regardless, one factor is plain a decade later. Each Common and Disney have skilled great progress, to the tune of thousands and thousands of visitors per yr every. To some extent, the rising tide thesis was appropriate. 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 an enormous built-in viewers. Epic Universe is a completely new park, so the size and scope is totally different–greater.
Disney has in all probability concluded that the one solution 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 over the past decade and as they strategically noticed match. Nonetheless, it’s additionally truthful 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 necessary 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 sort of visitors who go to Central Florida’s theme parks.
For many common visitors, 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. All the pieces 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 fans or followers–don’t.
Then there’s the largest demo of all: first-timers. For this group, every thing at each theme park in Central Florida is essentially new. When selecting which parks to go to, they aren’t merely selecting the brand-new additions, though these in all probability are granted extra weight due to advertising. They’re trying on the full menu, and what appears to be like most interesting.
It shouldn’t be contentious to say that Walt Disney World is the extra established and time-tested theme park complicated. 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 films, it additionally shouldn’t be controversial to contend that the Disney’s steady of characters created and bought within the final ~100 years is extra in style and enduring. Common has made great strides with in style character mental property within the final couple of many years, however they’re nonetheless not on stage enjoying fields.
That is the place issues get extra fascinating by way of competitors for 2025 and 2026. Each Walt Disney World and Common Orlando have been aggressively including within the final decade. Lots of Common’s latest sights are improbable–Hagrid’s and VelociCoaster are two of the very best curler coasters wherever. 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 could be true {that a} rising tide lifts all boats, but it surely doesn’t accomplish that equally. Share progress for Common Orlando as a complete will outpace Walt Disney World as a complete in 2025-2026. They are going to acquire 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 a complete 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.
Nonetheless, I wouldn’t essentially wager on Walt Disney World seeing a drop in 2025. Epic Universe has all-ages attraction, however I’d hazard a guess that the park’s predominant attracts (Tremendous Nintendo World, How one can Practice Your Dragon, and Harry Potter) skew in the direction of households. The brand new third gate can be way more family-friendly than Common’s two current gates.
As a complete, it’s plain that Walt Disney World does a greater job of catering to households than does Common Orlando. On the premise of recent additions, you possibly can moderately argue that Common has been chasing Disney’s demographics over the past decade and Disney has been chasing Common’s. You can additionally moderately argue that Disney has completed a greater job of this–at the least, up till Epic Universe.
Nonetheless, the repute 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 lots of the households planning 2025 journeys to see Epic Universe will pair that with visits to Magic Kingdom and Disney’s Hollywood Studios.
Positively no more than they go to Islands of Journey and Common Studios Florida–comfort is large, as are trip packages–however probably sufficient that at the least these two parks and perhaps even EPCOT don’t lose attendance in any respect in 2025. Then again, 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 must be fast-tracked…2027 is about 4 years too late for that enlargement.
It’s additionally truthful 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 recent sights in Orlando, and indicated that this downtrend was prone to proceed till the opening of Epic Universe in 2025.
That is value 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 could additionally clarify why Disney is anticipating progress weighted within the second half of the 2025 fiscal yr–as a result of the slowdown brought on by postponed journeys will grow to be extra pronounced because the opening of Epic Universe attracts nearer. It’s really pretty simple to examine a situation the place Walt Disney World is up significantly year-over-year in Summer time 2025 due to Epic Universe, Starlight Evening Parade, and a positive 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 a substitute of doing it in 2024).
In the end, I wouldn’t wager towards 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 wager on it! Common is being intelligent and strategic with its strategy 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 some extent of concern if I had 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 provided that Common simply launched its Epic Universe trip packages.
If I had been Disney, I’d need to have extra counterprogramming than simply the Starlight Evening 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 may play.
One factor we do believe in is that the followers who declare Common is “beating” Walt Disney World or vice-versa are improper. There’s house within the Central Florida marketplace for each to proceed rising and thriving, and Orlando has grow to be a global vacationer vacation spot due to each Disney and Common. Given the properties featured, Epic Universe will in all probability increase the viewers for theme parks, reasonably than reallocate the prevailing pool of visitors. Disney’s evaluation will not be 100% correct, but it surely’s way more appropriate than the doom and gloom or schadenfreude amongst followers who want to see Disney taught a lesson after the entire value will increase, cutbacks, and so forth.
Planning a Walt Disney World journey? Find out about inns on our Walt Disney World Resorts Evaluations web page. For the place to eat, learn our Walt Disney World Restaurant Evaluations. To economize on tickets or decide which sort to purchase, learn our Suggestions for Saving Cash on Walt Disney World Tickets put up. Our What to Pack for Disney Journeys put up takes a singular have a look at intelligent gadgets to take. For what to do and when to do it, our Walt Disney World Experience Guides will assist. For complete recommendation, the very best place to begin is our Walt Disney World Journey Planning Information for every thing you must know!
YOUR THOUGHTS
What do you consider the corporate’s evaluation that Epic Universe is “really optimistic” 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 attitude {that a} rising tide lifts all boats? Suppose rising the marketplace for Central Florida theme parks is an ‘everyone-wins’ greatest case situation? Do you agree or disagree with our evaluation? Another ideas or commentary so as to add? Any questions we might help you reply? Listening to your suggestions–even whenever you disagree with us–is each fascinating to us and useful to different readers, so please share your ideas beneath within the feedback!
