The Magic of Disney’s $60 Billion Bet on Experiences

$3,000 for a five-night stay in a standard room at Aulani, a non-inclusive Hawaiian resort…

$3,200 for a day-long beachside villa visit in Puerto Vallarta for up to eight people, accessible only by boat…

$900 per hour for a guided VIP excursion around the Magic Kingdom, not including park admission…

Whether they’re staying at one of its 25 luxury resorts, hopping on one of its five fantastical cruise ships, or taking in the magic of its 12 iconic theme parks worldwide, consumers are willing to pay top dollar for the one-of-a-kind experiences only The Walt Disney Company (DIS) can deliver.

Pent-up post-pandemic demand for experiences has rocketed travel spending 65% higher in the past five years, according to Mastercard’s Travel Industry Trends report.

With younger generations prioritizing traveling over shopping – 78% of millennials would prefer spending on memorable events and experiences instead of buying material items – this bodes well for companies that specialize in unforgettable vacations, like Disney.

Especially now that the happiest place on Earth is getting even happier — and consumers willing to splurge on experiences have more options than ever before…

Disney’s $60 Billion Bet Is Paying Off

In fiscal year 2023, consumers helped drive 16% year-over-year revenue growth for Disney’s experiences division, which amassed an impressive $32.55 billion.

That momentum accelerated into 2024: In the first quarter, Disney’s experiences machine delivered all-time highs in revenue, operating income, and operating margin.

LikeFolio data suggests this profit engine is only gaining steam.

Disney “experience” mentions are currently up 42% year over year:

DIS is trending this month after it provided a more detailed glimpse into plans for its $60 billion investment into experiences over the next decade.

This investment stands to grow Disney’s already massive revenue bucket from its parks, all of which were profitable in 2024’s first quarter, and its cruise line, which is traveling calm waters back to profitability after a significant pandemic-related slump.

It also serves as a response to growing competition – neighboring Universal Studios Orlando is fighting for a piece of the consumer-spending-on-childhood-memories-pie, too…

The Competition for Tourism Dollars Heats up

Disney holds the keys to seven of the top 10 most-visited theme parks in the world, anchored by its flagship Magic Kingdom at Walt Disney World in Orlando, Florida.

Disney World’s Magic Kingdom Expansion:

The largest expansion in the history of the park
Will be about the size of Star Wars: Galaxy’s Edge, approximately 14 acres
Part of Disney’s $60 billion investment in parks, cruises, and experiences over the next decade
Aimed at bringing new attractions and technological innovations to enhance guest experiences

Disney Cruise Line Acquisitions:

New, exclusive port stop announced in 2019 opening soon – Lighthouse Point in Eleuthera, Bahamas, will begin hosting guests in May 2024
Disney Treasure, the newest ship in the fleet of six, sets sail in December 2024
The Adventure and the Destiny, two more new ships, are expected to take their maiden voyages in 2025

Universal Orlando’s Epic Universe:

A new, fourth theme park that doubles the size of the Universal Orlando Resort
Features Celestial Park at its core, leading to four different themed lands
Over 50 new attractions, entertainment, dining, and shopping experiences announced
Set to open in 2025

Universal highlights include:

How to Train Your Dragon — Isle of Berk: Featuring Hiccup’s Wing Gliders and Fyre Drill, offering immersive rides and attractions
Super Nintendo World: Expected to bring iconic characters and experiences to life, with potential attractions similar to those in Universal Studios Hollywood and Japan
The Wizarding World of Harry Potter – Ministry of Magic: Adding to Universal’s already popular Harry Potter-themed lands with designs inspired by the Fantastic Beasts series
Dark Universe: A land dedicated to Universal Monsters, offering thrills and chills with attractions based on classic horror icons

The Bottom Line

Universal has some catching up to do: In 2022, 10.75 million visitors walked through the gates at Universal Studios Orlando, compared to 17.13 million at Magic Kingdom.

Meanwhile, Disney is in prime position.

We issued a bullish alert on DIS to LikeFolio Investor subscribers in October when the stock was trading around $83. Since then, shares have gained more than 40% in value, and we see more room for upside from here.

This experiences upgrade isn’t the only plan Disney has cooking. Take a look at how Disney is shaking up the lucrative world of live sports streaming.

Until next time, 