Brittany Losey takes a picture with her daughter Madison Losey, 7, outside the Disneyland entrance at Disneyland Resort, which is closed in Anaheim, CA on Thursday, October 22, 2020.
MediaNews Group / Orange County Register via Getty Images | MediaNews Group | Getty Images
Before the pandemic, Michael Afram’s transportation company made an average of 450 to 500 trips per day in the Los Angeles and San Diego area. A strong percentage of the Karmel Shuttle Service destinations were Disneyland, Universal Studios and Water world San Diego.
With California’s theme parks closed and demand for air travel a fraction of 2019 demand, Afram only had 140 shipments throughout October.
Around 50% of Afram’s business was in the Anaheim resort area, which is home to Disney’s two California parks and the Downtown Disney mall. His shuttle company traveled to local airports, hotels, theme parks, restaurants, and other local tourist destinations in the area.
The other 50% included Greater Orange County plus Los Angeles, where Universal Studios are located, and day trips to San Diego.
Excluding the tourism boost from Disney’s parks, Karmel Shuttle Service’s revenues are down more than 95%, Afram said.
Currently, California theme parks will remain closed until well into 2021 as state guidelines prohibit reopening until coronavirus cases in counties fall below one per 100,000 – a goal that will be difficult to achieve Cases are rising across the country. This ongoing shutdown will weigh heavily on Disney’s earnings in the coming quarters and exacerbate the financial hardships local businesses face during the pandemic.
Currently Orange County, where Disneylands has two California parks and Knott’s Berry Farm located, sees 5.6 cases per 100,000 people. Los Angeles County, where Universal Studios is located, has 11.5 cases per 100,000 population.
“It’s totally out of reach right now,” said Afram. “I’m not sure how or why Disney as a company is able to follow protocols, establish procedures and guidelines, and open in Orlando and Paris, and Shanghai and Tokyo, but Anaheim, for whatever reason, they can’t do the same. ” “”
California Governor Gavin Newsom has raised concerns about the number of people who typically visit theme parks, the length of their time, and the possibility that transmission rates could rise if the parks reopen.
Sharon Quirk-Silva, a Democrat, who represents California’s 65th Congregation District, which includes northern Orange County, wants a better balance.
“I believe the guidelines set by Governor Newsom were released with the right framework and message to prioritize public health and safety for both theme park staff and guests.” She said.
“However, as we have seen the economic impact of this pandemic across all areas of the company, we can recognize that public health and the economy are not mutually exclusive,” she said. “I have expressed concern about the state’s guidelines, which are having a significant negative impact on thousands of jobs, small businesses and, ultimately, billions in revenue for California. I urge the governor and his administration to review the numbers and encourage them to adopt the guidelines update for our theme parks. “
Last year, Disney’s Parks, Experiences, and Consumer Staples segment was the fastest growing earnings driver. Disney has been bleeding out cash since the outbreak began. For the second quarter, the company posted $ 1 billion in operating income from the closure of its parks, hotels, and cruise lines. The company reported in the third quarter a steeper loss of $ 3.5 billion.
On Thursday, the company announced that the Covid-19 outbreak had cost the parks, experiences and products segment Recently, operating losses of approximately $ 2.4 billion have been lost. The company expects its California parks to remain closed until the end of this year.
The coronavirus pandemic has given Disney a lot of headaches. The company has faced cinemas closings, film and television production closures, docked cruise ships, and the suspension of most live sporting events. But the blow for theme parks was enormous.
While Disney reopened with limited capacity in Florida, Shanghai, Japan and Hong Kong, the Paris theme park closed in late October due to a revival of Covid-19 cases and will not reopen until 2021.
With its California parks that can’t be opened, Disney 28,000 workers laid off in September in Parks, Experiences, and Consumer Goods. Earlier this week, the company announced that additional employees, including officers, clerks, and hourly employees, would be vacationing at its California theme parks. Disney did not disclose the number of workers affected.
“In 2020, Disney was forced into damage control mode and its Covid hangover is expected to linger on companies like their theme parks that are not expected to be back in full swing for 12 months,” said Joe McCormack, senior analyst at Third Bridge Research Festivities.
Bill Coan, President and CEO of ITEC Entertainment, said the The guidelines for reopening in California are “overly aggressive”.“”
Coan, a theme park attraction developer and former Walt Disney Imagineer, said Disney’s reopening in Florida was a blueprint for what could happen in California. So far, there has been no evidence that the Orlando parks were responsible for coronavirus outbreaks, he said.
Despite limited attendance, demand is increasing, Coan said. While there are fewer international and out of state guests, people who can drive to the parks do so in droves.
“They might not stay seven days, but they come in and go to the park and demonstrate that it can work,” he said.
Republican Senator Patricia Bates, who represents South Orange and North San Diego counties, visited Disneyland a few weeks ago and told CNBC that she was “really impressed” with the security measures the company has put in place in the parks. She also visited Downtown Disney and saw diners follow Disney’s social distancing guidelines while shopping and dining.
Bates worked at Disneyland while at Occidental College in Los Angeles and believes the parks should open earlier than that current state guidelines would allow.
“Opening them up is vital to the local communities,” she said of how small businesses in the surrounding counties rely on the tourism generated by Disneyland and other parks in the area.
Not to mention the majority of workers laid off two months ago reside in these counties.
A couple wait in line to enter Downtown Disney in Anaheim, California on July 9, 2020. This is the first day the outdoor shopping and dining complex is open to the public. (Photo by Robyn Beck / AFP) (Photo by ROBYN BECK / AFP via Getty Images)
“Many of our hard-working residents will have problems and Californians cannot afford that,” Quirk-Silva said.
Andrea Zinder, president of UFCW 324, the union that represents all retail workers in Disney’s two parks and downtown Disney, said members are eager to get back to work. Many have been called back to work in the shops in Downtown Disney and on Buena Vista Street, a restaurant and retail area in one of Disney’s parks. But others are still waiting.
“We want the state to allow Disney to reopen at reduced capacity once Orange County is in the ‘Orange’ class,” said Zinder. “Disney has implemented many security protocols beyond those required by the state and provides periodic testing for all employees.”
The orange level in California ranges from one to 3.9 cases per 100,000 population. This is the category that the theme parks had hoped the state would reopen.
The concern is that while big companies like Disney can weather the pandemic – backed by revenue from other businesses like streaming, consumer products and advertising – smaller companies won’t be around when the storm subsides.
“”[Big theme parks] I have deep pockets that make them very sustainable, but my pockets are just the pockets that I have in my pants, “said Afram.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC.