Will Coronavirus Impact American Disney Theme Parks?
We need to have an uncomfortable conversation. By now, everyone’s heard about Coronavirus, the devastating virus that has spread across China. The disease has forced the closure of many popular tourist attractions in the country, including a pair of Disney parks.
Will Coronavirus impact American Disney theme parks? The answer is possibly yes…but not in the way that you might expect.
Let’s Start with the Numbers
A site called Worldometers tracks the Coronavirus outbreak. At the time of this writing, health officials have verified 28,368 cases of infection. Out of these afflictions, 3,863 have left victims in critical condition.
The doomsayer statistic indicates that 566 people have died. However, 1,428 people have recovered, which means that 71.6 percent of sufferers survived.
I’m providing this data to show that you shouldn’t freak out about Coronavirus. That statement especially applies to North Americans. Medical officials have reported only 17 cases here, five of which were in Canada.
The other dozen occurred in the United States. NONE of them is fatal thus far. So, you don’t need to worry that you’ll get Coronavirus and die based on all analytical data thus far.
How Coronavirus Impacts Disney
Here’s where the conversation gets more interesting. While the media panic might have worried you, the evidence at hand suggests that out of 364.8 million potential North American victims, only 17 people have gotten the virus. You’re three times as likely to get struck by lightning this week, and I did the math to check!
So, why should you care about Coronavirus? For starters, you’re a compassionate person who cares about the health and well-being of others. For this reason, I’m sure you’ve considered donating to Doctors without Borders, the Asia Foundation, and the American Red Cross.
Also, you understand that the disease will have ripple effects for Disney. I must stress that this is a trivial part of the overall story, but it’s something we should discuss. People are loudly wondering whether the parks will need to do anything. So, let’s talk about the elephant in the room.
For starters, Disney won’t need to do anything at the parks barring something unforeseen. Since the focus of the outbreak remains in Asia, the only impacted parks are Hong Kong Disneyland and Shanghai Disneyland. Park officials have closed both, and that’s part of the reason why we’re having this conversation.
What Do Those Parks Have to Do with Disneyland and Walt Disney World?
Do you remember last year when park officials suddenly announced several closures of shows and cast member entertainment? The cause for these shutdowns stemmed from an unexpected scenario.
During the earliest days of Star Wars: Galaxy’s Edge, attendance lagged far behind Disney’s projections. The company had anticipated that the new themed land would drive attendance at Disneyland Resort.
When the opposite occurred, park officials faced a budgetary shortfall. The closures were emergency cost-cutting measures to recoup some of those losses. You may already guess where I’m going with this.
In the middle of the most recent Earnings Report conference call, Disney’s Chief Financial Officer, Christine McCarthy, sounded an alarm. Her informed opinion is that Disney could lose $145 million if/when Hong Kong Disneyland and Shanghai Disneyland stay closed for two months. Friends, odds are extremely good that this will happen.
How Big a Deal Is This?
So, Disney’s Parks, Experiences and Products division will likely suffer a budget shortfall approaching $150 million. Yes, other Disney businesses can counteract these losses. An unexpected overachiever like a surprise movie blockbuster would have that effect.
Similarly, Disney officials have commented on the jaw-dropping impact of Star Wars: Rise of the Resistance. The appeal of this attraction has caused guests to show up at Disneyland and Disney’s Hollywood Studios long before the park opens. Then, these people remain in the park until they experience the ride, which sometimes takes the entire day.
When guests are in a park for the full day, per-visit spending increases dramatically. So, Rise of the Resistance has proven itself a windfall for Disney. Examples like this negate the impact of the Chinese parks being forced to close.
Also, the company purchases insurance policies for unexpected situations like this. They’ve said as much in the wake of hurricanes. Since insurance policies work differently in foreign countries, I won’t even speculate about the percentage covered for “business interruption” insurance.
Instead, let’s just assume that Disney has had to tighten its purse strings at least some for its American theme parks. What does this mean to guests who plan to visit this year?
Disney on a Budget
So, let’s start by assuaging your concerns. Everything that you love about Disney will still be there when you arrive. We’re mainly talking about minor changes, stuff that nobody would miss. Well, that’s partially true. The most impacting ripple effects involve how this situation messes with the timeline.
I don’t mean to sound like Avengers: Endgame here. I’m just saying that Disney officials always operate under a general guideline. They know when expected additions and enhancements will arrive at the parks.
Imagineers have stuff written down (in pencil, not pen) for arrivals in 2024 and beyond. They haven’t announced any of it publically, though.
And the unfortunate reality here is that some of this stuff that you don’t even know exists has just gotten pushed back. Well, possibly. Nothing’s determined yet. We’re still in a state of flux. But let’s speculate based on past history and some reasonable assumptions.
Possible Cost-Saving Measures
Here are a few ways that Disney could cut its park budget without reducing services. The company currently operates only one water park at Walt Disney World. Blizzard Beach is the only choice, while Typhoon Lagoon undergoes refurbishment. Well, running a water park isn’t cheap.
Park officials could feasibly keep Typhoon Lagoon offline for a while, forcing water park fans to visit Blizzard Beach instead. This move would save money on operating expenses plus labor. Blizzard Beach would need more cast members to address the additional guest volume, but Disney could still save quite a bit of money.
Other potential cuts in this category save less money. For example, Disney could close or reduce the operating hours at some of its golf courses and mini-golf parks.
Similarly, some daily shows involving cast member performances could go on hiatus. This tactic is the most recognizable one we witnessed last year, something I mentioned in the Worst of Disneyland article.
Reducing theme park operating hours provides another viable option for Disney officials. Payroll expenses represent the most extensive daily costs of running a park. By shortening the regular park hours, Disney saves on labor for every non-salaried cast member. But this tactic sucks for park guests. So, Disney’s unlikely to do it.
On the Bright Side…
You may wonder about the expansion plans that Disney has for its theme parks. On this front, I have good news. Once construction begins on a significant project, shutting it down could feasibly cost more than keeping it going. Park officials would have little incentive to stop current building projects. You don’t have to worry about that!
Realistically, the impact of Coronavirus is minimal right now. It only becomes problematic if two Disney theme parks remain closed for an extended period or if a second unexpected event occurs at the same time. I’m talking earthquake or hurricane of the like…and a legitimate catastrophe at that.
As long as nothing like this doubles Disney’s woes, Coronavirus is just depressing for Disney fans more than anything else.