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Wednesday, March 18, 2020

Don’t Expect Disney Parks To Open Anytime Soon

by Ray Keating
March 18, 2020

The Walt Disney Company has shut down Walt Disney World and Disneyland, as well as Disneyland Paris, through the end of this month in response to the coronavirus. But does anyone believe that these parks – or for that matter, Tokyo Disney, Hong Kong Disneyland and Shanghai Disneyland – actually will open on April 1? If so, they shouldn’t. These closures promise to run longer than many originally thought.

Keep in mind that the Shanghai and Hong Kong parks have been closed since the end of January, and Tokyo Disney since the end of February. The Tokyo parks – Tokyo Disneyland and Tokyo DisneySea – will be closed at least through early April, according to the company.

For the U.S. parks, the Tokyo target of mid-April would seem to be a wildly best-case scenario. Indeed, it is highly doubtful. 

Consider, for example, that Major League Baseball had originally pushed the start of its season back from late March to mid-April, and is now saying that it will go beyond that date while not offering any target for Opening Day.

I’m not sure why we should expect much different from Disney, especially given that the U.S. Centers for Disease Control and Prevention on March 15 recommended canceling in-person events of 50 or more people for the coming eight weeks. That would take us into mid-May.

This week, Disney also suspended its Disney College Program, Disney Culinary Program, Disney Cultural Exchange Program, and Disney Academic Exchange Program. The company is sending participants/cast members home, as is the case with international cast members in guest relations as well. This also speaks to a shutdown going beyond the end of this month.

The impact of an extended closure will hit Disney hard. Consider what The Wall Street Journal reported on March 12: “Closing the U.S. resorts has the potential to be costly. Domestic parks accounted for about $17.4 billion in revenue last year—and 30% of the company’s total operating profit.” Using those numbers and doing a back-of-the-envelope tally, each month that the U.S. parks are closed would cost The Walt Disney Company $1.5 billion in revenue.

Of course, one has to also add in lost revenues from the Paris, Tokyo, Shanghai and Hong Kong parks, the Disney Cruise Line, lost dollars at the movie box office, and ESPN being hit by sporting events coming to a halt, including the NBA.

For good measure, the U.S. economy, as I wrote in a recent column, likely already is in recession, and that promises to run at least through the second and third quarters of this year – adding to Disney’s woes.

In its latest update on Walt Disney World Resort operations, the company noted: “We will continue to make adjustments to our operations as appropriate and look forward to welcoming Guests back as soon as it is advisable.” When it will be advisable, no one knows. 

Looking at the CDC recommendations, how this has played out elsewhere and the magnitude of the response so far, I’d be shocked if Walt Disney World or Disneyland re-opened before mid-May or even June. Let’s hope and pray, though, that the U.S. response presents unexpected benefits, and we bounce back quickly.

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of The Disney Planner 2020: The TO DO List Solution and the Pastor Stephen Grant novels. He can be contacted at  raykeating@keatingreports.com.

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