In This Story
Disney (DIS+0.15%) recently unveiled its newest cruise ship, the 1,119-foot-long Disney Treasure, in New York City this November. It is just the first ship of several in a huge expansion of the budding yet lucrative business for the media giant.
The House of Mouse is planning to double its cruising fleet by 2031. The company said is investing roughly $12 billion to launch seven new cruise ships over the next six years, expanding its fleet from six ships to 13. The investment comes as Disney sees a big opportunity in sea travel, while some of its other segments continue to struggle.
“Given the fact that we are still a relatively small player and we see this strong demand, it’s only natural and actually the best time to invest in this business,” Thomas Mazloum, the head of the part of Disney’s Experiences division that includes cruises, told the Wall Street Journal.
Here is why Disney is going all in on cruising.
There is a lot of room for growth in cruising for Disney
Mazolum told the Wall Street Journal (NWSA+0.49%) that Disney’s cruises account for only 5% of the Caribbean market and just 2.5% globally, leaving room for more growth for the company in cruising at a time when demand for cruise voyages are on the rise.
The industry group Cruise Lines International Association reported that cruise travel has surpassed pre-pandemic levels in 2023, reaching 31.7 million passengers, compared with 29.7 million in 2019.
Disney’s big investment also comes as some of its other division have been facing financial challenges. While Disney’s streaming business turned a profit in the most recent quarter, the company continues to struggle with its traditional television assets, which include the broadcast network ABC and its cable channels National Geographic, FX, and others. The company reported that its operating income from the linear networks fell 38% to $498 million in its fourth fiscal quarter, from $805 million in the same quarter in 2023.
Disney’s parks and experiences division, which includes cruising, recorded 1% growth in revenue, to $8.2 billion. Its operating income fell 6% year-over-year, to $1.7 billion. This segment of the company was impacted by several disruptions including hurricanes Helene and Milton, and a drop in demand in Europe during the Paris Olympics.
People are willing to pay more for a Disney experience
Disney cruises are filled with all the bells and whistles visitors of Disney hotels and theme parks have become accustomed to including themed bars and restaurants, shows, and roaming costumed characters.
Disney is betting travelers will be wiling to pay a premium for an elevated Disney experience. For example, a four-day cruise in April from Port Canaveral in Florida to the Bahamas on Disney’s Wish cruise ship starts at $7,692 for a family of four. An equivalent trip on a Royal Caribbean (RCL+1.36%) starts at $3,368.
Its an easier way to tap into the Asian market
Disney is looking to court millions of potential customers in Asia that don’t currently live near a Disney theme park. Launching some cruise lines in the region will allow the company to expand into that market without having to build a new park.
The company is already planning to launch a 6,700 passenger ship, dubbed the Disney Adventure, in Southeast Asia next year. The Disney Adventure will be based in Singapore, becoming the company’s first service in the country. It will target wealthy travelers from India, Indonesia, and Malaysia.