2021 Will Also Be A Tough Year For Disney Parks
After a successful Labor Day weekend, things are definitely looking up for the Disney theme parks. However, analysts are telling us not to get too excited as the uphill struggle will continue through 2021. According to a recent piece in the Orlando Sentinel, the parks face a “lost year” in 2021 with an estimated $10 billion decline in revenue as a result of the COVID-19 pandemic.
The report from Deutsche Bank comes alongside their move to upgrade Disney stock based on the strength of the Disney+ streaming service despite the Walt Disney Company’s continued struggle.
Disney parks in Florida, Tokyo, Shanghai and France have all reopened their gates after lengthy coronavirus closures. Hong Kong Disneyland however had to reclose in July amidst a concern over a spike of COVID-19 cases in the city. Disneyland and Disney California Adventure have remained closed since the pandemic.
It goes without saying that the coronavirus had an unprecedented impact on profitability for the company. The Disney Parks, Experiences and Products division revenue is expected to decline by $9.8 billion this year according to the Deutsche Bank Report. The parks are not expected to reach their pre-pandemic levels until 2023.
“We assume substantial improvement in FY22, but with revenue still not fully back to the FY19 level,” according to the report. “We assume a return to full parks earnings power in FY23.” However, there are some positives to be found as the Orlando Sentinel points out. Deutsche Bank has forecasted that the Disney theme park division will rebound financially by 2025 with revenue $10 billion higher than pre-pandemic levels.
The analysts went onto say that a recovery at Disney theme parks isn’t possible until treatment and a vaccine is available for COVID-19. As the analysts report says, “We continue to believe that a widely available treatment and/or vaccine is required for a normalization to full earnings power at the parks.”
Though we did see an increase in crowds at Walt Disney World over the busy Labor Day weekend period. However, it should be noted that the parks are still leaning heavily on local visitors as air travel to the Orlando area remains at an historic low. In-state visitors currently make up 50% of the reduced capacity at Orlando theme parks and isn’t helped by the continued struggles and restrictions faced by the airline industry. As we mentioned earlier this week, United Airlines announced that they will be letting nearly 16,000 employees go next month.
This is a story that we here at MickeyBlog will continue to follow closely. Readers are encouraged to keep checking in with us for further news and updates!
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