Disney gives investors a rough outline of expansion plans

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Jay Rasulo, chairman of Walt Disney Parks & Resorts, unveiled for investors a plan for growth.

Rasulo told investors at a Disney analyst conference in Orlando on Feb. 7, "We have only scratched the surface of the worldwide travel market" and that Disney anticipates "strong, continued growth over the next decade and beyond."

He unveiled a rough outline of a plan that would rely not only on Disney's existing businesses but also on "new geographies and new businesses."

In the quarter ended Dec. 31, Disney's operating income increased 45% on a 10% increase in revenue. Any company would be challenged to exceed that performance, but Rasulo said Disney believes it can.

According to Rasulo, theme parks, resorts, cruises, and timeshares constitute a $120 billion market worldwide, or about 5% of the entire leisure market. Even with $10 billion in revenue in 2006, Disney said it has just a 10% market share in the businesses in which it participates.

Disney is eyeing new regions, particularly China.

"The number of Chinese who can afford to travel is growing every day," Rasulo said. "Last year, 31 million Chinese tourists took a trip outside of the country. That number is projected to grow to 100 million tourists by 2015, making China the second-largest tourism economy in the world behind the U.S."

The company is also looking at "broadening its footprint" with new products and services.

For example, Disney attractions could be installed in "resort hotels, RD&E [research, development and engineering] centers or water parks," Rasulo said.

While 29% of Americans went to theme parks last year, 71% went to U.S. cities, 33% went golfing or to the beach and 25% went on an outdoor vacation or to a national park, Rasulo said. But when people went to those destinations, they stayed at resorts that "lacked our theming, storytelling and detail."

Disney plans to expand its Grand Collection of Hotels, including regional resort properties outside of metropolitan areas, urban hotels, resorts in exotic destinations and boutique hotels, to virtually any place without such hotels. 

Look for Disney to build more retail, dining and entertainment complexes, Rasulo said, and to expand its theme parks, not just to new geographic areas but also to new kinds of parks.

"Not all parks have to be the size of our current parks," he said. "What about a smaller, deeply immersive park, for now I'll call it a niche park, that could serve a much smaller daily audience in a more intimate setting?"

To contact reporter David Cogswell, send e-mail to [email protected].

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