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Disney World and Disneyland Closing in March Is Just the Beginning

By Rick Munarriz - Mar 13, 2020 at 9:42AM

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The leading theme park operator is closing its domestic theme parks this month. This might take some time.

If there's a great big beautiful tomorrow shining at the end of every day -- as the catchy tune goes at Disney's (DIS 3.69%) long-running Carousel of Progress attraction -- that day will have to wait until at least April. The world's leading theme park operator announced that it will be closing down its domestic theme parks over the weekend in an effort to contain the rapidly growing coronavirus pandemic. 

The decision to close Disneyland at the end of Saturday's operations and Disney World a day later wasn't easy. Neither resort has experienced an interruption for more than a day or two. The financial hit will be substantial. If Disney estimates that it will be taking a $175 million charge this quarter for closing Disney Shanghai and Hong Kong Disneyland like it did back in late January, one can only imagine the size of the tab that will accompany this weekend's closures. 

Disney's stateside parks will be closed for a much smaller chunk of the quarter, but Disney owns just a minority stake in its Chinese resorts. Disney Shanghai and Hong Kong Disneyland combined to attract an estimated 18.5 million guests in 2018, a little more than a fifth of the 86.8 million estimated annual guests at Disneyland and Disney World combined. Toss in the more than two dozen hotels at Disney's stateside theme parks and the loss will be substantial -- and things could get worse. 

Alice in Wonderland with Mad Hatter and Rabbit in front of the Mad Tea Party ride at Disney World's Magic Kingdom.

Image source: Disney.

Now is the time

Closing Disneyland and Disney World for a little more than two weeks may not seem so devastating. The price to be paid for remaining open and helping spread the contagious COVID-19 virus would be far greater. Disney is being greeted warmly following the decision, and the media giant's call to keep paying its employees during the resort closures is commendable. What happens next month?

If you really think that the Disneyland and Disney World turnstiles will be unlocked come April 1, you're only fooling yourself. The Chinese parks have been closed for seven weeks. The rate of new cases is decelerating in the world's most populous nation, but the gated attractions remain closed. Tokyo Disneyland was supposed to reopen on Monday after its two-week closure, but that date has now been pushed out to at least early April. 

A lot of things would have to go right -- both in the U.S. and worldwide -- for Disney's domestic parks to open at the end of this month. No matter when the theme parks finally get back to entertaining guests, it will be a slow windup leading to the pitch. Hotels don't just fill themselves. Disney visitors that spend weeks or months planning their getaways will take that long to rebook plans. Even if the parks open early next month, the bigger financial hit will take place in the next quarter.  

I've spent the past two weeks initially wondering if Disney will close its U.S. parks and then pondering when it will happen. Now that we're at this unfortunate point in theme park history, I have some other problematic questions that no one seems to be talking about.

  • What happens with employee pay when April rolls around and the parks aren't open?
  • With the theme parks serving as a promotional platform for its theatrical releases, will its already weak starts at the multiplex get only worse now?
  • It's not his fault that this is happening, but will new CEO Bob Chapek survive his first year at the helm? He inherited a thriving media giant on a roll in a buoyant economy, and now he's stuck in a perfect storm on the precipice of a recession.

Wake me up when March ends, Mickey Mouse.

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