Star Wars: Galactic Starcruiser is Set to Close Permanently, Incurring Substantial Losses

In a surprising turn of events, the highly anticipated Star Wars: Galactic Starcruiser attraction at Walt Disney World will shut down for good in the fall of 2023. This decision will result in a staggering loss of up to $300 million. The closure has prompted discussions about the reasons behind this unexpected move, the timing of the announcement, and its financial implications.

The final voyage of the Star Wars: Galactic Starcruiser will take place from September 28th to 30th, 2023. This decision to end operations prior to Disney’s new fiscal year, commencing on October 1st, is a departure from the usual practice of announcing cost-cutting measures a few weeks before the start of the fiscal year. However, given the unique nature of the Starcruiser experience, I think it’s necessary.

Walt Disney World has also discontinued discounts for the remaining months of Star Wars: Galactic Starcruiser, including the previously available 30% off deals for Annual Passholders and Disney Visa Cardholders. This decision is understandable, considering the final voyage quickly sold out over the weekend. More dates will, however, follow suit as fans rush to experience the Starcruiser before bidding farewell to the starship Halcyon.

The latest update regarding this development emerged from the 2023 JPMorgan Global Technology, Media & Communications Conference, where JPMorgan analyst Phil Cusick interviewed Disney Parks Chairman Josh D’Amaro. Although the interview covered various topics, one of the noteworthy points was D’Amaro’s acknowledgment that the Star Wars: Galactic Starcruiser performance did not meet their expectations, leading to the decision to discontinue the attraction in September. D’Amaro praised the exceptional work of the Cast Members and Imagineers in bringing the Starcruiser to life, emphasizing the high ratings given by guests.

Regarding the financial impact of the closure, D’Amaro revealed that the acceleration of depreciation on Starcruiser will result in an expected $100-150 million depreciation in both the third and fourth quarters. Cusick sought clarification, confirming that D’Amaro meant the depreciation would occur in each quarter rather than as a total amount. D’Amaro confirmed this, indicating that Walt Disney World anticipates a loss between $200 million and $300 million on Star Wars: Galactic Starcruiser by the end of this fiscal year.

The saga surrounding the Star Wars: Galactic Starcruiser has garnered significant interest, with opinions varying on its inevitable demise. From the moment the concept was announced, skepticism among fans was palpable. As more details came out before the opening, they seemed to diminish it instead of increasing interest. The exorbitant cost associated with the experience confirmed the realization that it was not a traditional hotel. The cost only further alienated both Walt Disney World and Star Wars enthusiasts.

Given the widespread foresight and criticism surrounding the Starcruiser, there will likely be future analysis of what went wrong with the attraction. From a business perspective, every aspect fell short. While some may see this as validation or an unsurprising outcome, others find the entire saga intriguing. Looking back at previous discussions on Starcruiser, it becomes evident that the concerns raised by numerous commentators were prophetic. This is not to claim sole credit for these insights; many astute observers foresaw the impending outcome.

It raises the question of how so many external parties could foresee the issues while the company seemingly did not. Fans have often overestimate Walt Disney World’s reliance on data and analytics, and market research is often used to confirm decisions already made. Star Wars: Galactic Starcruiser’s closure is a prime example of this.

The gradual unraveling of Star Wars: Galactic Starcruiser is akin to a slow-motion trainwreck, or perhaps even worse. It resembles embarking on an unfinished railroad, aware that the tracks are incomplete, only to reach a disastrous cliff. The risks and challenges were apparent from the very beginning, and the absence of a contingency plan is baffling.

This situation brings to mind another recent disappointment: Lightyear. As the initial excitement waned, each new detail generated more questions than answers. The decision to introduce a different performer and animation style while abandoning beloved characters and a perplexing narrative conceit that lacked marketing clarification left fans perplexed. It felt like a story that no one asked for, and the overall project gave off an aura of a subpar imitation of the original Toy Story franchise.

Both Star Wars: Galactic Starcruiser and Lightyear exemplify Disney’s display of excessive hubris. This is likely a consequence of their live-action remakes generating billions at the box office despite being critically underwhelming, and their theme park decisions, including price increases, consistently driving demand higher.

Rumors regarding the true cost of Star Wars: Galactic Starcruiser have circulated over the past couple of years, with some figures bordering on hyperbole. The notion that the break-even point for the 100-room experience would be decades away seemed far-fetched. However, the revelation of a $300 million loss implies a profit of at least $3 million per room. The sheer number of voyages required for Star Wars: Galactic Starcruiser to avoid financial losses is staggering.

It is important to note that this loss represents profit rather than revenue, which renders the high voyage rates irrelevant. As previously mentioned, the operational expenses for Starcruiser, including the equity entertainment and cast-to-guest ratio, were exorbitant. Staffing costs alone were substantial, and the complex nature of Starcruiser, with its multitude of moving parts, entailed significant maintenance and upkeep expenses. The $300 million loss likely does not encompass the entire cost of the attraction.

It is worth mentioning that my knowledge of depreciation and amortization rules is limited, but it seems reasonable to assume that a portion of Star Wars: Galactic Starcruiser’s assets had already been depreciated in the previous fiscal year. Considering the building’s opening in March 2022, it is likely that a portion of the asset will depreciate on a straight-line basis over a 10- or 20-year useful life. This results in approximately $15 to $30 million accounted for.

Regarding the assets within Star Wars: Galactic Starcruiser, such as the physical infrastructure and tangible technology developed through Imagineering R & D, the depreciation of these assets will likely be accelerated. Assets not intended for repurposing could be easily bundled with the building and depreciated in the current fiscal year. However, assets like the lightsaber and other portable effects that could find a home in Star Wars: Galaxy’s Edge or future attractions may not be depreciated this fiscal year if there are plans for repurposing.

Regardless of the exact figures, it is reasonable to assume that the actual cost of Star Wars: Galactic Starcruiser exceeded $300 million, likely falling in the range of $400 to $500 million. Not all of this expenditure is a waste of money. The underlying technology, props, and pieces will be repurposed in other areas of Star Wars: Galaxy’s Edge or future projects. It is a widely known adage that no good idea dies in Imagineering. The innovative elements of Starcruiser will likely find new homes and applications within the Disney universe.

Furthermore, the decision to accelerate the depreciation of Star Wars: Galactic Starcruiser suggests that Walt Disney World has no immediate plans to repurpose the building itself. While this does not entirely rule out the possibility of future use, it indicates that the closure was a definitive choice rather than a strategic transition. The timing of the closure is particularly intriguing.

Walt Disney World had recently introduced discounts for Star Wars: Galactic Starcruiser, including offers for Cast Members, Annual Passholders, and Disney Visa Cardholders. However, these discounts are not available to the general public. Despite attempts to fill up voyages by offering these deals, it appears that the attraction failed to meet revenue expectations even with reduced prices. This might have led the decision-makers in Burbank to conclude that continuing operations with public discounts would only result in further losses. Cutting their losses and writing off the investment proved more favorable than prolonging the inevitable by operating Starcruiser into the next fiscal year.

The lack of a gradual wind-down and the absence of a proper “farewell” season indicate that the decision to close Star Wars: Galactic Starcruiser was abrupt and perhaps even caught Walt Disney World off guard. Limited lead-time was provided for affected guests, resulting in the need to offer discounts and rebook reservations. This suggests that the higher-ups in Burbank made the decision swiftly and decisively, leaving little room for negotiation or alternative solutions.

Given the circumstances surrounding the closure and the information that has emerged, it is natural to speculate on the reasons behind this hasty decision. A combination of underperformance, financial considerations, and an assessment of future viability likely led to the discontinuation of the attraction. The suddenness of the decision implies that the attraction was deemed economically unviable. This makes it more advantageous for Disney to incur immediate losses rather than continue operations with uncertain prospects.

I eagerly await further developments in this captivating saga. The reasons behind the attraction’s rapid decline and irreparable state raise numerous questions and leave room for extensive analysis. It is a reminder that even a company as experienced as Disney can falter in its pursuit of ambitious projects. The tale of Starcruiser serves as a valuable lesson in the delicate balance between innovation, financial viability, and market demand.

The closure of Star Wars: Galactic Starcruiser serves as a cautionary tale for the entertainment industry, highlighting the importance of careful planning, market research, and adaptability. It raises questions about the decision-making process within Disney and the extent to which they consider market trends and consumer preferences.

The failure of Star Wars: Galactic Starcruiser to meet expectations also underscores the ever-present challenge of striking a balance between creative vision and commercial viability. While the concept of an immersive Star Wars experience sounded enticing, the execution and pricing ultimately deterred potential guests. It seems that Disney misjudged the market’s willingness to invest in such an expensive and unconventional endeavor.

Additionally, the closure of Starcruiser sheds light on the broader challenges the theme park industry faces in a post-pandemic landscape. While there was initial pent-up demand upon the reopening of Walt Disney World, the sustained success of an attraction like Starcruiser relies on long-term visitor engagement and positive word-of-mouth. The decline in guest satisfaction mentioned in the article suggests that Disney may have lost sight of this crucial aspect.

As fans and industry experts analyze the downfall of Star Wars: Galactic Starcruiser, it serves as a reminder that even well-established companies can experience significant setbacks. The experience serves as a valuable lesson for future ventures, emphasizing the importance of comprehensive market research, cost analysis, and adaptability in an ever-changing entertainment landscape.

While the closure of Starcruiser is undoubtedly disappointing for fans and Disney alike, it also provides an opportunity for reflection and reevaluation. Disney can use this experience to learn from their missteps, better understand the desires of their audience, and realign their future endeavors with market demand.

Ultimately, the story of Star Wars: Galactic Starcruiser serves as a reminder that even the most ambitious and highly anticipated projects can falter if not executed. Through such setbacks, companies can learn, grow, and ultimately deliver experiences that resonate with audiences and stand the test of time.

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