News Star Wars Galaxy's Edge opening day reports - Disney's Hollywood Studios

[wdisney9000]

Now that Dorian is gone, its the possibility of a recession that people are blaming for low attendance at SWGE, right? Got it!

 

[jt04]

The roaming character and interactivity of the land were a major selling point of the land. I can understand opening with just one ride because the other was not ready, but there is no good reason to hold off on the other stuff until later, you want to open with your best product possible.

Adventureland and Tomorrowland didn't.

 

[Sirwalterraleigh]

Very true. The ride system issues were almost up there with Gringotts.

...what do you think about the lack of crunch in Orlando so far?

I’m shocked - to be honest - I thought they’d be packed no matter what.

It’s a bigger problem that Star Wars IMHO

 

[Sirwalterraleigh]

Now that Dorian is gone, its the possibility of a recession that people are blaming for low attendance at SWGE, right? Got it!

I know...but that at least could be a legitimate explanation for a struggle...though it’s still too early to call.

Adventureland and Tomorrowland didn't.

That was 1971!! It’s a completely different consumer world now...

Come on...you can do better than that!

 

[danlb_2000]

Adventureland and Tomorrowland didn't.

Expanding a land over time is a lot different then pitching "game charging" elements for a land and then not delivering them on opening day. It would be liking opening Avatarland and then building the floating mountains later.

 

[wdisney9000]

I know...but that at least could be a legitimate explanation for a struggle...though it’s still too early to call.

Haley's Comet is projected to pass by in 2061. Thats clearly the reason for low attendance.

 

[Sirwalterraleigh]

Haley's Comet is projected to pass by in 2061. Thats clearly the reason for low attendance.

Well it’s low...so we speculate.

They already had to ADMIT a bad quarter at the parks...which they BS there way around 99.9% of the time...

Now how’s this one looking right now?

And it’s not about trimming cast hours or streetmosphere...

I will remind: still an “economic boom” and travel should not suffer during one...ever.

Stay tuned

 

[Steph15251]

...what do you think about the lack of crunch in Orlando so far?

I’m shocked - to be honest - I thought they’d be packed no matter what.

It’s a bigger problem that Star Wars IMHO

As someone that lives in Orlando area and has since 2002 ,we are not really that busy in sept. Or Jan .

 

[marni1971]

...what do you think about the lack of crunch in Orlando so far?

Very surprised. All other things being equal, and also taking into account the month and weather. I’m as surprised with what I’ve seen on the west coast. I’ve said elsewhere I’ve been telling friends to avoid DHS until next year. Now I’ve told them go for it.

 

[mikejs78]

And that was last quarter with only one month (June) of sub-par performance of DL's SWGE - next quarter will be a full quarter of DL's low attendance and WDW with one month (Sept). Not going to be a great story, but he will use "Dorian impact" to buy time until next quarter where the normal holiday attendance will help mask the issue.

You won't see the real picture until you get to the end of next fiscal year, then you will see the full impact of the huge incremental depreciation (partial year for both ROTR's) and incremental operating costs burdening the OI for both parks all year.

Just do the cocktail napkin math on a billion dollar investment (I don't think it's that much for each park, but that's the rumor and it makes the math easy) - average depreciation schedules will be 10-15 years on the merch, F&B locations, equipment and the buildings/infrastructure will be on a 25-30 year schedule, so let's use 20 years average on the entire investment. That means the P&L will take a $50M hit before the incremental operating costs of labor, utilities, COGS, etc. of operating the land. Won't be able to hide that next year.

The bigger issue of course is the actual return on the investment, from a cash perspective factor in a corporate cost of capital of probably about 10% and you will need probably $2B incremental OIBDA discounted back over that 20 year period to get just a minimal corporate expected return so that is $100M/year more growing with inflation. Hence, the panic.

"It's the same as last September" ain't getting you there....

The fatal flaw in this analysis is it assumes a static analysis of what's going on. I.e. that because Sept is slow and not meeting expectations, it never will. This is a major fallicy.

For example, it may not be enough to disrupt normal vacation patterns - where September is slow. But what it may do, and this is yet to be determined, is increase attendance at normal vacation periods - increase attendance to DHS, to WDW in general. I know I'm not jumping over there for opening month, because Sept is a bad time for me to take a vacation, and I can only go so often, so I'm waiting until the whole land is open.

Really, all those shouting doom and gloom should not be so quick to do so. Obviously the opening was not as strong as anyone thought. But it is going to take a year to really get an assessment of what the impact is. Any assessment now of failure, or success for that matter, is woefully premature and indicates a shortsightedness and ignorance to how things work.

Of course for those that just want this to fail, that doesn't fit the narrative.

 

[mikejs78]

I will remind: still an “economic boom” and travel should not suffer during one...ever.

True, but two things we don't know:

1. If we really are still in an economic boom. Usually you don't know that one is over until after the fact. And there are warning signs of recession.

2. We don't know if travel is suffering - Sept always seems to be this slow season. If this is in line with previous years, then it's not necessarily suffering but not increasing. Again, there are a ton of factors and I do think this needs to marinate before we can pass any kind of judgement. Speculation is fine, but ultimately whether or not GE proves to be a good investment by Disney or not will be determined over months and years, not weeks.

 

[Sirwalterraleigh]

Very surprised. All other things being equal, and also taking into account the month and weather. I’m as surprised with what I’ve seen on the west coast. I’ve said elsewhere I’ve been telling friends to avoid DHS until next year. Now I’ve told them go for it.

Same...

100%. We know the wdw customer has not been “discerning” at all during this last 8 year period...and consider how heavy they are with DVC rooms now and you don’t need to tell them twice to go for ANY reason...I’m shocked.

Really am.

But no problem...Let’s talk about That annual pass, Bob...maybe it’s time to admit you chopped down the cherry tree?

 

[mgf]

I am very confused by the decision to just now allegedly start building a new TS restaurant in SWL as well as the decision to just now build some version of one for TSL.

F&B margins (especially if you can add alcohol to the menu) are huge, and with the 180 ressie pressure Disney creates they can count on advance credit card guaranteed bookings -- something very few lower end restaurant providers can pull off. It seems like a no brainer and a huge missed opportunity for major day-1 cash flows.

 

[marni1971]

I am very confused by the decision to just now allegedly start building a new TS restaurant in SWL as well as the decision to just now build some version of one for TSL.

F&B margins (especially if you can add alcohol to the menu) are huge, and with the 180 ressie pressure Disney creates they can count on advance credit card guaranteed bookings -- something very few lower end restaurant providers can pull off. It seems like a no brainer and a huge missed opportunity for major day-1 cash flows.

Both lands cost a fortune. When costs rise something needs to give. And it can’t be something that would make the overall land have problems.

Interestingly the TSL TSR was not in the original plan for the land. Could it be an interim replacement?

 

[RobWDW1971]

And profit margin on something like Savi’s has to be through the rough even when you consider COGS, overhead, etc. - it’s just a few die cast parts, LEDs, RFID...all cheap components, especially given the scale at which they’re being produced/ordered. One actor and a crew of maybe a dozen baseline cast members are operating this all day. The development costs were probably minimal as well, the only component of them that isn’t fairly standard for sabers are the RFID Kyber crystals.

The issue is not the standalone profitability of the Savi operation, it's about the massive incremental resort wide spend they must drive to see a return on the entire billion dollar project (including the infrastructure behind it - rerouting ROA, Project Stardust, etc.).

Now, had they added Savi's to the merch store at the exit of Star Tours at DHS or put it in the second floor above Star Traders at DL and avoided the huge infrastructure/build out, it would be a huge win for them. Unfortunately, it's just a minor contribution trying to offset a huge financial nut they now need to cover every year.

I can almost guarantee you there are corporate finance/strat planning people seeing the takeaway from this as that they should have just built the attractions, cantina bar, light saber and droid shops as extensions of the existing DHS Star Tours area and DL's Tomorrowland and saved the hundreds of millions in both capex and opex in building Batuu and its domino effects.

 

[LivingLifeInFlorida]

It's interesting to discuss, but why would food/beverages matter in the discussion of the SWGE success? People can only eat so much and that eating will steal from other venues throughout the park. You eat "lunch" at SWGE, you aren't eating "lunch" elsewhere in the park. You buy a drink here, you don't buy a drink there. Maybe with merch it's different, but it seems that most people have a budget they will spend and the dollars spent in SWGE are the dollars NOT spent elsewhere in the park. I don't see how there is any real gain. The only hope would be higher attendance (more people who need to eat/spend).

 

[MrPromey]

Maybe this is what a semi-nocrowded day at a park with a popular attraction featuring reasonable capacity that doesn't have fastpass looks like?

Was at Epcot and the MK yesterday and things were slow at both. Soarin' had a 30 minute, Frozen had a 45 wait but Test Track, at the time we got in line was at 60.

Went over to the MK after lunch and for most of the time we were there, the attraction with the longest wait time (60-70min) was Peter Pan. When the People Mover broke down and we were stuck inside the Space Mountain building for nearly 20 minutes while cast walked the track before reopening, we were given free wildcard fastpasses that we were told could be used anywhere but 7DMT (55 minute wait) and Peter Pan.

As I was wandering around and occasionally checking the MF wait times, (it got up to an hour at one point) a thought occurred to me that shockingly, I haven't seen discussed. What do you guys think MF wait times would look like right now if Faspass was an option?

Peter Pan's capacity kind of sucks. Test Track and Mine Train both have decent capacity but are popular and still manage to have larger than average wait times, even on a slow day.

Yesterday when we were at Hollywood Studios and the MF wait times were 45 minutes, Slinky Dog had a 65 minute wait.

This got me thinking, I wonder what MF wait times would look like if Fast Pass was up and running right now? How many people not interested in waiting in line for 40-60 minutes for it today would have booked a fastpass last night or last week and soaked up capacity that way? Would we be seeing two hour waits for standby if people who were only casually interested in it being a new attraction could "skip the line" to ride?

They never opened FOP without fastpass and that one has been balls-to-the-walls busy since day one. Even when the resort has been slow, that one's been showing heavy wait times relative to everything else.

Wonder what MF would be looking like with FP enabled right now.

Alternately, it made me wonder what the line for 7DMT would have looked like yesterday if there were no fastpass for it, either.

 

[gmajew]

Wait times have TT at 25 and MF at 50... space is 40 mine train 70 and big thunder 10....

Parks are just dead.... this is not a star wars problem. Can offseason really be returning?

 

[mikejs78]

Wait times have TT at 25 and MF at 50... space is 40 mine train 70 and big thunder 10....

Parks are just dead.... this is not a star wars problem. Can offseason really be returning?

September has never stopped being off-season. But it will be busy by Oct.

 

[danlb_2000]

It's interesting to discuss, but why would food/beverages matter in the discussion of the SWGE success? People can only eat so much and that eating will steal from other venues throughout the park. You eat "lunch" at SWGE, you aren't eating "lunch" elsewhere in the park. You buy a drink here, you don't buy a drink there. Maybe with merch it's different, but it seems that most people have a budget they will spend and the dollars spent in SWGE are the dollars NOT spent elsewhere in the park. I don't see how there is any real gain. The only hope would be higher attendance (more people who need to eat/spend).

I know in my case I would not buy a drink like the ones they are serving in Oga's, but I will in this case just to experience it, so they are going to get more money out of me. I think the other trick is to try to get people to step up from a quick/counter service to a table service. If there was a table service in GE there is a good chance that I would do that instead of just grabbing something at a counter service resturant.