It's over. The last of the "passengers" aboard Walt Disney's (DIS 0.58%) ill-fated Star Wars: Galactic Starcruiser will be heading home on Saturday morning. The premium lodging experience at Florida's Disney World resort turned heads when it was introduced early last year with its hefty pricing, starting at $4,809 for a party of two to partake in the interactive two-night experience. It just failed to generate enough interest. The sticker shock lasted longer than the novelty value.
I'll take my lumps, putting out a video ahead of its debut detailing the five reasons why Galactic Starcruiser will succeed. It lasted just 19 months. Disney is naturally taking a bigger hit. It now has a costly 100-room structure adjacent to Disney's Hollywood Studios. When it announced the closure in May it didn't have concrete plans for the future of the concrete structure.
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With Disney shares hitting a three-year low this week, it has far bigger failures than Galactic Starcruiser to worry about this year. It's had some colossal disappointments at the box office, including Indiana Jones and the Dial of Destiny and Haunted Mansion. Disney+ subscriber growth has been buffering this fiscal year. Its linear networks continue to struggle as cable and satellite TV subscribers cut the cord.
Even its theme parks, a lucrative source of stability the past couple of years, has meandered lately. Attendance at Disney World has slowed since April, which was also when it officially opened the costly and long overdue Tron Lightcyle Run thrill ride. The bright side to Disney's long list of recent misses is that Galactic Starcruiser gets to close quietly. There's no point in kicking Mickey Mouse when he's down.
Image source: Disney.
Star Wars: Galactic Starcruiser could've been a hit, despite the stiff price tag. It had just 100 suites to fill in a massive resort of more than 36,000 available rooms. Disney just had to persuade guests to pay a rich premium for less than 0.3% of its occupancy for a unique lodging adventure. It also could've done a better job of updating the experience or giving fans of the original trilogy more than just Chewbacca on board.
A common suggestion to save the richly themed sci-fi attraction was to charge substantially less, but that wasn't financially feasible. It cost a lot to operate and staff the two-day experience that would have roughly 300 paying guests at any given time. As it began offering 30% discounts to a growing number of groups when demand started to wane, its fate was all but sealed. No one was ever going to pay retail again, upending the profitability of the business model.
What will become of the structure? That's not an easy question to answer. You can't just convert a building with 100 window-less guest rooms into a more traditional and economical hotel. It also doesn't do Disney any good to just let it sit there dormant. It can market it for convention experiences, turn it into corporate offices, or perhaps even find a way to use it as a way to expand Disney's Hollywood Studios' Galaxy Edge.
The failure of the Galactic Starcruiser isn't making Disney blaster-shy about investing more in new experiences. It revealed last week that it will be investing $60 billion in its theme park resorts and cruise ships over the next 10 years to beef up its offerings, nearly doubling the fresh capital it's deploying for its leisure business. With growth prospects cloudy for many of the media stock's other businesses it makes sense. The tuition didn't come cheap, but it will learn from the short-lived Star Wars hotel venture.
