Disney could lose $21 billion from its parks alone due to closures and likely recession following the COVID-19 global pandemic.

Disney, like many other companies, has been hugely affected by the COVID-19 pandemic with all theme parks around the world coling, movies being delayed, production shutting down, live sports going off the air, and much more. They have had to furlough tens of thousands of employees in the U.S alone. Now it looks like the Disney Parks being shut down could cost the company $21 billion in revenue. Parks have been closed since March because of the ongoing pandemic, making it the longest shutdown in the parks’ history.

At this time, it is still unclear when all of the Parks will reopen, but it looks like they are hopeful that it will be later this year and not need to be delayed until next year. When they do eventually reopen it won’t be business as usual. The parks will only be open to partial capacity, likely 50% to start, and there will be strict guidelines in place for guests and employees. These guidelines will include mandatory face masks for employees and guests, temperature checks before park entrance, ticket purchases before the day (meaning no walk-ups), more sanitation stations, and social distancing while in lines.

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Disney, much like everywhere else, is anticipating a slow reopening process with a multi-step plan towards full capacity once again. However, it may take time for people to feel comfortable visiting the parks with large crowds with the virus still prevalent.

In the meantime, Disney is constantly losing revenue because of these closures and will likely continue to with a slow reopening process. Disneyland and Walt Disney World already had to offer refunds to annual pass holders because of park closures. That being said, the economic hit could be bigger than originally anticipated.

Disney In Danger?

disney - comic classic

According to the Orange County Register:

“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.”

Referencing an analyst report from the research firm MoffettNathanson, parks around the world have a rough future ahead for the next few years. The Parks will not only be losing money from the closures as well as the slow reopening process, but the economic recession and hesitancy to gather in large crowds as well.

“We believe that investors are underestimating the lagging recovery nature of Disney’s theme parks,” states the MoffettNathanson report.

Not only are the parks themselves closed, but the resort hotels and the shopping centers like Florida’s Disney Springs and California’s Downtown Disney. These like the parks will take a while to reopen and it will be a process with changes made to accommodate the new normal of the pandemic.

The pandemic will not only have an immediate financial impact, but also a longer lasting one. The economic recessions that follows will mean that the Parks will take years to get back to original capacity. The MoffetNathanson analyst report estimates that the next three years park revenue could be $21.7 billion less than the 2019 fiscal year. To put that into perspective, “that’s enough to pay for Shanghai Disneyland four times over.”

In March MoffetNathanson, like many others, thought that theme parks would only be closed for the month. As of now, MoffettNathanson is assuming the 12 Disney parks will be reopened on July 1. However, “That might end up being too optimistic as well,” states the MoffetNathanson report.

This will not be the first time the Parks were affected by an economic recession. According to the MoffetNathanson report the recession following the 9/11 terrorist attacks saw Disney’s U.S. park attendance drop 9% and attendance reportedly didn’t return to normal peak levels until 2005. After the 2008-2009 economic recession Disney’s hotel revenue took three years to bounce back to normal pre-recession levels.

According to the MoffetNathanson report, “It is now clear that the current pandemic impact on the travel and hospitality industries is much more severe than both prior downturns.” MoffetNathanson also projects that attendance at the Disney parks will drop by 50% through the 2020 fiscal year. The following years attendance should be up to 75% of the pre-pandemic levels in 2021 and 90% in 2022.

Assuming a vaccine is widely available MoffetNathanson foresees a “significant rebound” for park attendance in 2022. This will hopefully get the park close to peak pre-pandemic levels. Disney is hugely impacted by the ongoing pandemic and this multibillion dollar loss only includes park revenue. Disney is and will likely continue to lose money in other areas of the company as well.

One area in which the company is doing well in is their relatively new streaming service Disney+, which has over 50 million subscribers and it is continuing to add content. The platform released Frozen 2 and Onward early because of theater closures and stay at home orders. The Rise of Skywalker, the final film in the Skywalker saga, was released early on May 4, Star Wars dayArtemis Fowl which was originally intended to have a theatrical release will instead premiere on the streaming service. While the parks are going to have problems the next few years hopefully they are able to pull through as they have in the past.

Did you think Disney Parks would be losing that much money? Will you be going once they reopen? Leave your thoughts in the comments below or on our social media.

Source: Orange County Register