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Disney World Needs a New Theme Park

By Rick Munarriz - Updated Feb 24, 2020 at 11:39AM

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Overcrowding and staying ahead of the competition will lead the world's leading theme park operator to open a fifth gate in Florida.

It's pretty crowded at Disney's (DIS 3.30%) most popular resort these days. February used to be the sleepy season at Florida's Disney World, but that is certainly not the case anymore. Festivals, long-distance running events, and even cheerleading competitions in recent weeks have helped spice up the off-season at the Florida resort. The turnstile taps are also accelerating as a result of the buoyant economy, and -- to be frank -- after years of phoning it in, we're at the point where Disney is introducing bar-raising rides and attractions again.

With Disney World's largest rival in the process of dramatically expanding its empire, it only makes sense for the world's leading theme park operator to do the one thing that it hasn't done in more than two decades. Disney needs to open a new theme park in Florida, and it's no longer a matter of if but when the media giant breaks out the hardhats and shovels.  

Alice in Wonderland, Mad Hatter, and Rabbit in front of the spinning tea cup ride at Disney's Magic Kingdom.

Image source: Disney.

A whole new world

I took a look at what Disney will look like in 2025 over the weekend, and one of my passing comments was that its Florida resort will have announced a new theme park by then. In reality, the welcome addition will probably be nearing its completion by 2025 if my Madame Leota crystal ball is up to snuff. I'm not a voice in the wilderness on that front, but since most of the bloggers and social media influencers daydreaming about a fifth gate are merely making emotional pleas to make this happen, I'm going to make my argument rooted in math and financial common sense.

Disney World turns 50 next year -- and I'll have more on that in a moment -- but for now let's discuss the four theme parks currently operating in Florida. Since Disney shook up the Central Florida landscape in 1971 with the arrival of the Magic Kingdom, we've had to wait seven to 11 years for the three subsequent parks -- but come April, we'll be at 22 years since it opened Disney's Animal Kingdom, the fourth and currently newest gated attraction. Why is Disney waiting at least twice as long as it ever has to add another theme park?

The obvious answer is that Disney doesn't need a new park, but let's take a closer look. Estimated attendance across all four of its parks clocked in at 42.6 million in 1999, the first full year of operation for all four Disney World parks. We were at 58.3 million guests in 2018, a 37% increase. We will surely top 60 million by the end of this record-breaking year. 

What are these people doing once they get into a Disney World park? Disney doesn't have 37% more rides than it did in 1999. Disney updates and replaces attractions, and a good chunk of its expansion comes at the expense of closing down older rides. Florida's Magic Kingdom -- the world's most visited gated attraction -- and Epcot have roughly the same number of attractions as they did in the 1990s. Disney also continues to open new on-site resort hotels, funneling more people into parks that are getting more crowded with every passing year. 

Life is a highway

Disney World is becoming the equivalent of I-4, the notoriously overcrowded freeway that many take to reach the resort. I-4 is an urban planning nightmare that took too long to address its congestion shortcomings, and now it's just a gridlock mess. Does Disney World really want its parks to be a haven of frustrated riders, a stroller wheel bump of the ankle away from full-on road rage? 

Just a few painfully traversed I-4 exits away, Comcast's (CMCSA 1.52%) Universal Orlando gets it. Comcast has roughly doubled its real estate in recent years, and in 2023 it will open Epic Universe. Since the 1998 debut of Disney's Animal Kingdom, we've seen Universal Orlando grow from one theme park to what will be four in three years. Is Disney really going to let Comcast grow larger in the rearview mirror when it just makes sense to floor it? 

Disney can argue that it has raised prices to help keep crowds in check. Single-day ticket prices have more than tripled since 1998. Folks keep coming, but eventually the kind of negative trip reports we're seeing pop up lately will eat into the House of Mouse's pricing elasticity. Disney World is going to turn 50 in the fall of next year, and it's been arming itself with some pretty impressive firepower in the form of new e-ticket experiences. It would be a shock if Disney doesn't use that media frenzy to announce plans for its inevitable new theme park at that time.

Announcing plans for a new theme park in 2021 would eat into Comcast's momentum when it unveils its new destination two years later. Even if Disney's new park won't open until 2025 at the earliest, guests knowing that something new is on the way would make the current overcrowding that much more tolerable (just as they're putting up with the current construction workarounds in EPCOT). 

You're a blue chip stock, Disney. Stop acting like I-4.

Rick Munarriz owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool recommends Comcast and recommends the following options: long January 2021 $60 calls on Walt Disney and short April 2020 $135 calls on Walt Disney. The Motley Fool has a disclosure policy.

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