Disney's theme park segment posted a loss of $406 million in the second quarter, on revenue of $3.173 billion, the company announced today.
Disney's U.S. parks lost $587 million on revenue of $1.735 billion during the three months ending April 2, 2021, with its international parks losing $380 million on revenue of $262 million. Net income of $561 million in Disney's consumer products division eased the overall loss in the Disney Parks, Experiences and Products segment.
The Disneyland Resort in California, Disneyland Paris Resort, and the Disney Cruise Line were closed for all of the company's second quarter, while Hong Kong Disneyland Resort was open for 30 days during in the quarter, compared to 25 days in the prior-year quarter. The Walt Disney World Resort and Shanghai Disney Resort both were open for all of the second quarter. (The Tokyo Disney Resort is owned by the Oriental Land Co, so it is not included in Disney's financial results.)
Disney estimated that the total net adverse impact of Covid compared to the prior-year quarter was a decrease in segment operating income of approximately $1.2 billion. While the Disneyland Resort has reopened its theme parks to guests in the current quarter, Disneyland Paris and the DCL remain closed.
"We are focused on the ongoing recovery of our parks business and the resumption of Disney Cruise Line," CEO Bob Chapek said. "There have been some encouraging developments in recent months, particularly with the ongoing rollout of the vaccine and the gradual lifting of government mandated restrictions. And through this time, we've taken advantage of the opportunity to make improvements to our operating procedures to enhance the guest experience through the use of technology innovations, new ticketing strategies, and other offerings.
"We are especially excited that after being closed for 412 days, we welcomed our first guests back to Disneyland two weeks ago, and the response has been overwhelmingly positive. Bob [Iger] and I stood on Main Street USA on opening day, and it was so wonderful to see the joy on our cast and guests faces and feel the excitement in the air."
"It's been fantastic to see cast members back at work. Most recently at Disneyland, we were able to quickly recall more than 10,000 per load cast and retrain them to be able to operate to the State of California's new health and safety requirements. We continue to see strong growing demand from consumers, as we are at or near our reduced capacity levels at both Walt Disney World and Disneyland for the current quarter. It's clear our guests are excited to give back to experiencing the magic of Disney, and they also have extraordinary confidence in our safety protocols."
"Our parks and resorts that were opened during the quarter operated at significantly reduced capacities, yet all achieved the objective of a net positive contribution, meaning that revenue exceeded the variable costs associated with opening," CFO Christine McCarthy said. "At Walt Disney World, attendance trends continued to steadily improve throughout the second quarter, and guest spending per capita, again, grew by double digit versus the prior year. The Disneyland Resort reopened on April 30, and as Bob mentioned earlier, we are very encouraged by the initial guests response. Bookings for park reservations at both of our domestic parks are strong, demonstrating the strength of our brands as well as growing travel optimism as case counts decline, vaccine distribution ramps up and government restrictions loosen."
Chapek also addressed the situation with annual passes at Disneyland, when asked about the possibility of increasing profits at the company's theme parks in the post-pandemic era.
"There are a lot of negative impacts, of course, with Covid, but one of the things that it gave us a chance to do, as we were forced to stop operation, was to completely re-examine how we priced and programmed our tickets," Chapek said. "As you all know, we ended our current annual pass program at Disneyland. That gives us a chance to create a modern version of a park loyalty program and affinity program that isn't necessarily governed by legacy."
"With the ability now for us to sort of completely reconsider how we go about our loyalty programs and our frequent visitor programs, we have the chance to make even more advancements - not only in terms of the guest experience and to make sure that guests have a tremendous experience no matter what day of the year they come, whether it's a high demand day or a relatively low demand day - but also the ability to increase our per caps and our yields, and we've already seen tremendous growth in those as you're seeing over the last couple quarters, but I don't think we've even scratched the surface in terms of what we can do when we finally restart with some of our programs."
Chapek also said that today's CDC guidance that fully vaccinated people no longer needed to wear masks was "very big news for us," but he provided no details about when Disney might change or eliminate its mask rules.
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