Disneyland and Universal theme parks will reopen.
Paul Rovere | Getty Images
March was the best month for Michael Afram’s transportation company since closing California last year due to the pandemic. When the state eased some of its coronavirus restrictions and vaccination rates increased, the Carmel Shuttle Service began to recover.
“To give you an idea of where we are, the revenue we booked for the entire month of March 2021 is one day in March 2020 before the shutdown,” said Afram. “So I think you can think of us as a thirtieth of where we need to go back.”
Before the pandemic, Afram made an average of 450 to 500 trips per day in the Los Angeles-San Diego area. A large percentage of his destinations were Disneyland, Universal Studios, and SeaWorld San Diego.
With California theme parks closed and air travel demand a fraction of its 2019 value, Afram’s business took a massive financial blow. With the reopening of Universal Studios on Friday and the opening of the gates through Disneyland on April 30th, companies like Afram’s are experiencing a small boom.
However, a full recovery is slow. Especially since these parks are forced to limit capacity and can only accept guests who already live in the state.
While bookings are strong in April and May, Afram doesn’t expect its business to fully recover until the second quarter of 2022.
“We survived the storm and see a light at the end of the tunnel,” he said. “Unfortunately, [we] saw and suffered so much destruction and despair on the way to get to this point. “
About 50% of Afram’s business was in the Anaheim resort area, which is home to Disney’s two California parks and the Downtown Disney mall. His shuttle company traveled to local airports, hotels, theme parks, restaurants, and other local tourist destinations in the area.
The other 50% included Greater Orange County plus Los Angeles, where Universal Studios are located, and day trips to San Diego.
“The impact Disneyland and Universal Studios have on our local economies is important to all of our small businesses and the surrounding industries,” said Sharon Quirk-Silva, Democrat, who represents California’s 65th Congregation District, which includes northern Orange County belongs.
“There will no doubt be a surge in economic growth across Orange County when they reopen,” she said
A slow and steady rebound
Direct travel-related spending in California was $ 145 billion in 2019, up 3.2% year over year, according to a report from Visit California, a tourism nonprofit.
In fact, in 2019, out of $ 10 spent locally, residents of other states and countries accounted for $ 6.
In 2020, California tourism spending fell to $ 59 billion, just 41% of the previous year’s spending. The last time the state’s tourism spending was below $ 60 billion was in 1996.
The Los Angeles tourism and hospitality sector supports more than 600,000 direct and indirect jobs, said Lawren Markle, senior director of communications at Los Angeles County Economic Development Corporation.
“Of course, LA County’s 10 million residents support this sector and its jobs as we visit our local theme parks and hospitality businesses frequently,” she said. “And LA also welcomes approximately 50 million visitors a year, and their spending is also a big engine of economic activity.”
“We’re still well below pre-pandemic tourism levels, so we see the reopening of theme parks as a very public signal that things are getting back to normal in LA and that trips to Los Angeles are looking practical and enjoyable again,” she said .
For Roscoe’s Chicken and Waffles, a restaurant chain with seven locations in California, including one at Disneyland Resort, local restrictions forced the company to close its doors to indoor dining. It stayed afloat during the pandemic by offering take-away and delivery and because it owned the buildings where its restaurants are located.
Diane Vara, the company’s creative director, said the company was able to hit around 75% of what it did last year in 2019, but looks forward to the influx of companies that comes with the theme parks opening and the state will go hand in hand.
Vara noted that Roscoe’s Inglewood location near Los Angeles International Airport often attracts travelers who come to business with luggage in tow right after their flight lands.
“This is great for us,” she said of the state reopening.
Of course, Disney and Universal will also benefit from the reopening.
Last year’s shutdown resulted in Disney laying off tens of thousands of workers and limiting an important source of income for the media company. The Parks, Experiences, and Consumer Staples segment accounted for 37% of the company’s total revenue of $ 69.6 billion, or approximately $ 26.2 billion, in 2019.
A year later, sales shrank to $ 16.5 billion, or roughly 25% of the company’s total sales of $ 65.4 billion.
“That was probably one of the toughest things I personally had to do in my career,” said Josh D’Amaro, chairman of Disney’s Parks, Experiences and Consumer Products division, in an interview with CNBC last week about the layoffs. “I’m very passionate about the cast here. I think they’re the real reason people come to these parks.”
D’Amaro said the company will have recalled more than 10,000 cast members when the Disneyland resort opened in late April. Initially, Disney’s parks will be about 15% full and only open to California residents. Mask wear and social distancing are required for guests visiting the park.
At Universal, too, revenue from theme parks declined in 2020. The company, which belongs to Comcast, reported that theme park revenues fell 68.9% to $ 1.8 billion last year as the pandemic forced the closure of its park in California and its parks in Florida and Japan will only be reopened with limited attendance.
When the California park reopens, Universal guests must also wear masks and adhere to social distancing guidelines.
Universal Studios officials declined to comment.
“During my visits to Downtown Disney … I heard many of our constituents feel safer in the theme parks than in their own grocery store,” Quirk-Silva said. “We have supported our efforts to reopen our theme parks with hand washing stations, temperature controls and helpful staff who ensure that our residents are safely distanced.”
Florida parks are thriving
If the reopening of Florida’s theme parks is a sign of this, there is a lot of catching up to do.
Universal’s two parks, Islands of Adventure and Universal Studios, have consistently reached capacity limits in recent weeks, and Disney’s four theme parks – Magic Kingdom, Animal Kingdom, Hollywood Studios and Epcot – sell out days in advance.
Guests in the wizarding world of Harry Potter as Universal Studios Hollywood welcome guests back to the theme park on Friday April 16 to experience the exciting rides and attractions.
Al Seib | Los Angeles Times | Getty Images
To date, there have been no public reports of the tcoronavirus outbreaks in Orlando Parks.
“We continue to deliver the amazing entertainment experience,” said Brian Roberts, Comcast chairman and CEO, during the company’s earnings statement in January. “And our guests are reacting, as our steadily increasing number of visitors and our latest financial results confirm.”
“What we saw in this fourth quarter, especially in Orlando, gives us even more confidence in the momentum our theme parks will experience if we achieve sustained recovery,” he said at the time.
While Florida Governor Ron DeSantis allowed theme parks to return to normal operations with limited protocols for physical distancing, Disney and Universal, among other things, continued to restrict participation and force the wear of masks.
California lawmakers are aiming for a broader reopening of the state in June. However, it is unclear how this will affect the capacity limits of the theme park. It also remains to be seen when California will allow non-residents to purchase tickets to its parks.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC.