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Disney World Closes Its Florida Parks Through the End of March

By Daniel B. Kline - Mar 13, 2020 at 10:40AM

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Disneyland and its cruise line will also be idled as a result of efforts to contain the coronavirus outbreak.

Walt Disney's (DIS 3.69%) Disney World will close on Sunday and remain closed through the end of the month. The company has also closed its California Disneyland theme parks, all of its parks in Asia, as well as its park in Paris due to the COVID-19 disease caused by the novel coronavirus.

This move marks a very rare closure for the four Florida parks and two water parks. Previously, the company's parks had closed for the occasional day due to hurricanes, and they were closed briefly after the terrorist attacks of Sept. 11, 2001. 

"In an abundance of caution and in the best interest of our guests and employees, we are proceeding with the closure of our theme parks," Disney said in a statement report by The Orlando Sentinel. "We will continue to stay in close contact with appropriate officials and health experts."

The Mad Hatter's Teac Cups ride.

The teacups will stop spinning temporarily at Disney parks. Image source: Walt Disney.

How big a deal is this?

Disney includes its theme parks in its parks, experiences, and products segment, which accounted for $6.65 billion in revenue in the most-recent quarter -- about a third of the company's revenue and the largest of its four operating segments.

For the full year, park revenue came in at $26.22 billion of the company's overall $69 billion. Closing the parks eliminates revenue (probably nearly all of it) for that segment. It's a major blow to the company, but closing by choice has better optics than closing due to an outbreak taking place on one of its theme park properties.

If Disney kept its parks open and contributed to people getting sick or even dying, the impact of the current crisis might last longer. By shutting down now, the company keeps its credibility with its customers by putting people's health before profits.

"It's the right thing to do. Safety and health comes first, revenue and profit comes second," said Dennis Speigel, the president of the International Theme Park Services consultancy after he heard the news late Thursday, according to The Sentinel.

This may create a flood

Disney is being joined in closing its parks by rival Universal Studios, which is owned by Comcast (CMCSA 1.18%). The Disney hotels and the shopping venues at Disney Springs will remain open. Universal Studios Florida will close its parks after Sunday.

This is a case where public pressure forces a company to do the right thing. In the long run, postponed Disney trips will get rescheduled. That does not mean revenue won't be lost. Some trips simply won't happen, and others who visit more often (like Florida resident annual-pass holders) will miss out on days they otherwise would have been in the parks spending money.

It's hard to know how big a long-term hit this will be for Disney. A two-week closure isn't minor, but it's still relatively small. If the closure stretches into April or travel gets disrupted even if the parks reopen, the losses could be significant.

Ultimately, people will come back to Disney World. The park has just opened major Star Wars attractions and a new ride devoted to Mickey and Minnie Mouse. Those were reasons for people to visit that won't change because operations ceased for a few weeks or even longer. Disney trips are part of the American experience, and as soon as the coronavirus crisis passes, people will return.

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