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Will Disney World Open in June?

By Rick Munarriz – May 4, 2020 at 11:30AM

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The world's most popular theme park resort is getting closer to greeting guests with many area businesses reopening this week.

We may get a better estimate of when Walt Disney's (DIS -0.63%) theme parks worldwide will potentially reopen when the media giant reports its fiscal second-quarter results on Tuesday afternoon. Speculation is behind the wheel for now, and analysts have been predicting that Disney World in Florida could open as early as June and as late as 2021

The pieces are starting to fall into place for the world's most visited theme park resort to open sooner rather than later. This isn't a situation that the House of Mouse is taking lightly. There's a lot to lose financially if Disney doesn't open soon, but there could be an even greater price to pay if the iconic resort opens too soon. 

A Disney World turnstile with a MagicBand scanned for entry.

Image source: Disney.

Cash mountain

Today is a pretty big day in Florida. The first phase of opening up the economy is kicking off on Monday across most of the state. Central Florida is allowing restaurants and retailers to reopen after a decline in new COVID-19 cases for several consecutive weeks.

It won't be business as usual. Restaurants need to space out their outdoor seating so social distancing can take place. Indoor seating is limited to 25% of a dining room's capacity. Shops are also limited to 25% of their customer capacity. Some businesses, including gyms, salons, and barbershops, will remain closed during this phase of the state's plan. 

Disney World and other area theme parks can't unlock their turnstiles until later in the phased rollout, but those benchmarks could be hit as early as next month. A local economic recovery task force unveiled a plan last week for how all area businesses -- including Central Florida's important tourist attractions -- will get back to business.

The experience won't be ideal. Employee health screenings, in-park sanitation checks, and patron safeguards will be extreme. Attendance will initially be limited to 50% of a park's capacity. However, getting open soon matters beyond just the obvious point that a closed gated attraction isn't generating any revenue or employment opportunities. 

Disney World offers more than two dozen resort options for guests, and no one is going to pay a premium to stay on-site if the theme parks aren't available. Furthermore, holders of annual passes are currently being credited for the time that the resort remains closed. The sooner the parks open, the sooner those revenue-generating meters start ticking again. 

The growing consensus among speculators is that Disney World will attempt to cap crowd levels initially by limiting theme park visitors to folks staying at on-site resorts and a combination of pass holders, locals, and in-state visitors. With cases continuing to rise in some states, international travel not bouncing back anytime soon, and airlines dramatically scaling back their domestic flight schedules, it's not as if Disney will have much of a choice. 

The restrictions will be challenging, and the guest experience will inevitably suffer. However, it's going to be an awkward hand-off when the shutdown hands off the relay baton to the recovery efforts anyway. Whether Disney World opens in June, October, or next year, there will have to be a ramp-up process. The uncertainties may be fewer later, but they will be there until we see how coronavirus containment efforts hold up as the rusty wheels of the industry get greased again. Pulling the trigger too soon could prove catastrophic, but pulling the trigger too late could find the economy so far down the recessionary hole that consumer discretionary businesses -- like Disney -- no longer have consumers or discretionary income to serve. Disneyland in California isn't likely to open for a couple of months, but when it comes to Disney World, you're better off betting on the under than the over.

Rick Munarriz owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short July 2020 $115 calls on Walt Disney. The Motley Fool has a disclosure policy.

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