Fun Is Over for Theme Parks in the Age of Social Distancing
2020-05-08 15:28:32.282 GMT

By Vinjeru Mkandawire and Ben Gartside

(Telegraph) — By the time Shanghai Disneyland reopens its doors
to visitors on Monday, the California owner of the famed theme
parks will have lost an estimated $30m or more for every day its
gates have remained shut.

Daily visits to the Shanghai park will be slashed to less than a
third of the usual 80,000 capacity. Guests will be forced to wear
masks, have their temperature checked and log into an app that
tells them if they have come into close contact with an infected
person. They will also need to stand at least 6ft away from each
other every time they join a queue, enter a restaurant or hop on
a ride.

With strict social distancing rules soon coming into force, could
the fun be over for theme parks? Disney’s outgoing chief
executive Bob Iger admits his entertainment empire has been dealt
a sharp blow.

Despite this, Iger insists the company is “exceptionally
resilient”. “As someone who’s been around for a while and led
this company through some really tough days over the last 15
years, including economic downturns, natural disasters and other
unforeseen events, I have absolute confidence in our ability to
get through this challenging period,” he said on the company’s
results call this week.

However, analysts warn that the weeks and months ahead will offer
little solace as Disney braces for a bumpy ride. Theme park
operators are among the groups that analysts believe will be hit
hardest by the pandemic. “Theme parks and other venues that
attract tens of thousands of people daily will likely be among
the last to open given the health risks involved,” says John
Hodulik at UBS.

The impact on large parks will be determined by how long they are
closed and how quickly they can attract visitors back once they
reopen.“A lot of these parks have really high fixed costs and
they need a certain attendance level to be profitable,” Hodulik
says.

The lingering effects of the Covid-19 outbreak – and the need for
social distancing – mean there will be increased costs from the
increased safety precautions each park will have to take.

UBS expects Disney’s annual visitors in the US to drop to less
than half their usual capacity over the next 12 months before
recovering slightly during the second half of next year. The bank
says that theme parks may not be able to recover their previous
profits until a vaccine is widely available.

“Authorities are worried about large gatherings. With thousands
of people touching the safety straps on the rides, large parks
could be virtually impossible to disinfect,” Hodulik adds.

Analysts believe Merlin Entertainments, which owns Alton Towers,
Chessington World of Adventures and Thorpe Park, could bounce
back quicker as it relies less on international tourists. The
group attracted about 67m visitors at its sites last year.

Even so, social distancing measures will provide no silver bullet
for theme park operators. “In a world where social distancing
becomes the norm, we would certainly see theme parks operating
below full capacity,” says Mateo Salcedo at Spread Research. “But
even with significant health initiatives, social distancing and
other measures imposed by governments, I believe demand will
remain weak, and operating big parks could no longer be
attractive. »

The pain of the pandemic has hit smaller parks, with lower cash
reserves and smaller margins, even harder.

More than 50 staff from Dreamland Margate were made redundant
earlier this week, with chief executive Eddie Kemsley warning
that « no attraction in the world could have prepared for the
devastation of Covid-19.” M&D’s, which ran Scotland’s biggest
theme park in Strathclyde, fell into administration last month.

Richard Mancey, managing director of Paultons Park in Hampshire,
says theme parks and other attractions will be in “serious
trouble” if they are not open by July.

He points that in order to be prepared for re-opening, he cannot
furlough all his staff: “We have a skeleton crew at the park –
we’ve got a large grounds that need upkeep, but that’s a cost.
That’s a problem and it’s something we’ve raised with the
Government – we’re not a warehouse, we can’t just lock up and
leave.”

Many in the sector believe an extension of the Government’s
furlough scheme is necessary to keep theme parks afloat.

But even with continued support, the outlook looks bleak. Mancey,
who also chairs the British Association of Leisure Parks, Piers
and Attractions, predicts that small parks have “six weeks”
before their cash reserves run out. “A lot of good, family run
businesses will go to the wall. If we don’t get open by the
summer season, a lot will be in serious trouble, even the big
parks, who have more cash reserves.”

Most of all, Mancey and fellow theme park owners say that they
want clarity on timings. “It would be very beneficial to be given
some kind of date, » he says, noting that Ireland has helped
businesses by putting forward a five-point plan on reopening. All
eyes are now on Boris Johnson and his address to the nation on
Sunday night.

“It’s really important in terms of planning, what’s happening
with staff and gearing towards that with our marketing, » Mancey
says. « It is probably the biggest single frustration within the
industry and we’ve heard nothing. I’m hopeful we get past Sunday
and then they focus on the hospitality industry.”