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Why Disney Investors Shouldn't Bug Out About the Upcoming Disneyland Attraction Closures

By Eric Volkman - Jan 6, 2016 at 12:45PM

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There's a very good reason why the company's shuttering part of its signature theme park: Star Wars.

The Force is strong with this one. Walt Disney (DIS 3.30%) will begin the new year with set of closures at its flagship Disneyland theme park. These are being enacted to make way for the park's upcoming new "land" devoted to the company's prize asset, Star Wars.

So the armies of visitors drifting through Disneyland will take a bit of a hit in terms of convenience and access. Investors shouldn't worry about the visitor counts or the company's stock also getting dinged by the shutdowns.

Sleeping Beauty Castle. SOURCE: B64 AT EN.WIKIPEDIA

It's a smaller, smaller world
Although Disney has secured a tract of land next to Disneyland for the Star Wars expansion, it will still need some space within the confines of today's park. As a result, it will temporarily and permanently close several attractions in advance of the construction. Being shuttered will be Frontierland's Big Thunder Ranch, plus an accompanying restaurant, performance stage, and petting zoo.

Temporary closures will hit the Riverboat ride, Davy Crockett Canoes, Disneyland Railroad, the pyrotechnical music display Fantasmic, and the entirety of Tom Sawyer Island. The shutdowns are to begin on Jan. 10. The company has not yet provided a completion date for the new Star Wars land, nor a time frame for the reopening of the temporarily closed attractions.

Disney doesn't like to offer bargains, and it's apparent that Disneyland visitors aren't going to get a discount for visiting a park that's partially shut. Actually, the opposite is the case: The announcement of the shutdowns, which was made in September, came around the same time the company boosted the park's ticket prices by as much as 31%.

It's not the only theme park operator strengthening its ties to a big movie franchise. Comcast's (CMCSA 1.52%) Universal Studios has a bona fide hit with its Wizarding World of Harry Potter, which since 2014 has been located in two areas of its Universal Orlando Resort in Florida, and next April will open at its Los Angeles park.

For a normal company, providing less product for more money, not to mention operating in an industry against well-capitalized competitors, would risk inciting some form of consumer rebellion.

But Disney isn't a normal company. It's the operator of the most iconic theme park on the planet, featuring some of entertainment's mightiest brands and characters. People come from all over the globe for the specific purpose of spending time in Disneyland. The lack of a petting zoo or riverboat ride is not going to dissuade them, nor will a more constricted and crowded park.

Comcast's Universal Studios chain, while successful and attractive (particularly for Harry Potterites), can't be considered a match for The House of Mouse's offering. After all, Disney is still very much the name in the business, with the Comcasts of this world being effectively second-tier players.

This Fool's take
Once the Star Wars land attractions open, if anything, more visitors will flock to Disneyland. After all, the brand's immense fan base will have a special, and dedicated, destination for their tastes.

In the end, we can expect minimal impact on Disney (the company) while the new land is being built, with perhaps some modest upside once it opens.

Eric Volkman owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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