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.
Disneyland and other California theme parks are unlikely to return to full operation until spring or summer under COVID-19 health and safety reopening guidelines issued by the state.
Walt Disney World, Tokyo Disneyland, and Shanghai Disneyland have reopened with COVID-19 health and safety protocols, attendance restrictions, and reservation requirements. Hong Kong Disneyland will reopen for the third time on Friday, February 19. Disneyland Paris currently has a scheduled opening date of April 2, 2021.
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.
In 2022, the DME gets axed. If Disney’s profitability returns to record normal levels anyway, that means the DME was a waste for Disney. At that point, I would think that Disney may consider axing its entire internal transportation system, including the monorail and the skyliner. Imagine the money they can save doing that and the profit they can maximize. In the past, all those amenities were designed to draw people to WDW. Now people are drawn, so all these “outside the parks” freebies such as the DME can be eliminated to minimize expenses and maximize profit, and covid is an excellent excuse for them to start making such dramatic changes.
Smoke and mirrors from Disney’s call. Sure attendance is up over the holidays. That’s always the case. quarterly changes touted as a sign of increasing trend is just trying to manufacture some good news to prop up the stock price. Disney can’t live off of D+ forever. Their other operations have to get back to stable profitable ground on their own before the D+ gravy train runs out. They can’t count on new subscribers forever. Ask Netflix how that eventually goes.
Disney is focusing on the quarterly income and stock price like too many conglomerates do and sadly it will bite them in the butt sooner than they think.
Smoke in mirrors, indeed. Disney Parks were at the lowest point they could possibly be with big government shutting them down last year, so an increase in attendance is expected. Nothing special about it, in fact, Disney even admitted they hoped to see more bookings after re-opening in July. They will continue to take away “magical extras” to make their bottom line look better, because it’s all the about the Shareholder and NOT the Guest. Just look at DME and Magic Bands.
Meanwhile, they keep alienating part of their core base (i.e. Disney fans like me) with their woke ideology and cheapening of the Guest experience. Disney+ will eventually hit a wall and parks will be too expensive to visit.
But you still have to wear your masks indefinitely. Gone are the days when that magic was captured in a photo, you know the “surprise, scared, happy, etc.” look. Disney will never go back to being normal as in a pre-pandemic era. As long as Chapek & Iger have their way.
I’m sure they would like your money.