Analysts Say Disney Parks Could Return to Pre-Pandemic Levels of Profitability in 2022
Pent-up demand to visit Disney theme parks has resulted in a strong rebound from the pandemic lows, according to analysts. Additionally, the vaccine rollout continues to offer hope that the entertainment giant will soon return to record profits and increased spending on new rides and attractions.
According to the OC Register, Disney’s Parks, Experiences and Products division did better than expected in the company’s first quarter of 2021 thanks to increased theme park attendance, higher visitor spending, and cost-cutting initiatives despite a $2.6 billion hit to operating income.
“Parks rebounded faster than expected in the quarter,” Rosenblatt Securities analyst Bernie McTernan wrote in an analyst report.
Though Walt Disney World is currently operating at 35% capacity, attendance rose during the Christmas holidays and early 2021 when Florida and the rest of the United States experienced a dramatic spike in COVID-19 cases and hospitalizations. Since then, COVID-19 case rates have fallen steadily with the rollout of the coronavirus vaccine.
UBS analyst John Hodulik said Disney absorbed the brunt of the pandemic in its theme park division, which is set for a strong rebound. “Vaccine progress, pent-up demand, and pandemic-driven cost efficiencies position the parks segment for a strong rebound in FY22 and record profits in FY23,” according to the UBS analysts report.
Goldman Sachs analyst Brett Feldman believes Disney theme parks “remain well-positioned for rapid recovery as the economy reopens” with parks revenue forecast to increase due to pent-up visitor demand, according to Yahoo Finance.
Average daily attendance at Walt Disney World “grew significantly” from the fourth quarter of 2020 to the first quarter of 2021 due in part to the increased capacity, Disney CEO Bob Chapek said on a call with analysts. “We have ample demand for our parks despite everything that’s happening with the pandemic.”
The Rosenblatt report forecasts that Disney theme park project spending will rise to nearly $6 billion in 2024 after hovering around $4 billion in 2019 — that means more Disney rides, attractions, and themed lands could be on the horizon after the worst of the pandemic is over.