Disney theme parks face a potential $21 billion revenue loss through 2022 due to the ongoing coronavirus closures of its resorts around the globe along with the economic recession projected to follow, analysts warn in a new research paper.
An analyst report from research firm MoffettNathanson paints a grim picture of the financial impact of shuttering Disney theme parks in Anaheim, Florida and around the world amid the COVID-19 pandemic.
“We believe that investors are underestimating the lagging recovery nature of Disney’s theme parks,” according to the MoffetNathanson report.
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Disney’s two Anaheim theme parks, three hotels and outdoor shopping mall remain closed until further notice due to the COVID-19 pandemic. The shuttering of the Anaheim parks was preceded by closures of Disney parks in Shanghai, Hong Kong and Japan and followed by closures of Disney resorts in Florida and France.
In aggregate over the next three years, the new MoffetNathanson analyst report forecasts that Disney’s overall theme park revenues could be $21.7 billion below 2019 fiscal year levels.
To put that mind-boggling loss into perspective, that’s enough to pay for Shanghai Disneyland four times over. Disney’s $5.5 billion Chinese theme park resort opened in 2016.
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Back in March, MoffetNathanson assumed that Disney’s 12 shuttered theme parks around the world would remain closed for a month. Now, MoffetNathanson forecasts that Disney parks will reopen on July 1.
“That might end up being too optimistic as well,” according to the MoffetNathanson report.
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An extended economic downturn that is expected to follow the COVID-19 pandemic could mean Disney theme parks will face a “slower ramp back to a new normal” after they reopen, according to the analyst report.
Disney’s U.S. theme park attendance dropped 9% in the post-9/11 recession and didn’t return to peak levels until 2005, according to the report. Following the 2008-09 economic downturn, Disney’s U.S. hotel revenue didn’t return to pre-recession levels for three years, according to the report.
“It is now clear that the current pandemic impact on the travel and hospitality industries is much more severe than both prior downturns,” according to the MoffetNathanson report. “When will the parks reopen? How will Disney approach staffing them? Will they only open up one park like the Magic Kingdom to optimize operations? Given limited air travel, how many of their Orlando hotels will be up and running?”
SEE ALSO: What Florida’s guidelines for reopening Disney World could mean for Disneyland
The new MoffetNathanson report assumes Disney theme park attendance will drop 50% through the end of the 2020 fiscal year. Attendance should ramp up to 75% of previous levels in 2021 and 90% in 2022, according to the report.
Discount ticket prices intended to help drive attendance after the coronavirus closures could cut into Disney theme park profits through 2021, according to the report. Disney is expected to delay capital expenditures on non-critical theme park projects to help curtail the losses, according to the report.
SEE ALSO: When will Americans feel safe returning to theme parks?
MoffetNathanson analysts anticipate a “significant rebound” in Disney theme park attendance in 2022 to past peak levels assuming a COVID-19 vaccine becomes widely available and the pandemic threat recedes.
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May 05, 2020 at 05:17AM
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Disney theme parks face $21 billion coronavirus loss through 2022, analysts warn - OCRegister
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