News Cost Cutting Measures Coming Early 2025

[Tha Realest]

"Excuse??" Do you seriously think that there isn't going to be 1) an increase in material costs and 2) an impact to labor, particularly in construction in the south, such that almost any major construction project planned in US isn't going to have be re-examined given the changing market condition

Was that unforeseen when the company made these assurances?

 

[Jrb1979]

I haven’t seen any changes in market conditions. Although if it is so predictable like you say maybe they should have built when conditions where favorable?

Like Universal did.

Or don't announce things that aren't coming for 5-10 years from now. Only announce attractions that have plans for shovels in the ground in the next year or 2

 

[monothingie]

"Excuse??" Do you seriously think that there isn't going to be 1) an increase in material costs and 2) an impact to labor, particularly in construction in the south, such that almost any major construction project planned in US isn't going to have be re-examined given the changing market condition

I'll be honest, I'm not seeing where you're going on this.

The average cost of construction increased by 4% in 2023 and about the same in 2024.

This is a far cry from the 30-40% increases from 2020 to 2023.

I would assume that the planning for whatever is being done figures on at minimum a 5% increase in construction costs over the course of the lifespan of the whatever projects have been green lit.

 

[JMcMahonEsq]

Was that unforeseen when the company made these assurances?

What assurances? WDW made internal plans for a construction project, well a series of them really. When the market/costs change such that they have an effect on your budget, the company should re-valuate the budget/projects to make sure they are viable.

What ever is said at a D23 event, or other PR type postings is simply puffery. They aren't committed to spending a certain amount, or building something exactly has some PR documents may have portrayed them. Announcing something at a press junket doesn't create some binding responsibility to follow through with everything exactly as you advertised.

 

[Ayla]

Is this where I point out that the cost of building supplies is about to skyrocket and that might have some impact on Disney's "plans" for Florida?

That's where I was going with my earlier post, alluding to current events. Me thinking Indy isn't going to happen has absolutely nothing to do with saving Dinosaur. I've never ridden it and don't care whether it stays or goes. My thinking is more along the critical lines, not emotional.

 

[JMcMahonEsq]

I'll be honest, I'm not seeing where you're going on this.

The average cost of construction increased by 4% in 2023 and about the same in 2024.

This is a far cry from the 30-40% increases from 2020 to 2023.

I would assume that the planning for whatever is being done figures on at minimum a 5% increase in construction costs over the course of the lifespan of the whatever projects have been green lit.

The point is that with the new administration, changes in tariffs and trade could have a much higher impact on construction materials than a standard yearly cost increase.

If, and its an if at this point, there are major changes in immigration, including the removal of certain individuals already in the us (and i am not wading into political talk on if its good/bad/legal/moral, ect) then your labor market is going to take a hit which would result in labor cost increases above your standard expectation.

So if you have changes in the market that cause increases above your standard projections, any business, including WDW should then re-evaluate the viability of the project, including potentially making budget cuts to bring it within what had been your projected. Hell you still might move forward with the plan as designed, as the added cost might still be worth the overall project, but you still need to go through the process.

 

[JMcMahonEsq]

Or don't announce things that aren't coming for 5-10 years from now. Only announce attractions that have plans for shovels in the ground in the next year or 2

Why? These are announcements of future intent, not binding contracts or suicide pacts. It's fun/interesting to get an idea about what WDW might be thinking. But anyone with half a brain should understand that no company is obligated to do exactly what they might have said during a PR/advertising campaign. If a person doesn't understand that companies can change their minds about what they are going to do in the future over a 5-10year period, its not the company that is confused.

 

[monothingie]

The point is that with the new administration, changes in tariffs and trade could have a much higher impact on construction materials than a standard yearly cost increase.

It could also mean lower costs if cheap money is made available through lower interest rates.

I think you're reading far too much into this.

 

[Disstevefan1]

The point is that with the new administration, changes in tariffs and trade could have a much higher impact on construction materials than a standard yearly cost increase.

If, and its an if at this point, there are major changes in immigration, including the removal of certain individuals already in the us (and i am not wading into political talk on if its good/bad/legal/moral, ect) then your labor market is going to take a hit which would result in labor cost increases above your standard expectation.

So if you have changes in the market that cause increases above your standard projections, any business, including WDW should then re-evaluate the viability of the project, including potentially making budget cuts to bring it within what had been your projected

Well the good news for Disney, instead of blaming the pandemic for project delays and project cost cutting, they can now blame the new administration for all new for project delays and project cost cutting

Meanwhile, Universal will just build new stuff.....

 

[JMcMahonEsq]

It could also mean lower costs if cheap money is made available through lower interest rates.

I think you're reading far too much into this.

Dude, my company, thought granted not my division, literally built Shanghai Disney (along with Universal Beijing and Six Flags in Zhejiang.) This isn't reading into anything, its literally standard operating procedure for any reputable development or contracting company in the world. For any ongoing project of size most companies are having quarterly budget meetings to both look at what has been spent, and what cash flow/budget forecast is moving forward. You are looking to see what costs can be altered/cut to either get under budget, or increase profit, or looking to see what might impact costs moving forward.

For any project that hasn't been started there are similar reviews looking at projections to see if costs are still meeting/beating budget, and to determine if the market still makes the project viable, or if there needs to be VE or other budget/scope adjustments.

This happens normally all the time under normal everyday circumstances. Throw in something outside the norm, like oil shock in 2007/8, a massive storm, or say a presidential election, and your going to have even more detailed scrutiny. I don't think anyone no matter what side of the aisle your political leanings are, doesn't think that with President Trump coming into office, that there are going to be changes in policy, fiscal, foreign, and domestic, from the Biden Administration. I know of multiple large housing development projects, solar farm project, and other developments across the south and mid west that are being slowed down in design phase due to projected changes in costs for foreign sourced goods, expansion of buy American restrictions of certain materials, and potential disruption in local labor markets. The labor markets issue isn't being seen as such a large concern in North East and stronger union markets, but it still is being looked at as a factor.

It doesn't mean that any particular WDW project is going to be canceled, that wasn't my point. My main issue is that to call major market changes, or even potential market changes an "excuse" as opposed to a legitimate business reason to look re-evaluate spending is disingenuous.

 

[monothingie]

Dude, my company, thought granted not my division, literally built Shanghai Disney (along with Universal Beijing and Six Flags in Zhejiang.) This isn't reading into anything, its literally standard operating procedure for any reputable development or contracting company in the world. For any ongoing project of size most companies are having quarterly budget meetings to both look at what has been spent, and what cash flow/budget forecast is moving forward. You are looking to see what costs can be altered/cut to either get under budget, or increase profit, or looking to see what might impact costs moving forward.

For any project that hasn't been started there are similar reviews looking at projections to see if costs are still meeting/beating budget, and to determine if the market still makes the project viable, or if there needs to be VE or other budget/scope adjustments.

This happens normally all the time under normal everyday circumstances. Throw in something outside the norm, like oil shock in 2007/8, a massive storm, or say a presidential election, and your going to have even more detailed scrutiny. I don't think anyone no matter what side of the aisle your political leanings are, doesn't think that with President Trump coming into office, that there are going to be changes in policy, fiscal, foreign, and domestic, from the Biden Administration. I know of multiple large housing development projects, solar farm project, and other developments across the south and mid west that are being slowed down in design phase due to projected changes in costs for foreign sourced goods, expansion of buy American restrictions of certain materials, and potential disruption in local labor markets. The labor markets issue isn't being seen as such a large concern in North East and stronger union markets, but it still is being looked at as a factor.

It doesn't mean that any particular WDW project is going to be canceled, that wasn't my point. My main issue is that to call major market changes, or even potential market changes an "excuse" as opposed to a legitimate business reason to look re-evaluate spending is disingenuous.

Funny I'm throwing in something from our good friends at Gensler, but the level of volatility you're anticipating as a result of similar policies to those enacted between 2017 and 2021, does not exist.

 

[Trauma]

Well the good news for Disney, instead of blaming the pandemic for project delays and project cost cutting, they can now blame the new administration for all new for project delays and project cost cutting

Meanwhile, Universal will just build new stuff.....

I guess Universal isn’t effected by make believe scenarios.

 

[Bocabear]

I have no doubt that Tropical Americas including Indy will happen....and probably the tear-out of TSI and the riverboat...Maybe one Cars attraction and an off the shelf-modified spinner... then I think they will stop. Just a feelin... based on the last gigantic debacle of the Reimagining of Epcot....

 

[UNCgolf]

That's where I was going with my earlier post, alluding to current events. Me thinking Indy isn't going to happen has absolutely nothing to do with saving Dinosaur. I've never ridden it and don't care whether it stays or goes. My thinking is more along the critical lines, not emotional.

I think Indy is more likely to happen than Monsters Inc., which is more likely to happen than Cars.

 

[Disstevefan1]

Building supplies and the labor for construction, especially in Florida, are about to go through the roof.

Somebody better tell Universal….

 

[Bocabear]

I think Indy is more likely to happen than Monsters Inc., which is more likely to happen than Cars.

Oh if only...... What I am more afraid of is them beginning the project and tearing out the ROA, Riverboat and TSI, and then run out of money and it becomes a gigantic "Event Lawn"...for another 7-12 years.... Shades of what they did whe 20k Leagues was finally bulldozed and was replaced with a kiddie playground and play structure for many years before the Fantasyland Forest expansion was announced....

 

[Casper Gutman]

Somebody better tell Universal….

They know. Their additions outside of EU have been profoundly underwhelming since the pandemic and all indications are they will continue to be so. They also have multiple areas that need to be addressed with new construction immediately but will be left to fester for the foreseeable future.

Outside of EU, Uni is not doing better then WDW.

 

[Disstevefan1]

They know. Their additions outside of EU have been profoundly underwhelming since the pandemic and all indications are they will continue to be so. They also have multiple areas that need to be addressed with new construction immediately but will be left to fester for the foreseeable future.

Outside of EU, Uni is not doing better then WDW.

Well lets hope EPIC Universe helps Uni. Iger is positive EPIC will help WDW

 

[Andrew25]

They know. Their additions outside of EU have been profoundly underwhelming since the pandemic and all indications are they will continue to be so. They also have multiple areas that need to be addressed with new construction immediately but will be left to fester for the foreseeable future.

Outside of EU, Uni is not doing better then WDW.

I agree that Universal went through an unfortunate period of poor choices, but there's hope for the two current parks. USF is receiving a new coaster, and Universal's recent coaster lineup is solid. They've been working through small updates across the park (renovated restrooms, improved food quality, etc.) and freshening up the park a bit.

 

[BrianLo]

Another good reminder that there are contractual obligations to carry through with half of the capex. About 27-30B they can’t really get out of now. 12 for DCL, 8 for WDW, 2 for DLR, what has already been spent (particularly Paris) and then their partner resorts have signed agreements as well.

WDW can certainly have a worse spending decade than 2014-2023 (because it has deflated), but they can’t really do a 2004-2013 at their current required spend.