An employee clears the grounds behind the closed gates of Disneyland Park on the first day of the closing of Disneyland and Disney California Adventure theme parks in Anaheim, California, on March 14, 2020.
DAVID MCNEW | AFP | Getty Images
Disney suffered another financial blow during its first fiscal quarter, when restrictions on the frequency of its open theme parks and the continued closure of its California parks weighed on its financial results.
There is currently no timetable for the reopening of Disneyland, as the state of California has said it will not allow theme parks to reopen until coronavirus cases have substantially decreased in the surrounding community. Although Covid’s 7-day average of new daily cases dropped from the previous week in California, more than 1,000 new cases are diagnosed each day in the state, according to a CNBC analysis of data from Johns Hopkins University.
“Where we have been able to reopen our limited-capacity theme parks, guests have consistently demonstrated a willingness and a desire to visit what, we believe, is proof that they feel confident in the health and safety protocols we have in place” , said CEO Bob Chapek during a earnings conference call on Thursday.
The company said the outbreak cost this division about $ 2.6 billion in operating revenue lost during the December quarter.
Disney park, experience and product segment revenue fell 53% to $ 3.58 billion.
Disney reported similar losses in each of the last three gains. In the fourth quarter, the company said the coronavirus outbreak cost about $ 2.4 billion in lost operating revenue during the most recent period. In the second quarter, the company reported that it lost $ 1 billion in operating revenue due to the pandemic, and in the third quarter, the pandemic cut its operating revenue by $ 3.5 billion.
Walt Disney World in Florida and Shanghai Disney Resort were open throughout the first quarter, while Disneyland and all Disney cruise deals were suspended.
Disneyland Paris was open until late October, about a third of the quarter, and Hong Kong Disneyland was open until early December, or about two thirds of the quarter. The company expects its Hong Kong location to reopen during the second quarter.
“In terms of prospects for the parks for the rest of the year, and capacity, this will really be determined by the population’s vaccination rate,” said Chapek. “This seems to us to be the biggest lever that we can maneuver to take the parks that are currently limited in capacity and increase it or open the parks that are currently closed.”
Financial director Christine McCarthy said that for the parks that have been opened, the company has managed to profit from guests. The revenue obtained from the park’s visitors exceeded the opening costs. She also noted that the company is satisfied with the number of reservations it is taking.
As the parks expand their capacity and reopen, Chapek said there will be a certain level of social detachment and wearing masks for the rest of the year.
“Dr. Fauci said earlier today that he expects vaccines for everyone who wants them by April this year,” said Chapek. “If that happens, it will be a game changer and it could accelerate our expectations and give people the confidence they need to get back to the parks.”
“Will there be any overlap until we know we have achieved herd immunity?” he said. “Of course, but we also believe that we will be in the same state of social distance of 1.8 m and wearing a mask in 2022? Absolutely not.”