Last week Disney announced that Star Wars: Galactic Starcruiser will permanently close in September 2023. Disney Parks Chairman Josh D’Amaro states that although the experience did not perform as well as Disney had hoped, it will ultimately lead to a significant tax break for the company.
Speaking during the recent JP Morgan Global Technology, Media & Communications Conference, D’Amaro reported the closure of the Star Wars: Galactic Starcruiser this fall will enable Disney to claim a tax write-off of approximately $300 million.
Following the hotel’s closure, depreciation is expected to accelerate at a rate of $100 million to $150 million per quarter over a span of two quarters.
“I don’t think we’ve talked about this before, but in both Q3 and Q4 as we accelerate depreciation on that Starcruiser, we should expect about $100-150 million acceleration in depreciation,” stated D’Amaro.
Though on the surface, this depreciation may sound negative, the company is pleased with the value reduction because of taxation. Tax regulations will allow Disney to recover the write-down in value of the Galactic Starcruiser hotel and, in the process, pay less tax on the property overall.
It’s still very possible the overall venture will be a loss to the company, but not as big of one as you might think when considering the overall tax impact.
Glad that Disney can claim a tax write-off to offset some of the Galactic Starcruiser loss?