Disney's Iger Tells CNBC: Cruises Deliver High Margins, Returns
Walt Disney plans to add two cruise ships to its existing lineup, in an effort to meet increasing demand and provide more trip destinations, Robert Iger, Disney's president and chief executive officer, told CNBC.
Disney, which currently has two ships, said the new ocean liners will hit the waves in 2011 and 2012. Each ship with have 1,250 rooms.
"This has been a great business for the company," Iger told CNBC. "We've had high margins and double-digit returns on our invested capital. It’s also a great brand builder. These ships are great ambassadors for Disney around the world."
Disney, which entered the cruise business in 1998, said the new 122,000-ton cruise liners will be two decks taller than the existing 83,000-ton ships, the Disney Magic and the Disney Wonder.
"This is a big deal because it expands their non-theme park business," reports CNBC's Julia Boorstin. "This has been a strong enough business that they see real potential in doubling their capacity."
Disney signed a letter of intent with Meyer Werft shipyard, based in Papenburg, Germany, to build the ships. Specific design plans and itineraries for the still unnamed ships are in development and will be unveiled at a later date. But Disney did say that the ships will combine art deco elements reminiscent of ocean liners in the 1930's, with an exterior color scheme matching Mickey Mouse's trademark black, white, red and yellow.
Disney Cruise Line's trips to new destinations, including the West Coast and the Mediterranean, have recently set booking records, the company said. Disney had traditionally offered three-night, four-night and seven-night Caribbean cruises.
The larger fleet will also provide Disney with more flexibility to provide a variety of itineraries, Iger said. "We are looking at a lot of different itineraries around the world," he added.
Beyond the cruise business, Disney is also focused on growing its brand in other channels such as the Web. The company relaunched Disney.com a few weeks ago, Iger said.
"We believe the Internet should be looked at as a entertainment experience," Iger told CNBC. "That's a direction we are taking...and the effects have been really positive."
Iger is also upbeat on the prospects for its ABC television unit: "ABC has a really balanced schedule. They added two shows that are doing quite well in "Ugly Betty" and "Brothers and Sisters,"" Iger told CNBC, adding that there's still strength in hits like "Desperate Housewives," "Grey's Anatomy," and "Lost," among others. "I'm confident in the management of ABC and the direction that it’s going."