About a week ago, I posted an article on The Kingdom Insider about Disney Parks potentially being closed until 2021. The Walt Disney Company didn’t make this statement, a financial analyst from UBS did. Needless to say, Disney fans weren’t happy. Many were quick to say these are rumors, lies, and nothing more than click-bait type articles. In defense of the analyst, he wasn’t maliciously spreading rumors. He was in fact, doing his job. He also made some strong points, based on his years of experience and the methods used by analysts to create these reports. The one thing we’re certain isn’t true is his now-infamous “2021” remark. I shouldn’t say it’s not true. It’s just that at this point, the statement hasn’t been confirmed or denied. Here’s the deal with his statement, Disney’s current situation, and why everyone just needs to chill out.
Who is this UBS guy, anyway?
Up until last week, some people hadn’t even heard of UBS, which is derived from the Union Bank of Switzerland. But just because you haven’t heard of them, doesn’t mean they’re irrelevant. It’s quite the opposite. UBS is an investment bank and financial management firm that in 2018 reported earnings of more than $30 Billion. UBS provides wealth management, asset management, and investment banking services for private, corporate, and institutional clients with international service. They also manage the largest amount of private wealth in the world, counting approximately half of the world’s billionaires among its clients. So yea, UBS is reputable and a source in the industry people trust and turn to for sound, financial advice.
The analyst in question, more recently named Public Enemy #1 by Disney fanatics, is John Hodulik and he’s the Managing Director of Global Research for UBS. Hodulik created a report titled, “The Eye of the Storm,” where he suggested Disney Parks was just that, in the eye of the storm. Little did he know there was another storm brewing. I’m talking about the storm between the legions of Disney obsessed fans and anyone else who says anything other than the parks will open on June 1st.
Believe it or not, John Hodulik didn’t say this just to make Disney fans from all over the country want to storm the gates of his house, similar to the time Gaston and the provincial town’s people stormed Beast’s castle. His report was made as a tool for investors, shareholders, and essentially everything else that has to do with the Walt Disney Company’s stock (DIS) and people buying or selling it. Some will think the report is irrelevant, others will say its only intention was to spread vicious rumors, and you’re entitled to your opinion. However, in the world of finance and trading, it will be regarded as a trusted source of information.
Hodulik made the argument that Disney Parks are in a unique situation for reopening. That’s because they won’t just be opening a park (As if it’s a common playground). Disney Parks is a business that has several little businesses inside it. All the retail shops, all the restaurants, hotels, and even ride-share systems will all make it more difficult for Disney to reopen as opposed to a local business. Hodulik also pointed out that stadiums and arenas are in the same type of situation. Each of these smaller businesses will likely have different rules and regulations that will need to be enforced, specific to their location and circumstance.
In direct regard to the parks reopening, Hodulik said in his report, “We believe Parks’ profitability will be impaired for a longer period of time given the lingering effects of the outbreak and now assume an opening date of Jan. 1 as our base case… That said, the economic recession plus the need for social distancing, new health precautions, the lack of travel, and crowd aversion are likely to make this business less profitable until there is a widely available vaccine.”
Disney, not profitable? This guy obviously knows nothing and this is complete BS, said every Disney fanatic ever. In actuality, he raises several valid points. Not everyone is rescheduling their Disney vacations, and if they are, it could very well be in 2021. Other factors coming into play, are that maybe the person traveling will no longer have that vacation time from work. Assuming, of course, they even still have a job at this point. No matter where you’re from, this pandemic has affected all of us. Not just as a country, but on a global scale. Things we considered to be essential or a top priority a few short weeks ago, Disney included, might be at the bottom of our list right now.
Then there’s the capacity issue. Disney has all but confirmed they’ll choose to reduce capacity in their parks and in each resort. Other than locals and Florida residents who don’t mind driving there, not everyone is going to book airfare, secure a Disney hotel for a week, only to be told the park is at capacity. That’s a tough trip to make when although you’re guaranteed a hotel room, you may not be guaranteed a day, in the parks. Disney has also hinted that there would be a phased reopening of the parks and that Florida residents would potentially have access to the parks before the rest of the country. As a Florida resident, I’m all about it. The bottom line is, Disney makes less money on Florida residents compared to just about every other guest that visits their parks and resorts.
As John Hodulik implied in his report, these factors and more will ultimately make Disney less profitable.
It should also be mentioned, and I’m not even joking when I say this, there’s a chance Hodulik is totally underestimating the Disney community when he says attendance will be down. Disney fanatics are so hungry for even the smallest morsel of magic, that they’re willing to risk it all. Don’t believe me? Ask the dishes. (Would you expect a Disney obsessed person to say anything else immediately after, “don’t believe me?) Let’s try this again, don’t believe me? Take a look at the pictures from the final night Disney was open. The Magic Kingdom’s crowds rivaled those of Christmas Day in the parks. As the CDC, WHO, Dr. Fauci, and every other healthcare professional said one thing, Disney fans literally said, “Nah, I’m good,” and did the exact opposite. They risked catching COVID-19 just for a chance to be in the Magic Kingdom the night it closed, ultimately indefinitely. Sure, they could pay the price by potentially catching or passing along coronavirus to someone around them, but waving goodbye to Josh D’Amaro and Mickey Mouse as they watched them leave from above- priceless.
I also think many of us, myself included at times, have this mindset like once Disney and everything else opens it will be business as usual. As if this entire global pandemic didn’t happen. Do you think after 9/11, people were eager to jump back on an airplane? Of course not. Slowly but surely, people jumped back on an airplane but it was entirely at their own pace. Some people got over having to take their shoes off at TSA right away, others it took some time. And yet, somehow there’s still a group of people who forget they have to take their shoes off, even after all these years. I know this because I’m always behind them.
The thing is, John Hodulik from UBS (or any financial analyst, for that matter) has nothing to do with Disney Parks. He’s just doing his job, Global Research for UBS, and he made an accurate statement based on the facts he was provided, and his years of experience. Some of what he based his statement on was taking into consideration what will make people feel safe again. Perhaps that’s the one thing he has in common with the Walt Disney Company is just that, safety. Disney is directly making decisions based on the safety and comfort level of their guests.
Bob Iger, Bob Chapek, Josh D’Amaro, and anyone else at Disney isn’t working with or consulting with any financial analysts. At least not that we know, we’re talking about the inner workings of the Walt Disney Company, so we may never know. It’s been over a week and Disney hasn’t issued a statement or rebutted Honulik’s statement. Some see it is a bad sign, I see it as they just have bigger fish to fry right now- or, in Disney terms, they’re trying to ride Smuggler’s Run and John Hodulik is looking like “it’s a small world,” right now. Disney is in the fight of their life right now, not just the parks, but all aspects of the company. Do you think they’re going to stop what they’re doing and respond to every person who makes a statement like this?
Disney is, however, working with the states of California and Florida very closely. Disney’s executives are serving on their state’s reopening task forces, and some are even serving as close advisors to the Governor of each state throughout this entire process. Those in power at the Walt Disney Company are making sacrifices, and working tirelessly around the clock to get the parks and resorts open as soon as possible. But make no mistake, Disney will open on their terms. The decision to reopen won’t be announced until Disney has exhausted every possible resource and utilized everything within their power to make it a safe and healthy environment for its cast members and guests. Does Disney ever do anything halfway? Never. It’s always big or go home, and that same mentality applies here too.
Everyone at the Walt Disney Company knows how much we miss the parks, I’m sure they’ve heard us loud as day and crystal clear. Everyone’s saying “Why isn’t Disney just giving us something, anything, why are they saying nothing?” Or “Why don’t they just give us a date?” First of all, the only thing Disney owes us is their word that when we visit their parks and resorts, no guest will be put into a situation that compromises their health and wellbeing (physical and mental). We know they’ll deliver on that. And if it’s an answer you’re looking for, to when they will reopen, they already gave us that. On March 27th, 2020 when they announced its parks and resorts would be closed indefinitely. Indefinitely was the answer given to us, and for the foreseeable future, we must accept it. All we can do right now is put our faith, trust, and pixie dust, into the Walt Disney Company and support whichever decisions they’re making. At the end of the day, they’re making them with our best interest at heart.
Lastly, I want to make it clear that I’m in no way insinuating that you shouldn’t go to Disneyland or Walt Disney World when they reopen. You better believe the second I catch wind of the park’s opening, I’ll be there faster than you can say “dole whip!” My only piece of advice if you are rescheduling or looking to booking a Disney vacation anytime from June and beyond is, to use a travel agent. For the past year, I’ve trusted my family’s Disney vacations to our agent at Academy Travel, and my only regret has been not using them sooner. You might be ready to take the trip now, or it may take you a while to feel completely safe again, and that’s okay too. The most important thing right now is doing what’s best for you and your family. When you are ready to make those Disney memories again, the agents at Academy Travel will be there for you.
The next time someone approaches you questioning Disney reopening in 2021, feel free to whip out this article. Explain to them the Walt Disney Company and The United Bank of Switzerland have nothing to do with each other, and to zip-a-dee-do-carry on with their day.