An employee cleans the area behind the closed gates of Disneyland Park on the first day of the Disneyland and Disney California Adventure theme parks, in Anaheim, California, on March 14, 2020.
DAVID MCNEW | AFP | Getty Images
Disney took another financial hit during its fiscal first quarter as restrictions on visiting its open theme parks and the continued closure of its California parks weighed heavily on bottom line.
There is currently no timeline for Disneyland’s reopening, as the state of California has said it will not allow the reopening of theme parks until the number of coronavirus cases has declined significantly in the surrounding community. While the 7-day average of daily new Covid cases is down from the previous week in California, more than 1,000 new cases are diagnosed in the state every day, according to a CNBC analysis of data from Johns Hopkins University.
“Where we have been able to reopen our theme parks with limited capacity, guests have consistently shown a willingness and desire to visit, which we believe is a testament to their confidence in the health and safety protocols we have” CEO Bob Chapek said on a profit call on Thursday.
The company said the outbreak cost this division about $ 2.6 billion in lost operating revenue in the December quarter.
Sales in Disney’s parks, experiences and product segments declined 53% to $ 3.58 billion.
Disney has reported similar losses in each of its last three earnings. In the fourth quarter, the company said the coronavirus outbreak cost it about $ 2.4 billion in lost operating revenue in the most recent period. In the second quarter, the company reported losing $ 1 billion in operating revenues as a result of the pandemic, and in the third quarter, the pandemic reduced its operating revenues 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 operations were suspended.
Disneyland Paris was open until the end of October, about a third of the quarter, and Hong Kong Disneyland was open until the beginning of December, or about two-thirds of the quarter. The company expects the Hong Kong location to reopen in the second quarter.
“As for the outlook for the parks for the rest of the year, and capacity, it will really be determined by the degree of vaccination of the public,” Chapek said. “That seems to us to be the greatest lever we can maneuver to either expand and enlarge the parks with limited capacity or open parks that are currently closed.”
Chief Financial Officer Christine McCarthy said that before the parks were open, the company could make a profit on the guests. The revenues from park visitors outweighed the costs of being open. She also noted that the company is pleased with the number of reservations and bookings it sees.
As parks expand and reopen capacity, Chapek said there will be some degree of social distance and wearing of a mask for the rest of the year.
“Dr. Fauci said earlier today that he hopes there will be vaccines for everyone who wants them by April of this year,” Chapek said. “When that happens, it’s a game changer, and it could accelerate our expectations and give people the confidence they need to come back to the parks.”
“Will there be some overlap until we know we’ve achieved immunity to the herd?” he said. “Sure, but do we also believe that by 2022 we will be in the same state of social distance of six feet and wearing masks? Absolutely not.”