I was listening to a podcast the other day in which two fairly distinguished people — one was Professor Sir Somebody, of Oxford University — were saying that (a) COVID isn’t just going to go away and (b) a vaccine may not be the dream solution everyone’s hoping it will be. They said that the new normal could be normal for at least another three years. And that was optimistic, in their view.
Can WDW and UOR continue to operate on the current model for that long? Is either of them currently making an operating profit?
I don’t know if they’re making profit now, but if indeed this is going to be the situation for the next few years I think people will start traveling again. Humans are incredibly resilient when it comes to accepting and adapting to new situations. If people do start traveling again, it won’t be in the numbers Disney is used to, so it may become a “luxury for the rich” with much higher pricing.
I don’t know about UOR or Disney, but my DH has seen this cost of PPE for just his one manufacturing plant In a bigger company and he doesn’t see that as being sustainable long term. This battle between health and economy is far from over.
I couldn’t help but notice that Disney’s changes don’t seem very temporary. Why invest in things like character cavalcades if you don’t intend it to be the norm for some time. I think the fact that park passes are in place until September of next year is also telling.
And to add to my previous comment, earlier this week I was talking to my son’s doctor who was telling me that they are creating priority lists for when a vaccine does come out. My son is in the second group (senior citizens being the number one priority, and rightly so.) They also said that the first vaccine will likely not confer full protection and only for a short time. The better vaccine is probably 3 years away.
I’m not sure the cavalcades are a great expense. Some of the floats look to be from the parades. It’s not like they built anything new. I wouldn’t exactly call that an investment. It’s probably saving them money as they don’t have to worry about meet and greets or the bigger parades.
He left out the natural herd immunity, which makes the rest of what he says worthless. Look at New York, which had the absolute worst place in the world as far as this goes. Deaths per capita was 3X the next worse location. But now Cuomo is crowing about what a great job New York is doing. That is because their numbers plummeted, because of the developing herd immunity.
Is it sustainable? No. We have an upcoming, long-planned trip to Disney for Jan 2021. I’d had plans to get the Target Red Card and buy Disney gift cards to pay for our tickets and deposits. I didn’t because I’m not entirely sure Disney will still be open in 2021. Most likely they probably will. But with the current model, it is a question. With credit cards, I can get a refund, but not gift cards.
I know that there is new info every 7 minutes these days, so many things are still up in the air.
But I do not think banking on our already having herd immunity in NYC or will anywhere in the future is something we can rely on.
I think overall moving forward it is going to be a multi-layered approach of hygiene, testing, masks, vaccines and better treatments that get us back closer to normal.
To circle back to Matt’s question, I think as those layers get added on we’ll see upticks in WDW attendance and eventually they’ll get back somewhere near profitable.
I also think they’ll come up with a plan to slowly ratchet up prices once the attendance does start rolling - just enough to help them get profitable more quickly while not overdoing it so people sitting on the fence bail out on trips.
The floats and trolleys I saw at MK. The boats are at AK and don’t think they are new. Correct me if I’m wrong, but didn’t they have cars for some of the special actor appearances at the Star Wars after hours? It wouldn’t be difficult to just use them in HS. They just need to change the paint job like they did with the Minnie vans.
Disney reports earnings for the period April 1st thru June 30th on August 4th. That should give us a decent idea how much red ink the company is bleeding due to the closures as most parks were closed for the majority of that time. It won’t tell us how running in a limited state is comparatively but I’d presume closed is the worst case. DIS did setup some loans etc. to bridge them and is sitting on $14B in cash according to Yahoo Finance. $14B should help weather a lot of storms…
[Edit - corrected earnings period - had written March 1st, actually it’s 3 months April-May-June - so all closed]
Travelling internationally being super common, ubiquitous flights, a huge portion of consumer spending going to leisure (entertainment, travel, eating out), these were all characteristics of the world economy up to 2019. All of these are going to be severely impacted if a global pandemic exists, regardless of policy, and a lot of these have cascading effects. A world without a vaccine or treatment (don’t forget about treatments, they might be enough!) is not going to be the world as it were on 2019.
Disney has a lot of money, a lot of income sources and can cut pretty much anything that is not profitable. It will survive this.
All that being said, I am not that afraid of the what-if-we-never-solve-corona scenario. 7 months in and we know much more and are much better at treating it. There are hundreds of studies going on, many of them promising. The research on how much masks help is overwhelming. The world not returning to the same state as it were in 2019 doesn’t mean the world being a worse place, it can just mean different.
OR the fireworks!! I read somewhere that they are second only to the US military in annual explosives purchases - can’t remember if it’s the world or the country. I’d imagine their fireworks supplier is hurting pretty badly right now.
Our numbers plummeted because we shut down, instituted mask requirements, and reopened slowly only when criteria were met. And even then there have been modifications - we still have no indoor dining, gyms, or indoor entertainment.
There is a lot of question as to if “herd immunity” (surely we can come up with a better term for humans - we are not cattle) is even something that can happen with this. Especially given that there have been reinfection cases as well as decreases in antibodies.
Closed may be the worst case for earnings, but maybe not for profits. When closed, expenses for the parks are way down. Worst case is probably open but with few people in the park. But I am no corporate finance expert.
