Disney Parks Revenue Drops Over 50%, $119 Million Lost - Inside the Magic

The Walt Disney Company has just released its first-quarter earnings for Fiscal 2021, with a drop of 50% in revenue for the Disney Parks.

Related: Disney Loses Billions As a Result of the Pandemic

In Q4 of 2020, we reported that The Disney Parks lost $2.4 billion, due to the pandemic. Now, Disney is reporting that the revenue for the quarter has dropped 53% to $3.6 billion.

The Walt Disney Company Reports First Quarter Earnings for Fiscal 2021 states:

Since late in the second quarter of fiscal 2020 and continuing into fiscal 2021, COVID-19 and measures to prevent its spread have impacted our segments in a number of ways, most significantly at Disney Parks, Experiences and Products. 

The report continued:

Disney Parks, Experiences and Products revenues for the quarter decreased 53% to $3.6 billion, and segment operating results decreased $2.6 billion to a loss of $119 million. Lower operating results for the quarter were due to decreases at both the domestic and international parks and experiences businesses.

As a result of COVID-19, Disneyland Resort was closed and our cruise business was suspended in the current quarter. Disneyland Paris closed on October 30, 2020 and Hong Kong Disneyland Resort closed on December 2, 2020. Walt Disney World Resort and Shanghai Disney Resort were open in the current quarter. Our parks and resorts that were open during the quarter operated at significantly reduced capacities.

At our consumer products business, operating income growth was driven by an increase in games licensing revenue reflecting the release of Marvel’s Spider-Man: Miles Morales.

We estimate the total net adverse impact of COVID-19 on segment operating income in the quarter was approximately $2.6 billion.

While on the earnings call, Bob Chapek discussed the theme parks that have reopened, stating “Guests have consistently demonstrated a willingness and desire to visit, which we believe is a testament that they feel confident in the health and safety protocols we have put in place”.

Christine McCarthy, Senior Executive Vice President and Chief Financial Officer, also spoke on the earnings call about the Parks and Resorts. McCarthy explained how the current pandemic continues to significantly impact the theme parks, saying:

We continue to see significant impacts from the COVID-19 pandemic across many of our businesses. While some Operations have resumed, our parks experiences and product segments has undoubtedly been hard hit by COVID.

In the first fiscal quarter we estimate the pandemic adversely impetted DPEP operating income by approximately 2.6 billion due to revenues lost as a result of closures and reduced operating capacities. Operating income at parks experiences and products declined significantly versus the prior year to an operating loss of $119 million.

As a reminder, Walt Disney World Resort and Shanghai Disney resort were open for all of the first quarter. Disneyland resort was closed, and our cruise business was suspended for the full quarter. Disneyland Paris was open until the end of October, or for about a third of the quarter, and Hong Kong Disneyland was opened until the beginning of December or for about two-thirds of the quarter.

McCarthy continued:

Our Parks and Resorts that were open during the quarter all operated at significantly reduced capacities. Yet all achieved a net incremental positive contribution for the periods during which they were open, meaning that revenue exceeded the variable costs associated with opening.

At Walt Disney World, as Bob mentioned earlier, average daily attendance grew significantly from Q4 into Q1. Benefitting from typical seasonality factors as well as solid underlying demand trends. At the same time our Operations team found innovative ways to responsibly increase capacity while still maintaining rigorous COVID protocols. Per caps were also up double-digits year-over-year.

We continue to be pleased with the rate of reservation bookings we are seeing in the current quarter. And consumer sentiment around visiting our domestic theme parks over a longer period of time remains strong.