Walt Disney World’s $2,500-a-night Galactic Starcruiser went from hyperdrive to a $300-million write-off in a little over a year. The inside story of how the Empire swung for the fences—and struck out.
OnMay 18, when Disney announced that it was shutting down its ambitious Star Wars-themed Galactic Starcruiser hotel in Orlando at the end of September, just 19 months after opening, company executives did not immediately elaborate on what went wrong, framing the closure as merely “a business decision.”
A somewhat fuller explanation came four days later. Speaking on May 22 in Boston at a J.P. Morgan investor conference, Disney parks chairman Josh D’Amaro stated the obvious: “It didn’t perform exactly like we wanted it to perform,” he said. “Despite the fact it was a never-before-seen experience and raised the bar, we thought it was time to sunset this in September.”
D’Amaro told conference-goers that Disney would accelerate depreciation on the Galactic Starcruiser by up to $150 million in each of the last two quarters of 2023. In other words, one of Disney’s grandest, most innovative experiments will end up a $300-million write-off.
Launched with tremendous fanfare in March 2022, the Galactic Starcruiser had spent the good part of a decade in development and took an estimated $400 million to build, according to Dennis Speigel, founder and CEO of International Theme Park Services, an industry consulting firm. The project ran over budget and the opening was delayed for various reasons, including the Covid pandemic, he says. (For context, Disney reportedly spent $1 billion to build the 14-acre Star Wars: Galaxy Edge land, which opened in 2019 inside Hollywood Studios park with two rides, five food outlets and nine retail shops.)
Even by Disney’s standards, the Galactic Starcruiser was no ordinary hotel. It was a swing-for-the-fences mold breaker, a two-night immersive experience where guests pretend to board a spaceship for an elaborate days-long Star Wars cosplay, complete with costumed characters, meals and storylines. Once aboard the Halcyon ship, passengers received lightsaber training, rubbed elbows with space creatures and went on missions to aid either the Resistance (a.k.a., the good guys) or the evil First Order.
“This is not your typical hotel where you have desk clerks and housekeepers,” explains Speigel. A disproportionate number of personnel are actors, which makes the Starcruiser extremely costly to run. “It is a very niche market that Disney is catering to,” he says. The target audience is the subset of Star Wars fanatics who can afford to shell out nearly $5,000 for a couple or $6,000 for a family of four.
Solo Voyages: At $2,500 a night, the Galactic Starcruiser wasn't seeing enough return visitors.
Matt Stroshane/DisneyWhile guests have given the Galactic Starcruiser some of the highest satisfaction ratings in the 50-year history of Walt Disney World, not enough of them return for a second voyage. Some of the two-night voyages have been less than half full, according to reports, often causing Disney to consolidate two dinner seatings into one.
“In the theme park industry, we live on repeat visitation,” Speigel explains. The sky-high price tag virtually ensures that the Starcruiser is a bucket-list experience, a “one and done,” he says. “It’s like going back and seeing the same movie or play again. The experience, the interface with the theatrical people is basically the same.”
“Try not. Do or do not. There is no try.” —Yoda
Inmany companies, shutting down such a high-profile, expensive project might be seen as an earth-shattering failure. But this is Disney, whose parks division raked in $7.9 billion in operating profit last year, compared to a loss of about $4 billion for its shiny but as yet unprofitable streaming unit, Disney+.
At the J.P. Morgan investor conference, D’Amaro put the closing of the Star Wars hotel into perspective. “The Galactic Starcruiser got a fair amount of attention,” he said. “But it’s a boutique hotel, it’s 100 rooms. If you think about Walt Disney World, it’s actually got 30,000 rooms. So this is very, very small in the context of what we deliver at Walt Disney World.”
Limited capacity was a big part of the problem, says Robert Niles, creator of Theme Park Insider. “The math never worked for the Starcruiser. Not at the high cost per guest to run it and the number of rooms available. Disney does blockbusters, not boutique.”
With its 100 guest rooms, the Galatic Starcruiser has a maximum capacity of 502 passengers. Assuming that every guest pays an average of $1,800 for a two-night stay, Disney could take in roughly $900,000 per voyage—or about $13.5 million per month—but that’s before expenses. It sounded workable on paper, but only if bookings stayed strong.
Would more rooms have saved the Starcruiser, given the challenge to fill the existing 100 rooms? “There was no way to sustain this business at the return on investment that Disney is used to with its theme parks,” Niles says. “That should have been apparent from the beginning, but apparently Disney chose to give this creative challenge a go anyway.”
Cantina Spirit: Guests raved about the Starcruiser experience, but Disney opted to cut its losses.
DisneyOthers argue that the property made sense within the larger context of Disney’s Star Wars strategy. Just a few years earlier, before the pandemic, before fears over the economy set in, the company announced an expanded universe of new Star Wars movies and TV shows. Viewed through that lens, a spectacular new first-of-its-kind Star Wars experience seemed like a smart venture. “I mean, the timing looked good,” Speigel says. “If you were in meetings at Disney headquarters, looking at what was happening on the entertainment side of the business, you’d be saying, ‘Wow, this is great.’”
Industry insiders give the company a lot of credit for pulling out all the stops. “Disney accomplished everything it set out to do with Starcruiser, and spectacularly well,” Niles says. “It was an award-winning, one-of-a-kind experience that devoted Star Wars fans loved.”
“Disney sets the bar for the entire industry,” Speigel says. “So they’ve got to keep reaching for the stars. It’s just what our business is about.”
“Never tell me the odds.” — Han Solo
The last time the Galactic Starcruiser was mentioned on a Disney earnings call was in May 2022, two months after the experience opened. Then-CEO Bob Chapek called the response “phenomenal,” citing “incredibly high” guest ratings and “strong” demand. Six months later, Chapek was out and his predecessor, Bob Iger, was back in.
Executives soon began to see that Starcruiser bookings were dropping. By early January, reservations had slowed so much that Disney began offering discounts. Guests could save up to $700 on a two-night stay if they extended their stay at another participating Disney hotel. While it’s not unusual for Disney to run hotel promos (a current summer deal lets guests save up to 25% on a stay), they are typically offered on a seasonal basis. But the Starcruiser discounts were available all the way through September, a sign that the immersive Star Wars experience was not justifying its premium price tag.
Since the closure announcement, some headlines have unfairly zeroed in on Chapek as a scapegoat, says Speigel. “Poor Bob Chapek,” he says. “He’s a smart guy, a big diamond in the rough, perhaps. But this project was on the board for eight or nine years. People love to blame Chapek, but this wasn’t on his watch. He completed the assignment.”
“There’s always a bigger fish.” — Qui-Gon Jinn
“Ithink Disney looked at it from the pelican view and said this will have very little impact on guests overall,” Speigel continues. “Besides, they’ve got bigger fish to fry right now in their organization.”
One of those fish is Iger’s pledge to cut $5.5 billion in costs across the corporation. “I'm participating in that as well,” said D’Amaro, while insisting he will not cut labor from the front line in the parks.
An arguably bigger issue is Disney’s ongoing feud with a presidential candidate, Florida Governor Ron DeSantis, whom Bob Iger has called “anti-business” and “anti-Florida.” What began as a dispute over the governor’s controversial “Don’t Say Gay” law has escalated to dueling lawsuits over the special tax district governing Walt Disney World. The latest salvo was fired last week, when Disney announced it was pulling the plug on a $1-billion company campus that would have brought 2,000 jobs to Lake Nona, Florida.
Wookiee Here: Disney says that Starcruiser performers will be offered new roles in the company.
Kent Phillips/Disney“A lot has changed since we made that announcement,” D’Amaro said of the plan to build the Lake Nona campus. “Number one, we have new leadership in place. And number two, the business conditions have changed pretty significantly. So we’re going to reverse that decision. We’re not going to have the campus in Florida.” D’Amaro confirmed that Disney–the state’s largest employer and biggest taxpayer–plans to invest another $17 billion in Florida over the next decade.
Then there’s the economy. After more than a year of persistent inflation, post-pandemic travelers are showing a greater price sensitivity than last year. “Should we see any volatility from an economic perspective, we think we’re in a pretty good position to be able to manage–not be immune from a recession–but certainly manage in a better way than we had been in the past,” D’Amaro said. “It’s also important to note that anytime we have gone into an economic recession, we’ve come out a lot smarter and stronger than we have in the past.”
Perhaps all those factors made it easier for Iger to junk the Galactic Starcruiser. “There will be guests who are totally brokenhearted. I can guarantee you that Iger and that whole team of senior people are very disappointed,” Speigel says. “But this is not going to be a witch hunt or a head chopping. Nobody goes to the guillotine for this one.”
“I am not a committee.” —Princess Leia
In the end, Iger made the right call, industry experts argue. “There’s a strong business case to just take the loss to clear space on the books for better investments tomorrow,” says Niles. “Disney can find a higher return on investment with other hotel concepts that can scale.”
“I don’t think anybody wants a write-off,” adds Speigel. “But by taking the accelerated depreciation approach, Disney is taking its lumps now rather than spreading it out. And they’ll move on. It’s the old ‘cut your losses’ and quite frankly, it’s the practical approach.”
“I’ve been doing this all my life,” continues Speigel, who broke into the theme park industry as a 13-year-old ticket taker in Coney Island Cincinnati. “I have watched Disney build some of the most successful parks in the world. Everybody has a strikeout, and I would say that Disney has had more home runs than they’ve ever had strikeouts.”
As for what will become of the Starcruiser building? “I don’t think anyone outside of the company knows what will happen with it,” says Niles. “And I suspect that no one inside the company has made that decision either.”
“Disney will do something with the facility,” Speigel speculates. “They’ll pick themselves up, brush themselves off and start all over again.”
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