Are good Disney earnings good or bad for cruising?

[brentm77]

Disney just posted an unexpected profit, easily beating expectations. A huge part of its success was it's Disney+ streaming service, which offset park and cruising losses.

I am concerned that Disney will use this as an opportunity to put entertainment far above experiences. Entertainment is relatively stable with overhead costs that can be adjusted quickly to market conditions. Theme parks and ships are huge capital/labor expenses that drag you down in a pandemic or even a recession to some extent. I hope Disney realizes that what makes Disney special is the whole package. The entertainment is better because of the real life experiences, and visa versa.

What is your opinion on how this affects the parks and, more specifically, cruising going forward?

 

[_auroraborealis_]

Right now, it just solidifies what I have said all along: DCL will not be the first to set sail again, and will be extremely conservative in how it begins, and experiences offered. The earnings are not a significant chunk of the corporate bottom line, and have greater PR risk than earnings upside. They will let other lines "test the waters," to use a cliche here that works.

 

[brentm77]

Right now, it just solidifies what I have said all along: DCL will not be the first to set sail again, and will be extremely conservative in how it begins, and experiences offered. The earnings are not a significant chunk of the corporate bottom line, and have greater PR risk than earnings upside. They will let other lines "test the waters," to use a cliche here that works.

I am afraid you are right. They have much less incentive to get things moving compared to other lines.

 

[OKW Lover]

Disney just posted an unexpected profit, easily beating expectations.

<snip>

What is your opinion on how this affects the parks and, more specifically, cruising going forward?

It can only be good news. Good earnings mean more money to plow back into the business. New attractions. New experiences. Less cut-backs.

 

[Intr3pid]

Disney+ is indeed going to become their distribution platform of choice. Just look at all the content they announced a few weeks back.

But that's all the good news. Original content still requires significant investments, and the competition is absolutely fierce. Netflix, Amazon, and Warner/AT&T are all entrenched in this space with the likes of Apple knocking on the door - and all up against the 800-pound Youtube. The revenue per user has been in a perpetual decline.

Parks and experiences - on the other hand - is where Disney is truly without peers. You have some competition from Warner/Universal in the US, but other than that, there is daylight between the top two and the rest. This is also where the growth is. Shanghai Disneyland occupancy, for instance, was going bonkers in 2019 before the pandemic hit.

I doubt they will get into a big do-over with parks/experiences (or, for that matter, a niche product such as cruising) in the doldrums of a pandemic.

 

[BartmanLA]

In order to keep the Disney + service profitable they'll have to keep producing new and original content, whether it's making their own or buying properties from other sources. They are seeing the "newness" bump of profitability because of the circumstances that have prevailed over the past 14 months, But it is unlikely they'll make enough profit to prop up the other Disney entities (Parks, Resorts and the Cruise Line). They will have to keep pouring money back into the streaming service in order to keep up the subscription base and attract new customers. So it's not likely that they'll be able to share a lot of their money with other arms of the Disney empire if at all.

 

[KVH]

I hate to be a stick in the mud but I'll only believe the company is going all-in on the service until I start to see a consistent amount of content available made before 2000. Preferably a bunch from the 1940-1980 range.

 

[brentm77]

I hate to be a stick in the mud but I'll only believe the company is going all-in on the service until I start to see a consistent amount of content available made before 2000. Preferably a bunch from the 1940-1980 range.

There are probably some licensing issues with some of that content that need to expire or be cleared before adding it. There is also some content the are holding back for future release to generate interest when needed, I'm sure.

 

[cgolf]

While they may have posted better than expected profits, I am assuming the profit targets were much reduced from what they would have had if all parks were operating at peak levels. The company I work for has definitely modified our profit targets for this year, so I wouldn't think that this is surprising. So they still probably are far off from where they want to be, so I could see them opening up as much as possible to make as much as possible and soon as possible. With DCL though they may delay just because they seem to take a less risky approach with DCL vs other cruise lines, likely due to their image. For this reason they may delay cruising to not have to deal with the bad press that say Princess dealt with early in the Pandemic and Holland America a little while after that.

 

[tvguy]

Disney is a great example of why companies that are diversified can weather downturns better.

 

[Cheburashka]

Disney had been quietly, gradually & steadily moving toward reduced services at the parks and on the cruise ships for years before anyone had heard of Covid or Disney+. Covid vastly accelerated the trend, with Disney+ helping Disney stay afloat. When Covid stops dominating our lives, I don't believe that the parks or ships are likely to ever return to the same level of service they offered in 2019. It's just too convenient for Disney that people have gotten used to doing without, and therefore will be accepting about getting less afterwards.

And no, I don't think DCL will resume cruising at all until late 2021 at the earliest.

 

[jtntx34]

Disney had been quietly, gradually & steadily moving toward reduced services at the parks and on the cruise ships for years before anyone had heard of Covid or Disney+. Covid vastly accelerated the trend, with Disney+ helping Disney stay afloat. When Covid stops dominating our lives, I don't believe that the parks or ships are likely to ever return to the same level of service they offered in 2019. It's just too convenient for Disney that people have gotten used to doing without, and therefore will be accepting about getting less afterwards.

And no, I don't think DCL will resume cruising at all until late 2021 at the earliest.

I agree.

 

[_auroraborealis_]

They have pulled May cruises from the site, although no cancels yet.

 

[jrabbit]

Disney will NOT have to advertise that their parks have all reopened and are running full days. There only needs to be a whisper that everything's open and BAM the parks will be full.

There IS a pent up demand that will explode once the parks are "fully" operational. And 50% of the population has been vaccinated.

Where FULLY is defined as get as many people in the doors as possible, and sell them overpriced stuff and high profit "food". They will not have to offer all of the "Pluses" from the past.

But once that initial rush is over with (30 months or so), if they continue to decline services and "Magic" by increment, people will be looking elsewhere ... there seems to have been an increase in RV sales during the pandemic ... so people just might continue to go camping.

And once people are free from the fear of the virus, I believe that there will be a lot of subscribers to Disney +, Apple +, CBS All Access, Peacock, Paramount and NetFlix dropping subscriptions. Disney is loath to release Black Widow on Disney Plus Premium because in reality the revenue from the service cannot match what they can get at the movie theaters.

As it is for any business, juggling all of the pieces is a tricky balance ... and Disney actually has more "properties" than most companies so it's even more difficult to balance who gets the budget this year for the biggest ROI's.

Back to the topic at hand: Like others have said, DCL will NOT be the first Ship on the Ocean. And my big question is "It was overpriced before... what will it be like now and will with be worth it?" Because if they have to scale back on ship activities, meet and greets, shows in the Walt Disney Theater, shows in the lounges and limit the number of people up on the pool deck, then the answer will most likely be NO.

But the bottom line is: "Everyone" complains about the High Price of Going to the Parks and Cruises and about the crowds. Disney has not yet found the price point to decrease demand. So at the end of the day, I expect, decline in service, perks and magic and an increase in price.

 

[_auroraborealis_]

Disney have raised ticket prices for next year and extended the park reservation system.

So it is fair to say that when DCL sails, they are unlikely to discount for a lesser experience, and that operations may be quite different.

 

[DCLDVC1]

So at the end of the day, I expect, decline in service, perks and magic and an increase in price.

Sad but true.

 

[cgolf]

But the bottom line is: "Everyone" complains about the High Price of Going to the Parks and Cruises and about the crowds. Disney has not yet found the price point to decrease demand. So at the end of the day, I expect, decline in service, perks and magic and an increase in price.

They are potentially coming up on an interesting situation. If they raise prices to meet the proper demand level for the 4 ships, it will be interesting to see if they have enough demand to fill 7 ships at the higher price points. In the future I could see big discounts on the Magic and Wonder for sure because everyone will want to sail on the fancy new ships. Dream and Fantasy may see less demand too and lower prices than we see now.

 

[DCLDVC1]

They are potentially coming up on an interesting situation. If they raise prices to meet the proper demand level for the 4 ships, it will be interesting to see if they have enough demand to fill 7 ships at the higher price points. In the future I could see big discounts on the Magic and Wonder for sure because everyone will want to sail on the fancy new ships. Dream and Fantasy may see less demand too and lower prices than we see now.

Great point. I know my family won't have any interest in current ships once the Wish hits the water.

 

[jrabbit]

They are potentially coming up on an interesting situation. If they raise prices to meet the proper demand level for the 4 ships, it will be interesting to see if they have enough demand to fill 7 ships at the higher price points. In the future I could see big discounts on the Magic and Wonder for sure because everyone will want to sail on the fancy new ships. Dream and Fantasy may see less demand too and lower prices than we see now.

I think we will be at 2030 before we see "lower" prices on the Magic and Wonder, the Wish and her new sister ships will draw higher prices ... and still above the "market pricing" of other cruise lines. But yes I believe that at some point Disney will have "too many ships" to demand higher prices ... especially since most of the cuts in service / magic DCL says are "industry standard".

Notice how Cost Cutting is always talked about in "bringing DCL in line with other cruise lines" BUT the Higher Prices charged are because DCL is a Premium Cruise Line. Can't have it both ways!! But they ARE Disney, so I guess "yes they can!"

 

[cgolf]

Notice how Cost Cutting is always talked about in "bringing DCL in line with other cruise lines" BUT the Higher Prices charged are because DCL is a Premium Cruise Line. Can't have it both ways!! But they ARE Disney, so I guess "yes they can!"

This is why for now we are cruising free agents. I definitely want to sail the new ships and the Magic a couple of more times before she is retired, but we have gotten really picky on price and value. So for us we shop around now. We did pay up for the Edge and the APEX if it sails, but the Edge was worth the cost. Our 2022 cruise we got the best deal we have ever gotten on an inside for like 135 per person per night with standard alcohol package, gratuities, port fees, and taxes included on a 10 day Celebrity Constellation. That deal was too good to pass up. We will keep our eyes open for deals on DCL though