Walt Disney’s chief executive and its CFO said the dramatic spike in Florida COVID-19 infections last month right when Walt Disney World reopened have resulted in higher cancellations at the park than they’d first anticipated – and their expectations weren’t all that high to begin with.
CEO Bob Chapek and chief financial officer Christine McCarthy said, however, that the park is meeting the financial criteria set by Disney to sustain a reopening. It has to cover variable costs, plus kick in a little extra. They acknowledged on a conference call to discuss quarterly earnings that they had hoped the little extra would have been bigger.
Cancellations are not a surprise, Chapek said, “because the disease does ebb and flow.” Annual pass holders who spend less have been filling in for more lucrative vacationers who might come from farther away and book for a week.
All parks are already running at much reduced capacity for health and safety reasons.
The entertainment giant reported a massive $3.5 billion hit last quarter from theme parks. They’re a huge chunk of the company and most of them were shut for the entire three months. Wall Street digested that number then asked for a snapshot today, when most parks are open. The Shanghai Disney Resort re-opened in May. Hong Kong Disneyland Resort re-opened in late June but closed again July 13, a few days Walt Disney World in Orlando opened. Disneyland Paris and Tokyo Disneyland are open.
Flagship Disneyland in Anaheim remains out of commission although its adjacent shopping area is open. Chapek didn’t indicate a timeframe.
And he said of Walt Disney World: “We are happy we are returning a positive net contribution [to the company] while opening responsibly.”
Parks’ research and bookings indicate “that we should be in good shape once consumers return,” he added.
“It will pick up when … the travel patterns get a little more normalized and we see people going and staying for regular vacations like they used to,” said McCarthy.
On a bright note, she said that generally, “The per capita spend is very strong and that’s probably because people have not visited the park for a while.” The new attraction Star Wars: Rise of the Resistance only opened late last year, she noted, “so even Floridians travelling locally may not have seen” it.
The division called Walt Disney Parks, Experiences and Products saw revenue for the quarter plunged to just under $1 billion from $6.575 billion the year before. Operating income took a $3.7 billion downward swing to a loss of just under $2 billion versus a $1.7 billion profit last year.
Disney has been continually updating its safety practices, recently adding a rule against walking and eating and another requiring actual masks with ear loops versus more casual face coverings like bandanas.
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