Courtesy of TripAdvisor
Disneyland.
- Disney is taking the rare step of closing its Disneyland parks through the end of March due to the coronavirus pandemic, the company announced on March 12.
- Ahead of the announcement, Wall Street analysts started forecasting how much of a hit Disney could face if it were forced to close its US parks, which are the company's most profitable.
- UBS analysts estimated Disney could risk roughly $1.5 billion in revenue in 2020 if it has to close both its Disney World and Disneyland locations for 30 days.
- So far, Disney has said it will close Disneyland's two parks from March 14 to 31, and the parks' resort starting on the March 16.
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Disney is closing its parks at Disneyland, which include the company's oldest and some of its most profitable theme parks, from March 14 through the end of the month because of the coronavirus pandemic, the company announced on March 12.
The media conglomerate took the rare step after the governor of the US state of California, where Disneyland is located, recommended gatherings of 250 or more be cancelled to slow the spread of the virus.
The decision comes after Disney was forced to close its parks in Shanghai, China; Hong Kong; and Tokyo, Japan due to the outbreak. Disney World and Disneyland Paris remained open at the time of this writing.
Ahead of the US Disneyland's closure, Wall Street analysts began to estimate how much the coronavirus outbreak could damage Disney's business.
Analysts at UBS estimated on March 10 that closing both of Disney's US theme parks, Disney World and Disneyland, for 30 days could cost the company $1.5 billion in revenue in 2020, and $803 million in operating income.
The firm used prior US park closures, including when Disney World was closed for two days in 2017 because Hurricane Irma, as a guide.
"With profitability for US parks being much higher [than those in Asia], we looked at the impact of prior hurricane-related closures for Disney World to assess the impact," the note said.
If Disney were forced to shut down all of its theme parks globally for 30 days, UBS estimated Disney could take a nearly $2 billion revenue hit, or about 2.5% of what the analyst firm forecasted Disney would generate in 2020 overall.
Separately, Rosenblatt Securities estimated on Feb. 26 that closing Disney World and Disneyland could risk roughly $50 million in combined segment operating income, or around $0.025 per share, per day.
That firm used 2017's Hurricane Irma, when Disney World parks were shut down for two days and Disney Cruise Line trips were canceled or shortened, as a guide, as well. Disney took a $100 million hit to operating income during Hurrican Irma, and Rosenblatt estimated about $70% of that was due to Disney World. It estimated the rest came from the cruise business.
UBS estimated Disney was the media company most threatened by the coronavirus, because of its large parks business.
In 2019, Disney's parks, experiences, and products business generated $26.2 billion in revenue, which was roughly 38% of its business that year. The company did not break out how much revenue came from theme parks alone.
Disney said on March 12 that its Disneyland resort would remain open through March 16 to give people time to make travel plans. The Downtown Disney district that includes shops, restaurants, and other entertainment would remain open.