Please ensure Javascript is enabled for purposes of website accessibility

Disney World Needs a New Charge

By Rick Munarriz - Aug 13, 2016 at 8:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The theme-park giant is shipping out an iconic attraction. It needs something new.

Image source: Disney.

One of Disney's (DIS 3.69%) signature Florida attractions is going away. The Main Street Electrical Parade, the illuminated nighttime procession with its earworm of a soundtrack, will end its run at Disney World's Magic Kingdom on Oct. 9. It will then move on to Disneyland for a limited-time engagement. 

The Wednesday announcement didn't reveal what will replace the whimsical parade, but obviously, Disney isn't going to let the world's most-visited theme park stay in the dark -- in more ways than one -- for too long. The Magic Kingdom without a nighttime parade is like a park souvenir store not selling mouse-eared hats. 

One rumor is that Disneyland's critically acclaimed Paint The Night parade will take its place, because it's going away in California next month. However, that doesn't seem likely, because Disney announced that Paint The Night will return to Disneyland for select nights in December during the seasonally potent holiday season. There's no point in transporting all of the bulky floats to Florida for two months during the off-season.

The Magic Kingdom will likely dust off one of its earlier parades as a replacement, but that also appears to be a solution that has become a symptomatic problem at the House of Mouse. Disney World is now coming off of back-to-back quarters of year-over-year declines in attendance. It can't afford to phone it in when so much is at stake for Disney's second-largest operating segment.

Brain drain    

Disney Imagineering confirmed to the Los Angeles Times earlier this week that it did lay off dozens of its roughly 2,000 imagineers, the creative souls that dream up the theme-park giant's new rides and attractions. The move may not be a surprise, given that the June opening of Shanghai Disneyland is now in the rearview mirror; but it's unsettling at a time when Disney World, and now Disneyland, are struggling to woo park guests.  

Disney World is playing it safe at a time when its rivals are going the other way. Disney's biggest competitor -- Comcast's (CMCSA 1.18%) Universal Orlando -- opened a new ride, and updated a signature coaster after an 11-month refurbishment this summer. Another Central Florida rival opened two new roller coasters in Tampa and Orlando in June, and it's promising even more new attractions for next year.  

There's naturally a lot of hype surrounding the arrival of Star Wars Land. and to a lesser extent, Toy Story Land at Disney's Hollywood Studios; but that's several years away from becoming a reality. Outside of the Pandora-themed expansion at Disney's Animal Kingdom that's set to open in 2017, the next couple of years may be barren in terms of actual ride additions.

Comcast's Universal Orlando, on the other hand, has at least one new ride opening next year, along with an entirely new water park. It also has another new ride on tap for 2018.

The end of the Main Street Electrical Parade's historic run at Disney World is a metaphor. It's a pull of the plug at a time when it should be juicing things up. It's losing power, and that is evident by the lower attendance level through the first half of 2016.

Disney raised expectations when its shift to tiered pricing pushed single-day, multi-day, and annual pass ticket prices as much as 18% higher. It also made some of its annual passes more restrictive, and introduced pricier parking levels and luxury experiences.

The good news for shareholders is that Disney is making up for the dip in traffic by milking more revenue, and even more profit, out of the folks who do show up. However, that's also not a sustainable strategy.

If the company doesn't invest in the new rides that make Disney World a required vacation stop, the brand's perceived premium starts to fade. Disney's turning off the lights at the worst possible time.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$97.78 (3.69%) $3.48
Comcast Corporation Stock Quote
Comcast Corporation
CMCSA
$39.57 (1.18%) $0.46

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.