Writedowns taken for the soon-to-close Star Wars: Galactic Starcruiser hotel in the form of “accelerated depreciation” were a factor in the disappointing performance of Disney’s domestic theme parks in the third quarter, the company told investors Wednesday.
The elaborate “Star Wars”-themed experience, which includes two nights in a fully themed space hotel, will embark on its last “voyage” on Sept. 30. It only opened on March 1, 2022.
Domestic parks attendance grew slightly year over year, and operating income for the segment was nearly 30% higher compared to 2019, interim CFO Kevin Lansberry said on the call.
“Elevated travel costs” affecting international visitors were also cited as a factor for the domestic theme parks, particularly Walt Disney World, and what Disney described as the “burn-off of pent-up demand” following the pandemic (read: the stir-craziness of being stuck at home for three years).
Referring to anticipated “cost pressures” in the fourth quarter, Lansberry cited increased labor wages and “$150 million of remaining accelerated depreciation for the Galactic Starcruiser.”
Excluding the Starcruiser, Lansberry said, “we are still expecting full year total company revenue and segment operating income to grow at a high single digit percentage rate versus the prior year.”
Even without the spectacular failure of the Starcruiser, attendance at Walt Disney World has been low, with the company extending deals and packages through this year’s holiday season (which puts most rooms at around what they cost in 2019 – not a huge savings but not nothing, especially in the grand scheme of Disney things). Disney touted the Genie+ service, which is supposed to help visitors get on more rides for an additional price, as offsetting the attendance dips.
The Star Wars: Galactic Starcruiser was a significant misstep for Disney. It went from being something that the company was endlessly proud of to something that it has to live down. As TheWrap exclusively reported, costs associated with the hotel and the related experiences could have cost the company as much as $1 billion. Getting it off the books as quickly and quietly as possible is clearly a top priority.