Analysts Say Disney Parks Are Bouncing Back Quicker Than Expected
Last week, the Walt Disney Company reported on earnings for the first quarter of 2021 and analysts seem impressed when it comes to the company’s ability to withstand the pandemics effect on the theme park industry.
According to a recent piece in the Orange County Registers, analysts are now saying that pent-up demand for the theme parks is leading to a rebound from the company’s lows with a more comprehensive vaccine rollout meaning a hopeful return to profits for Disney parks!
During the first quarter of 2021, Disney’s Parks, Experiences and Products division did do better than expected. This was due to a gradual increase in theme park attendance, higher visitor spending as well as cost cutting initiatives. However, it should be noted that this comes 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.
This is good news overall despite the fact that Disneyland and Disney California Adventure are unlikely to reopen rides and attractions until at least late spring or summer due to Covid-19 health and safety restrictions still in place by the state.
That being said, Walt Disney World, Tokyo Disneyland and Shanghai Disneyland have reopened with COVID-19 health and safety protocols put into place. And, we just shared the news today that Hong Kong Disneyland will be reopening for the third time on Friday February 19th. That just leaves Disneyland Paris and Disneyland in Anaheim that remain closed.
Crowd levels have gone up at Walt Disney World especially over the busy holiday period and in early 2021. UBS analyst John Hodulik told the OC Register, “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.
These sentiments seem to be echoed by Goldman Sachs analyst Brett Feldman who believes that the theme parks, “remain well positioned for rapid recovery as the economy reopens” with parks revenue forecast to increase due to pent-up visitor demand.
The hope is that Disney theme parks will return to pre-pandemic levels at some point in 2022. This spells good news as it is a year earlier than originally forecast. However, vaccine rollout still remains a key factor.
At the moment, Disney World theme parks are at a 35% self-imposed capacity limit to ensure that social distancing requirements can be met and that the appropriate health and safety precautions are in order. However, as Chapek said during the earnings call, “We have ample demand for our parks despite everything that’s happening with the pandemic.”
And Disney is utilizing the theme park down time to look at ways to better monetize demand when it comes to everything from ticket pricing to annual passes.
Rosenblatt forecasts that Disney theme parks spending will rise to nearly $6 billion in 2024 after staying right around $4 billion in 2019. This is also good news for theme park goers as it means that Disney is sinking more money into rides, attractions and themed lands for guests to enjoy once the worst of the pandemic is over.
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Source: Orange County Register