The complications of Walt Disney World to be able to reopen

Walt Disney World, the biggest theme park on the globe and arguably the Walt Disney Company’s most important asset, opened for business Saturday after being shuttered for nearly four months with a swell of hope and twinge of apprehension.

The anticipation has been massive given the symbolic heft of the park, a bellwether for Disney’s recovery, the crippled tourism industry and the nation’s quest to return to a semblance of normality. But it comes amid a COVID-19 spike in Florida, which today reported over 10,000 new cases, following more than 11,000 on Friday.

“To all who come to this magical place, welcome! On behalf of the entire team here at Magic Kingdom Park, we’re glad you are visiting today,” Jason Kirk, Vice President of Magic Kingdom Park said in a Tweet Saturday morning, urging guests to wear face coverings and practice physical distancing.

McGowan
Photo: McGowan

CNN and other national and local media are monitoring the open closely, showing a barren parking lot just before 9 am — people needed advance reservations to come today — with increasing activity as the morning advanced but crowds naturally a far cry from pre-COVID throngs due to capacity constraints.

“The reopening of the parks globally is a critical sign of recovery as this removes the largest overhang at the company due to COVID-19,” said Alexia Quadrani, analyst at J.P. Morgan in a note Friday.

The park’s shopping and retail zone, Disney Springs, opened May 20. Magic Kingdom and Animal Kingdom put out the welcome mat today. That will be followed by EPCOT and Hollywood Studios on July 15, the same day Disneyland Paris is set to open. Tokyo Disneyland reopened on July 1, Hong Kong Disneyland on June 18. Shanghai Disney has been open since May 11.

Disneyland’s return has been delayed until California publishes updated guidelines. But the famed Anaheim park’s adjacent shopping district, Downtown Disney, did open last week with fans lining the sidewalk to get in.

Disney’s parks and resorts business is more than a third of revenue, with domestic theme parks about 80% of the total and Walt Disney World an estimated 70% of that, according to Wall Street analysts. Parks are stamped in the company’s DNA. The early chapters of executive chairman Bob Iger’s 2019 autobiography, The Ride of a Lifetime, are all about theme parks – in Shanghai for the proud opening of one, confronted with a crisis at another.

Analysts expect Disney to be strong on safety and don’t truly seem to anticipate the worst – another shutdown. But they don’t neccessarily expect Walt Disney World’s opening to mov the company’s financials yet given lower capacity.

“Knowing Disney, they will be careful. Financially, it will not make a difference,” said one Wall Streeter. Disney shares popped more than 2% Friday on “sentiment,” he said, adding, “It’s a pathway to them getting back to normal. But near term, I wouldn’t be changing my estimates for the September quarter if they open tomorrow or open on October 1. I think it’s rounding errors.”

CEO Bob Chapek said in April that Disney was not aiming to turn a profit in reopening but on making up the incremental cost of doing business, plus a bit. Parks have large fixed costs, even when they stand still, and they will be inflated by the expense of temperature checks and other measures.

Author: Jill Goldsmith, Deadline