I wasn't looking to make history.
I was at Walt Disney's (DIS 0.16%) most visited theme park on the planet last week, enjoying Disney World's Magic Kingdom on a promising Friday morning. Walking through Frontierland, I saw a locomotive pull into the station.
The Walt Disney World Railroad making the rounds wasn't a new sight. The attraction, which had been closed since 2019, had begun making test runs in recent weeks. A day earlier, Disney employees -- cast members, as the media giant calls them -- were invited to go for a ride. Was the iconic vintage steam train actually starting to carry guests around the park as passengers?
The train had been sitting idle and empty at the Main Street station by the park's entrance when we tapped in an hour earlier, the attraction entrance roped off. It didn't seem as if it would be running that day. But -- lo and behold -- the Frontierland station cast members were no longer blocking access to the ride. The locomotive arrived, fairly full of passengers who had left the Main Street station just a few minutes earlier. I was about to board the first train to cycle through the perimeter of the Magic Kingdom carrying actual park guests in more than three years.
It was nostalgic. It was the return of a classic attraction. It was a partial but important solution to the capacity problem that has held the theme park operator in check since it reopened after a four-month COVID-19-related closure in 2020.
Image source: Disney.
The train event
The return of one of the original Magic Kingdom attractions might not seem to have much significance outside of theme park enthusiast circles, but this is a great thing for shareholders on the other side of the turnstile, too. When Disney World reopened in the summer of 2020, it did so with the introduction of park reservations. Having a ticket or an annual pass isn't enough anymore; potential visitors also have to secure a park reservation.
This was necessary early in the reopening process, when social distancing safeguards had Disney World and rival park operators in the state of Florida initially limiting attendance levels to roughly 30% of a gated attraction's capacity. Those statewide restrictions are long gone, but staffing, expansion, and economic challenges have kept them in place at the House of Mouse.
Disney is the only major theme park operator clinging to the reservations system. It might argue that it's about not disappointing a family traveling all the way to Orlando for a once-in-a-lifetime vacation, but that's just the thin caramelized crust of a creme brulee. It's easy to crack through to get to the pudding. Park reservations are presumably a gatekeeper, largely to keep annual pass holders who pay $2 to $5 a day for year-round access from taking away spots that could be filled by guests paying as much as $189 for a one-day admission. And that's not the only distinction being checked. Guests who are also paying to stay at a Disney resort will naturally be more lucrative than local residents or visitors who choose to stay off-site.
The math is cruel but undeniable. Revenue per capita is up 40% at Disney World since the rollout of the park reservations system.
The long-overdue return of the Walt Disney World Railroad over the weekend brings back one of the park's highest-capacity offerings -- it can reportedly take on more than 3,000 visitors an hour. The timing couldn't have been better, and not just because the steam team's arrival came during the peak holiday travel season. Disney World plans to close its Splash Mountain log flume ride next month, and it will be refurbished before reopening as Tiana's Bayou Adventure with a Princess and the Frog update in late 2024. Parkgoers who might have logged on, so to speak, can take the train instead.
Thankfully, the Magic Kingdom is also just months away from debuting the Tron-themed roller coaster it announced five years ago. Tron Lightcycle Run is slated to open in the spring. But it's been in testing for months, and I'd be surprised if it didn't open before the end of March, sometime during the resort's 18-month celebration of turning 50 years old.
Annual passholders hoping that the return of Bob Iger as CEO would put an end to the reservations system will need to be patient. The only ways to make that feasible anytime soon are by tightening annual pass restrictions (if not eliminating them entirely), raising prices, or increasing capacity. A global recession could also relax availability, but let's not go there just yet.
Increasing capacity at the parks is the best way to make all parties happy when it comes to the leader of travel and tourism stocks. The addition of a vintage transportation attraction is pulling into the station just in time to make that possible.
