Pent up demand for Disney parks ’will be there,’ ex-Imagineer says

By:
on Jun 22, 2020
Updated: Sep 11, 2020
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  • Disney continues to re-open its global parks amid the COVID-19 pandemic.
  • Some investors are concerned the pandemic will keep park goers at home.
  • But one ex-Disney insider believes pent-up demand is real.

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Global media and entertainment giant Walt Disney Co (NYSE: DIS) is among the most hotly debated stocks on Wall Street. Some investors are concerned that demand for its parks won’t return for months, if not years due to the COVID-19 pandemic.

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But according to a former Disney “Imagineer,” the pent up demand for people to return to its parks “will be there.”

The importance of parks

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Disney has shown impressive performance in its Parks and Resorts businesses over the years. Specifically, total domestic revenue rose from $12.329 billion in fiscal 2014 to $17.369 billion in fiscal 2019. Over the same time period, margins improved notably from around 18% to around 26%.

Recently, Wells Fargo analysts suggested the important Disney unit may not see a turnaround from 2018-2019 levels even in 2022-2023. 

Coupled with what appears to be a growing hot spot of new COVID-19 infections near Disney’s Orlando theme park, investors have valid reasons to be concerned. Simply put, the company’s exposure to the pandemic is above average and its other units can’t be counted on to counter any weakness in parks.

This is especially true for the streaming video business that is already tracking years ahead of initial expectations and this imply minimal room for near-term upside.

An insider’s perspective

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Bill Coanis a former Disney “Imagineer” who was tasked with building Disney’s theme parks, resorts, attractions, and cruise ships. On a Monday morning Fox Business interview he said Disney parks are “long-awaited trips” for many people, especially those who are anxious for some sort of leisure entertainment.

The pent up demand is real and Disney’s staff have the necessary tools at their disposal to ease health and safety concerns, he said. At the same time, Disney will be able to “elevate their entertainment offering.”

Disney also has a favorable reputation for being a family-friendly brand and a successful re-start to its parks could result in favorable social media and word of mouth recommendations.

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The problem with masks isn’t a problem

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Another major concern investors have relates to Disney mandating all guests wear face masks at all times with few exceptions. As any parent can relate, expecting little children to keep a face mask on is at best, an uphill battle.

These concerns may be overblown, at least for many would-be Disney guests, he said. Many families have gained experience with wearing masks in public. As such, it isn’t “such a strange experience” for little children.

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