As all the Disney Parks around the world closed in the past couple of months, it became obvious that the Walt Disney Company was in for a serious financial blow to their bottom line.
The truth is, when it comes to figuring out how much these closures will cost Disney, we can’t calculate an exact dollar amount. In reality, we probably won’t learn about any real numbers until Disney releases their quarterly reports and their subsequent Fiscal Year 2020 Annual Financial Report.
In the meantime, however, we can look to previous years’ reports and come to the conclusion that, to no one’s surprise, Disney stands to lose A TON of money by closing the parks.
Theme Park Admission
According to The Orange County Register, it is estimated that lost theme park admission revenue will cost Disney over $500 million due to the closure of all six of their global parks. This estimate is based on Disney’s Fiscal Year 2018 Annual Financial Report, and 2018 attendance figures from Themed Entertainment Association.
The $500 million estimate came about by looking at two key figures: total admission revenue and total attendance. In 2018, Disney earned $7.183 billion in admission revenue and drew in 157.311 million visitors worldwide that same year. That brings an average of $19.68 million per DAY.
Keep in mind that some of Disney’s parks charge considerably less for admission, with some parks charging as little as $40 per day. And here we’re accounting for Annual Passes by prorating them over the year.
Some of the parks, like Hong Kong Disneyland and Shanghai Disneyland, have been closed since late January, while the U.S. parks have only been closed roughly one and a half weeks at the time of writing.
But even looking at just that short time that ALL of the parks worldwide have been closed, that’s easily $157.44 million in lost revenue. And that number keeps ticking up and up every day.
In lost hotel bookings alone, The Orange Country Register reports that Disney stands to lose an estimated $140 million. Findings from Disney’s Annual Financial Report showed that in 2019 Disney had an estimated 13 million room nights available across all of their hotel properties, both in the United States as well as abroad.
Of those 13 million room nights, the average guest spent $353 per room (which includes food, drinks and merchandise purchases) with a 90% occupancy rate.
In just the U.S. alone, closing the hotels could cost upwards of $8.37 million per day. This report also mentions the fact that the hotels in Hong Kong and Tokyo have remained open during the park closures, allowing Disney to earn some revenue; although overall occupancy at those hotels has surely decreased in the last couple of months.
Additional Line Items to Keep in Mind
Disney is also losing copious amounts of cash from the loss of merchandise, food, and beverage sales throughout their parks and resorts. In their 2019 Annual Financial Report, Disney earned just shy of $6 billion across merchandise, food, and beverage sales for the fiscal year ending in September of 2019. But still, if breaking that average down per day, they’re still looking at around $16.44 million in losses per day worldwide.
In the U.S., both Disney World and Disneyland were in the middle of festivals (Epcot’s Flower and Garden Festival and Disney California Adventure’s Food and Wine Festival, respectively) at their time of closing, which is another way Disney makes a nice chunk of change this time of year.
One important thing to note is that Disney could still earn merchandise revenue through online retailers, which still falls under the Parks, Experiences & Products business segment.
There are other miscellaneous in-park purchases that Disney is losing out on right now, too. These range from group walking tours to VIP tours, as well as PhotoPass and MaxPass.
Some final thoughts to keep in mind…
Closing the Disney parks worldwide is a significant financial loss to the Walt Disney Company. In 2019, the Parks, Experiences & Products business segment was the most profitable for Disney, earning over $26 billion in revenue and accounting for over a third of the Company’s total revenue for that year. To add to that, Disney stands to lose much more money across the entire Company when you consider the financial hit on Studio Entertainment, as movie theaters across the world close their doors.
Also keep in mind that these figures are based on Disney’s current closure schedules. If Disney extends the parks’ closures, their fiscal loss will continue to rise. Add to that the fact that these closures are happening during the Spring Break season in the U.S., and could possibly extend well into their summer season in the United States, both typically busy times of the year for the domestic parks.
Even when the closures end and Disney resumes their “business as usual” operations, they stand to lose potential earnings in the future while the world rebounds. If economic conditions change and consumer spending is affected as a result, Disney could see an even further drop in revenue if fewer people visit their parks, which could take years of recovery.
One way Disney could save on costs, as difficult of a decision as it would be, would come in the form of furloughing employees. While we have no confirmation that Disney is considering such a decision, one analyst estimated that Disney could save upwards of $500 million by furloughing some employees for the month of April across their California, Florida, and Paris parks. There’s no way of knowing how Disney plans to proceed until we get an official announcement, which could come any day now.
Time will tell how the closures affect the overall Disney Company, but one thing’s for sure — these closures are costing Disney a pretty penny each day.
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How has the park closures impacted your travel plans to Disney this year? Let us know in the comments.