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Walt Disney is pouring money into its theme parks across the world, part of an investment surge that is estimated to top $20 billion over five years.
But Disney Chief Executive Bob Iger isn’t worried about the price tag.
Acquisitions of film properties such as Avatar and Star Wars, especially, “have had a tremendous impact on growing our returns at the parks,” Iger told Barron’s in a recent interview.
New developments based on the Star Wars universe will add more than a dozen acres each to Disneyland and Disney World, while the Hong Kong, Tokyo, and Paris parks will be home to a Frozen land. Parks are a good place to put the company’s capital, Iger said.
“There’s just more demand for our product than there ever was, because people are coming not just to visit a theme park, they’re coming to experience the stories and the characters, the places, that were part of the movies they loved,” Iger said. “The investment cycle that we’re in is a reflection of that success.”
Seven years ago, for each $1 in operating profit that Disney made from its parks and studios, it generated $3 in TV profit. But during the fiscal year ended September, profit from parks and studios retook the lead.
The steep investment in expanding Disney parks has several benefits. Giving park visitors more to do can encourage repeat visits and longer lengths of stay, Iger said. But park additions also create more capacity when crowding has been an issue.
“When Star Wars opens in Anaheim in June and in Florida later in the year, that’s adding capacity,” Iger said. “You’re adding 14 acres of land [each], more rides, and more things for people to do. It’s the biggest land we’ve ever built.”