Growth ahead for Disney: Expanding with LNG newbuilds
Disney Cruise Line’s market capacity is set to grow dramatically by 2024, according to the 2018-2019 Cruise Industry News Annual Report. With three new LNG-fuelled ships set to join the fleet in the early 2020s, Callum Tyndall takes a look at Disney’s strategy and its plans for the future
isney will be taking delivery of three new ships in 2021, 2022 and 2023, respectively. Each hosting 2,500 guests, the trio will raise Disney’s fleet to a total of seven and all three will be LNG-fuelled.
The new additions to the fleet were unveiled initially in 2016, at which time just two were planned, with the third announced last year. All three will be built at the Meyer Werft shipyard in Germany and will be approximately 140,000 gross tonnes, with approximately 1,250 guest rooms, making them the largest ships in the Disney fleet.
Names, itineraries and design plans are said to still be in the development, although Disney Cruise Line has stated each will have their own unique experiences.
1 million guests by 2024: Disney Cruise leads up Parks and Resorts
In 2018, Cruise Industry News has Disney projected to rank as the 11th biggest brand by projected guest capacity, though it is expected to move up by 2024 and increase capacity to over 1 million guests on an annual basis. Since launching 12 years ago, Disney Cruise Line has proved hugely profitable for the company, with the Magic and Wonder ships generating higher returns than any recent theme-park investments and, in some years, even producing higher profits than the flagship Disneyland Resort in Anaheim, California.
In the first quarter of this year, according to Disney’s earnings report, the Parks and Resorts segment (which includes the Disney Cruise Line) saw revenue increase for the quarter by 13% to $5.2bn. While the numbers partially benefit from the fact that the prior-year quarter was impacted by Hurricane Matthew, and Disney Wonder having been dry-docked during the prior-year quarter, it is an undeniably impressive level of growth, reportedly driven primarily by higher passenger cruise days. Given this growth, it is understandable that the company would choose to take full advantage and add a third new ship to the fleet.
“By the time all three new ships are sailing, we’ll have nearly doubled the size of our existing fleet.”
“We decided two ships wouldn’t be enough to hold all of the exciting new experiences we have been dreaming up to take family cruise vacations to a whole new level with immersive Disney storytelling, world-class family entertainment, and imaginative innovations,” Bob Chapek, chairman of Walt Disney Parks and Resorts, said at last year’s D23 Expo. “By the time all three new ships are sailing, we’ll have nearly doubled the size of our existing fleet.”
In addition to the general increase that more ships will provide, the expansion of the fleet will allow Disney to lessen the impact of any dry-docking as the extra ships pick up the slack. A dry-dock for Disney Magic in the second quarter of this year, for example, is set to reduce Disney Cruise Line’s operating income by around $20m. Although the new ships will still be subject to dry-docks as well, Disney will likely reap far greater growth than they do operating cost.
Going green: Powering the fleet with the world’s cleanest burning fossil fuel
Currently considered the world’s cleanest burning fossil fuel, liquified natural gas (LNG) has been steadily growing as an energy source and, in the cruise industry, has started to gain particular popularity as an alternative fuel source. Compared to conventional marine bunker fuels, LNG has allowed the shipping sector to not only lower fuel costs but make a substantial impact on lowering emissions. Given that the cruise industry has frequently attracted criticism for its place as one of the worst offenders when it comes to fuel emissions (an investigation by Channel 4’s Dispatches team last year found P&O Cruises’ luxury ship Oceana to have pollution levels in public areas of the ship similar to those in cities such as Delhi and Shanghai), it seems a natural move for cruise operators to begin adopting LNG as the fuel source for new ships.
Although Disney has not yet revealed any particular information about the LNG propulsion systems that will be in place on the new ships, the company did say that LNG is “one of the cleanest-burning fuels available.” Following in the footsteps of operators such as AIDA Cruises, whose AIDAprima became the first cruise ship to routinely use LNG with a dual-fuel powered engine while in port, and Carnival Corporation (the owner of AIDA Cruises), who plans to have seven fully LNG-powered ships delivered between now and 2022, Disney is making a clear acknowledgement that “green cruising” is the way forward.
“You might say Disney Cruise Line is on the threshold of reimagining the cruise industry once again.”
Although it won’t be the first cruise line to launch LNG-powered ships, Disney Cruise Line’s rapid expansion and continuing growth could allow the line to position itself as one of the predominant “green cruise” operators. There is still some way to go to catch up to rivals such as Carnival, but given the success that the cruise line has seen for Disney, it would be unsurprising to see the company continue to heavily invest in its expansion and ensure that it remains at the forefront of innovation within the cruise industry.
According to a March 2018 DisneyParks blog post by Jonathan Frontado, public relations director at Disney Parks & Resorts and public relations manager at Disney Cruise Line: “You might say Disney Cruise Line is on the threshold of reimagining the cruise industry once again, just like we did in 1998 with our very first ship. I couldn’t be more excited about the expansion of our fleet, and I know our guests will be, too.”