By the time Shanghai Disneyland reopens its doors to visitors on Monday, the California owner of the famed theme parks will have lost an estimated $30m or more for every day its gates have remained shut.
Daily visits to the Shanghai park will be slashed to less than a third of the usual 80,000 capacity. Guests will be forced to wear masks, have their temperature checked and log into an app that tells them if they have come into close contact with an infected person. They will also need to stand at least 6ft away from each other every time they join a queue, enter a restaurant or hop on a ride.
With strict social distancing rules soon coming into force, could the fun be over for theme parks? Disney’s outgoing chief executive Bob Iger admits his entertainment empire has been dealt a sharp blow.
Despite this, Iger insists the company is “exceptionally resilient”. “As someone who's been around for a while and led this company through some really tough days over the last 15 years, including economic downturns, natural disasters and other unforeseen events, I have absolute confidence in our ability to get through this challenging period,” he said on the company's results call this week.
However, analysts warn that the weeks and months ahead will offer little solace as Disney braces for a bumpy ride. Theme park operators are among the groups that analysts believe will be hit hardest by the pandemic. “Theme parks and other venues that attract tens of thousands of people daily will likely be among the last to open given the health risks involved,” says John Hodulik at UBS.
The impact on large parks will be determined by how long they are closed and how quickly they can attract visitors back once they reopen.“A lot of these parks have really high fixed costs and they need a certain attendance level to be profitable,” Hodulik says.
The lingering effects of the Covid-19 outbreak - and the need for social distancing - mean there will be increased costs from the increased safety precautions each park will have to take.
UBS expects Disney’s annual visitors in the US to drop to less than half their usual capacity over the next 12 months before recovering slightly during the second half of next year. The bank says that theme parks may not be able to recover their previous profits until a vaccine is widely available.
“Authorities are worried about large gatherings. With thousands of people touching the safety straps on the rides, large parks could be virtually impossible to disinfect,” Hodulik adds.
Analysts believe Merlin Entertainments, which owns Alton Towers, Chessington World of Adventures and Thorpe Park, could bounce back quicker as it relies less on international tourists. The group attracted about 67m visitors at its sites last year.
Even so, social distancing measures will provide no silver bullet for theme park operators. “In a world where social distancing becomes the norm, we would certainly see theme parks operating below full capacity,” says Mateo Salcedo at Spread Research. “But even with significant health initiatives, social distancing and other measures imposed by governments, I believe demand will remain weak, and operating big parks could no longer be attractive."
The pain of the pandemic has hit smaller parks, with lower cash reserves and smaller margins, even harder.
More than 50 staff from Dreamland Margate were made redundant earlier this week, with chief executive Eddie Kemsley warning that "no attraction in the world could have prepared for the devastation of Covid-19.” M&D’s, which ran Scotland’s biggest theme park in Strathclyde, fell into administration last month.
Richard Mancey, managing director of Paultons Park in Hampshire, says theme parks and other attractions will be in “serious trouble” if they are not open by July.
He points that in order to be prepared for re-opening, he cannot furlough all his staff: “We have a skeleton crew at the park - we’ve got a large grounds that need upkeep, but that’s a cost. That’s a problem and it’s something we’ve raised with the Government - we’re not a warehouse, we can’t just lock up and leave.”
Many in the sector believe an extension of the Government’s furlough scheme is necessary to keep theme parks afloat.
But even with continued support, the outlook looks bleak. Mancey, who also chairs the British Association of Leisure Parks, Piers and Attractions, predicts that small parks have “six weeks” before their cash reserves run out. “A lot of good, family run businesses will go to the wall. If we don’t get open by the summer season, a lot will be in serious trouble, even the big parks, who have more cash reserves.”
Most of all, Mancey and fellow theme park owners say that they want clarity on timings. “It would be very beneficial to be given some kind of date," he says, noting that Ireland has helped businesses by putting forward a five-point plan on reopening. All eyes are now on Boris Johnson and his address to the nation on Sunday night.
“It’s really important in terms of planning, what’s happening with staff and gearing towards that with our marketing," Mancey says. "It is probably the biggest single frustration within the industry and we’ve heard nothing. I’m hopeful we get past Sunday and then they focus on the hospitality industry.”