Disney discusses financial hit to Asia parks

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Disney discusses financial hit to Asia parks
Photo Credit: Swedishnomad.com-Alex W/Shutterstock.com

If Disney’s parks in Hong Kong and Shanghai are closed for two months, it could cost the company some $280 million in operating income, CFO Christine McCarthy said during the company’s fiscal first-quarter earnings call Tuesday.

Shanghai Disney and Hong Kong Disneyland have been closed since late January because of the coronavirus crisis. The closures will impact second-quarter and full-year results. The parks are closed during what, historically, is a strong period of attendance and hotel occupancy because of the Chinese New Year holiday. 

The exact magnitude of the impact depends on how long the park is closed and how quickly normal operations can resume, McCarthy said. The impact could be $135 million in lost operating income if the Shanghai park is closed for two months. 

If Hong Kong Disneyland, which already had been struggling with lower attendance stemming from Hong Kong’s civil unrest, is closed for two months, Disney could lose $145 million in operating income. 

An analyst asked if there were concerns about incoming international visitors from Asia to Disney’s U.S. parks.

McCarthy said international visitors typically make up 18-22% of domestic park attendance. Generally, the parks do not have a significant amount of visitation from Asia. At the Orlando parks, no Asian countries break the top five for Disney World’s international markets (U.K., Brazil, Canada, Mexico and Argentina).

Disneyland in California’s biggest international markets are Canada, Mexico and Australia. Japan is in the top five for international visitors to Disneyland, but McCarthy said it accounts for a “low single-digit number.”

At this point, she said, Disney isn’t seeing any impact from coronavirus on intent to visit its domestic parks.

CEO Bob Iger addressed the opening of Rise of the Resistance, the second major attraction in Star Wars: Galaxy’s Edge. It opened at Disney’s Hollywood Studios in December and Disneyland in January. He said he was “thrilled” with the attraction’s success, and that it has quickly become a fan favorite.

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