Specialist
Former Head at Disney Parks, Experiences and Products
Agenda
- Disney's (NYSE: DIS) parks operating environment – sizing pent-up demand likelihood and 12-18- month recovery prospects
- Implications of earliest-returning park visitor types for ancillary revenue streams such as food and beverage, merchandise and resort occupancy
- Longer-term pricing strategy possibilities
- Outlook for 2021 and beyond – CAPEX programme expectations and potential wildcards
Questions
1.
How would you describe the state of affairs around Disney’s theme parks and resorts segment? How has the situation evolved over the past 12 months?
2.
In August 2020, the coronavirus headwinds for the park business were estimated to be around a USD 3.5bn operating income hit. It’s now estimated at around USD 2.6bn. Could you assess the pace of recovery? It seems it will be a long, slow recovery, to ensure adherence to all the safety aspects.
3.
How would you compare Disney’s parks and resorts to other vaccine-driven businesses such as airlines and movie theatres? Some of these are expecting a return to pre-coronavirus levels by around 2023-25. What do you think are the earliest and latest points at which attendance levels could return to historical standards for theme parks?
4.
Where are you putting Disney’s global parks on the spectrum of day pass vs destination?
5.
How wide do you think the gap is for the destination parks to return to historical levels relative to regional parks?
6.
What are the puts and takes for Disney’s parks segment? This may obviously depend on the type of pass purchased. If rides-per-capita is trending downwards, does that necessarily mean that per-capita spend is also trending downwards?
7.
You mentioned that there will always be the risk of re-closure. Are there any parts of Disney’s parks business that you think could be more exposed to this risk than others, perhaps due to geopolitical factors or otherwise?
8.
Do you expect consumers’ attitudes and behaviours towards theme parks to change permanently due to coronavirus?
9.
To what extent do utilisation levels vary between Disney’s parks? Do you expect this to change permanently? Would it make sense for Walt Disney World to use this as an opportunity to reduce its utilisation given it seems its attendance is overheating and causing some problems?
10.
Do you think Disney will pursue aggressive tactics when opening its parks and even when considering safety precautions as it targets a return to peak capacity as quickly as possible? There was a lot of press in July 2020 when Walt Disney World opened during a peak in Florida COVID-19 cases.
11.
You mentioned the recovery pace difference for regional vs destination parks. How might regional operators weather coronavirus vs Disney?
12.
Do you expect coronavirus to negatively impact demographic trends? I heard Jeremy Grantham mention that we will be pushing off marriage at the age-group of people in their 20’s. Do you think that is something Disney is monitoring in the longer term?
13.
Do you think changes in family sizes correlate to changes in per-capita spend? How might this impact Disney long term?
14.
Is there anything you would expect to be materially different around management style with Josh D’Amaro as the Chairman of Disney Parks, Experiences and Products?
15.
Could you suggest how the streaming business might drive a flywheel for Disney’s various business segments? There’s talk around dis-intermediating third parties and utilising data to upsell on theme park passes.
16.
What kind of visitor do you think could drive early recovery? Is it a concern that AP [annual pass] holders could make up too big of a portion of the early attendance, which could have knock-on implications on per capita spend, for example? I’ve heard AP holder attendance is less than 10% but that it’s still meaningful.
17.
Do you think tracking resort and hotel occupancy relative to attendance volumes is a good way gauge the extent to which AP holders are contributing to the recovery?
18.
To what extent do you think the refund programme in late 2020 created pent-up demand from AP customers? What could be the challenges of capping AP customer attendance by offering a bespoke refund programme?
19.
Could you outline the potential differences in recovery across the various ancillary downstream segments such as F&B, merch and hotel reservations?
20.
Disney CEO Bob Chapek noted a USD 1bn incremental safety cost due to coronavirus, though only a portion of that relates to the parks themselves. How permanent or recurring might these costs be? Installing some safety stations might only be a one-time fixed cost. Could this materially impact long-term profitability?
21.
Do capacity limitations offset anything around the negative implications of high density? You mentioned long wait times for rides which impacts customer experience and per-capita spend. Could shorter wait-times due to reduced capacity offset some of the impacts of these restrictions?
22.
You mentioned that Disney doesn’t like to discount its prices. How could the company offset some of the capacity limitations via premium pricing in the immediate term?
23.
You mentioned price increases or getting rid of pass programmes to make up for the lost ability to grow margins via dynamic pricing. Is that something Disney could think about once it’s tapped out pricing for middle American households?
24.
Do you think ROIC has been trending downward more generally? Could this downturn be more profound due to the new initiatives being rolled out in this recovery scenario?
25.
You mentioned pouring money into Shanghai and investing in new rides and lands across Paris, Hong Kong, Shanghai and others. How could growth be reinvigorated after being somewhat stagnant, which was even the case pre-coronavirus?
26.
How might the Shanghai park ramp up post-coronavirus recovery indicate recovery pace at parks elsewhere?
