Opening up Central Florida's theme parks after months of inactivity wasn't easy. Scaling back operations now that demand is falling short of expectations will be even harder.
Layoffs, shuttering less popular attractions, and shortening operating hours have been the steady diet of grim news that's been trickling in for the industry in recent weeks. The latest jab came on Friday afternoon when Comcast's (NASDAQ:CMCS.A) Universal Orlando informed guests with upcoming stays at two of its seven on-site resorts that the hotels will be temporarily suspending operations starting next week.
Universal Orlando will be shutting down the Sapphire Falls and Aventura properties on Aug. 21. Existing bookings at the two hotels will shift to one of the other resorts that will remain open as Comcast consolidates its lodging operations.
Image source: Disney.
Summer bluffing
We're nearing the end of what has historically been the peak summer travel season, so one can argue that it's not a surprise to see Central Florida's theme parks in retreat. Area schools are resuming the new school year -- virtually at least -- and that has usually marked a time for the iconic gated attractions to ease up ahead of the popular Halloween festivities that aren't going to happen this year for Disney (NYSE:DIS) and Comcast's Universal Orlando.
However, it's also clear that theme parks were hoping for a better showing at this point. Universal Orlando wouldn't have been booking guests at the two soon-to-be closed hotels if it didn't think they would be running at sustainable occupancy levels.
This isn't the first sign that Comcast's once bustling theme park resort was losing steam since its early June restart. A week ago it temporarily closed down six of its less popular rides and shows. It also introduced an aggressive promotion where folks buying the equivalent of a one-day ticket could keep coming back through Dec. 24.
It's not just Comcast's resort going through some shrinking pains in the retreat. Disney's quarterly earnings call earlier this month came with an admission that the media giant's theme parks weren't living up to its internal projections.
"While Walt Disney World is operating at a positive net contribution level, the upside we are seeing from reopening is less than we'd originally expected given the recent surge in COVID-19 cases in Florida," CFO Christine McCarthy said during the call.
The thing here is that Florida did experience a coronavirus resurgence in the weeks leading up to Disney World's mid-July reopening, but the case counts have been trending lower every single week since it unlocked its turnstiles. COVID-19 concerns should be easing up instead of intensifying in the nearly five weeks since Disney World got back to business.
The country's two largest theme park operators are struggling in the new normal. For now, it's a small step back. Disney opened its Florida parks with limited hours, and next month they will see their operations contract even more. Comcast is temporarily closing attractions and hotels. Things aren't perfect, but an important distinction is that both companies mentioned in their recent earnings calls that the parks would be losing more money if they remained closed.
The reopening process was going to have its hiccups. We're here now. What Disney and Comcast do next will go a long way in dictating how quickly things get back on track.
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August 16, 2020 at 02:00AM
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Something's Not Right at Disney World and Universal Orlando - Motley Fool
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