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Disney Asia parks all closed, other parks face supply chain problems

Date: 2020-03-06

Large theme parks can use annual cards and loyal customers to reduce losses during the downturn, but the most injured are small independent operators.

Following Shanghai Disneyland and Hong Kong Disneyland, Tokyo Disneyland and Tokyo DisneySea have also been temporarily closed since February 29. Affected by the outbreak, Disney has closed all theme parks in its Asian region for the first time.

At the same time, Japan has closed several tourist attractions, schools and national museums. The Disney Mall and Universal Studios in Osaka have also been closed and will reopen as early as March 15.

Tokyo Disneyland will be temporarily closed until March 15, but in contrast, the reopening of Hong Kong and Shanghai Disneyland has not yet been determined. It is reported that the parks in Hong Kong and Shanghai may be closed for several months.

In early February, Christine McCarthy, chief financial officer of Disney, predicted on an earnings call that the closure of two Disneyland parks in China will result in a total loss of $ 280 million in operating income. This forecast is based on the assumption that the two parks will be closed for two months. .

With the closure of Asian theme parks, Disney's parks in California and Florida have also attracted industry attention.

According to the financial website Motley Fool, so far this year, the number of visitors to the two Disneyland parks in the United States has reached a record high, but with the outbreak, the number of tourists has begun to decline, and the number of tourists in the next few months will be difficult prediction.

For the Disneyland, which is crowded with tourists, the historic closure of the park happens to be at the worst point. At the end of February, the CEO of The Walt Disney Company Bob Iger suddenly resigned, and Bob Chapek, who had been in charge of the theme park business, was appointed as the new CEO, facing a huge test: If the park is closed prematurely, the financial impact will spread to several quarters; but If it's too late, Disney could be criticized as an irresponsible business that puts money above the safety of tourists.

The epidemic is spreading across the globe, causing major tourist attractions and activities to be impacted. On March 1, the Louvre Museum, the world's largest art museum, announced that it will continue to be closed from that day. The Beijing Palace Museum has been closed since January 25, and the opening time will be further notified.

Disney Paris is the only park outside the US market where the Walt Disney Company holds a majority stake. The French government recently followed the example of Switzerland (banning large-scale rally events with more than 1,000 people) and stopped large-scale events with more than 5,000 people. How this move will affect Disney in Paris is unknown, but many travelers are searching for potential closures via social media.

According to a recent report from Disney fan site WDW, Disneyland Paris responded that the park will continue to be open to tourists.

As of now, Disneyland in Orlando and Southern California have not been affected. The two Universal Studios resorts in the United States are also not expected to close at this time. Universal Studios Singapore is still open, but there are very few people in the park. The number of visitors to other theme parks in Asia and the Middle East has also declined significantly.

The tourism industry expects that the overall number of tourists will decline this year. While analysts still have reservations about the impact of the outbreak, Credit Suisse analyst Douglas Mitchelson remains optimistic. He pointed out that passengers may postpone the trip but will not cancel the trip completely.

In the United States Disneyland, the proportion of Asian tourists affected by the epidemic is not high. Disney's Chief Financial Officer Christine McCarthy revealed during the earnings call that foreign visitors to the United States Disneyland accounted for about 18% to 22%, of which Asian tourists were small.

But the biggest problem for Disneyland outside Asia is the supply chain. Disneyland Paris announced recently that the peripheral brooches of the new Pixar animation film Onward have been delayed due to issues with Asian suppliers. Although it has not yet been officially confirmed, several employees at Orlando Disneyland retail outlets have pointed to the decline in the supply of peripheral goods. An employee said, "Product inventory on the shelves has been declining, and we have been working hard to make the goods look adequate in the face of insufficient back-end supply."

Insiders and the Disney News website reported that with the closure of Disneyland in Asia, other park projects have also been delayed due to budget issues. Some reports speculate that Disney will make large-scale budget cuts in the next few weeks, and multiple preparation projects may be cancelled. But Orlando Weekly, the local Orlando media, thinks this is unlikely.

Bill Zanetti, an expert at the University of Central Florida's Rosen Hotel Management School, said, "When the economic downturn has a special impact on the tourism industry, large companies such as Universal Studios and Disney will cut short-term products, but will continue to invest in future projects. An important point The reason is that when the public is worried about the future, they tend to distract themselves through entertainment products, so the entire industry will remain strong. Theme park operators know this very well and will insist on long-term investment. When the situation improves, Large parks will regain their favor. "

On the other hand, Disney and Universal Studios parent company Comcast each operate home streaming services, which can offset the performance impact suffered by other departments. Many hotels are not so lucky. Hotels, restaurants and other areas have been affected this year, but their impact is still less than that of the cruise market.

On February 27, the International Cruise Association CLIA announced that it would ban all tourists and crew who visited South Korea and China (including Hong Kong and Macau) from boarding within 14 days before sailing.

After experiencing the events of 9/11 and the financial crisis of 2008, the cruise industry began to reacquire customers with deep discounts and loyalty programs. Bill Zanetti pointed out that Disneyland has taken similar steps.

"Disney introduced the annual card plan in response to the downturn in tourism. With the support of annual card members, the tourist off-season park will not be empty, and the theme park will also be able to reduce the loss of theme parks during special periods of epidemics or disasters. Participate in Disney after 9/11 Seasonal events such as Halloween Horror Nights are basically the same people who watch Hogwarts light show at Universal Studios Orlando. The park operators will organize more special events during the downturn to meet the needs of members and local travelers. "

The epidemic has brought a heavy blow to the tourism industry, but the market will still usher in a rebound.

Although much of the industry's attention has been focused on large-scale companies such as Disney and cruise ships, historically, even in the short-term downturn, the most injured are probably small-scale independent operators who cannot rely on annual cards and loyalty. Members to resolve the crisis, but they can still learn from the experience of industry giants.

"For small businesses, shifting their business focus to the local market in the short term is one way. Offering discounts is also a solution. In order to attract more customers, these companies have to use discounts to attract more locals than foreign tourists. "