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The doors to the Magic Kingdom may not reopen for a year due to strict social distancing measures enforced as the coronavirus pandemic spreads across the country. Disney, which shuttered the Disneyland Resort in Anaheim, Calif. and Walt Disney World Resort in Orlando, Fla. on March 12, will likely be unable to reopen the parks …
The doors to the Magic Kingdom may not reopen for a year due to strict social distancing measures enforced as the coronavirus pandemic spreads across the country.
Disney, which shuttered the Disneyland Resort in Anaheim, Calif. and Walt Disney World Resort in Orlando, Fla. on March 12, will likely be unable to reopen the parks until Jan. 1, according to a report from UBS analyst John Hodulik.
“Profitability will likely be impaired until there’s a vaccine,” Hodulik said. “We believe parks’ profitability will be impaired for a longer period of time given the lingering effects of the outbreak and now assume an opening date of Jan. 1 as our base case.”
The analyst said that even if Disney is able to open its doors early next year, the Mouse House will be impacted by health precautions that include social distancing, travel restrictions and crowd aversion, until there’s a COVID-19 vaccine.
As a result, he anticipates Disney’s theme parks take a $500 million earnings hit in 2020 and a $200 million hit in 2021.
Disney, which reports earnings next month, did not comment. Last month, the company said it was keeping its parks closed “until further notice” and that when it does reopen, it could incorporate new health measures including temperature checks.
JPMorgan analyst Alexia Quadrani had a more optimistic outlook for Disney, predicting the reopening of its US parks as early as June.
“We’re assuming the parks will open on June 1,” she told Barrons. Quadrani based that prediction on several factors, including when the lockdown and social distancing might become less stringent.
“It’s also the date that Disney is accepting reservations,” she offered. “If you call up and you want to book a hotel at Disney World, that’s the first date you can book: June 1.”
The analyst agreed with Hodulik that initial attendance will likely be “pretty weak,” pointing to the travel bans that remain in effect, as well as the closure of the US-Canada border to nonessential travel.
“First off, you have to take the international attendees,” she noted, estimating Disney World’s international visitors account for about 20 percent of its overall annual attendance. “I think you have to assume those are not going to be the first ones who come back to Disney World. And I think there will be consumers who are financially strapped, given the economic situation we’ll be in.”
“I do think there’s a lot of interest in folks coming back. But you can’t assume it goes back to normalized capacity for quite some time,” she said.
