Walt Disney Company reported its second quarter earnings on an investor call. We’ve already covered the numbers there in Disney Parks Lose $967 Million, But Demand Grows. If you’re curious about Disney+ subscribers stats or whether EPS beat projections, check that out.
In this post, we’re going to discuss the “juicier” topics that have real world implications for those planning Walt Disney World or Disneyland vacations. Namely, attendance limits capacity, Disney Park Pass reservations, and health safety protocol at Walt Disney World and Disneyland.
The updates on these fronts all came during the investor question and answer portion of Disney’s earnings call, during which Disney CEO Bob Chapek and CFO Christine McCarthy tackled a range of topics. Some of their responses are of particular relevance and interest for anyone planning a summer vacation to Walt Disney World…
The first question inquired as to whether there was “any color” Chapek could provide on how when it would be okay to start raising capacity at Walt Disney World. In response, Chapek stated that Walt Disney World has already started to raise capacity caps based on past guidance from both the CDC and Florida ending of all emergency orders.
It’s not a huge surprise that Walt Disney World has already started to increase capacity. There have been numerous reports of crowd levels increasing around Mother’s Day weekend, and increased of Park Pass reservations would seem to corroborate those.
It’s a given that Walt Disney World would distribute more Park Pass reservations as a result of this move. The only question is how quickly Disney would ramp up, and to what level. It’s likely going to be a gradual increase, with the parks operating at around 50% capacity by the start of summer. At some point, it’s likely that organic demand will be more of a limiting factor on attendance than the park capacity caps.
During the Q&A, Chapek was also asked how Walt Disney World would be able to scale up attendance given reports of heavy crowds already. In response, he stated “we don’t think we’re going to have any problem at all…that is not something that keeps any of us up at night.”
Continuing to address demand, he said: “So we’ve sort of got the perfect positive storm, if you will, where we’ve got plenty of demand, we’ve got really great yield management gains, and the cost management at the same time. In terms of labor, we had about 80% of our cast members return that we’ve asked to return. [We] continue to get more and more cast members back, it thrills us to be able to do that. We’ve had no problems whatsoever in terms of trying to get our cast to come back and make some magic for our guests.”
That’s actually a bit surprising, and also perhaps a bit misleading. I’m shocked that the return rate is 80% because that flies in the face of the rampant reports of hiring woes all around Central Florida, including at Walt Disney World.
In fact, we know that Disney accelerated the return of the College Program to Summer 2021 because of staffing shortages, has numerous job openings, and is actively advertising that its hiring in the Orlando market.
Chapek expects this will make for an even more pleasant experience and that it’s going to be an even bigger catalyst for growth in attendance. Disney is “very, very excited about that.”
This is very interesting to us, and frankly a bit surprising. As you might recall, Chapek was asked similar questions during the last earnings call.
In response, he stated that Disney has no doubt that parks will have “some level” of physical distancing and mask-wearing for the remainder of 2021. However, he also said that Disney views vaccines as a “game-changer.”
At that time, most other sites and Disney fans emphasized the “remainder of 2021” part of Chapek’s quote, citing it as “proof” that face masks would be in place at Walt Disney World until 2022.
We disagreed, emphasizing the some level and game-changer parts. In parsing Chapek’s words, it appeared to us that Disney was laying the groundwork for changing its approach to health safety protocol so rules can be relaxed on an earlier timeline. We’ve since reiterated and double-downed on that in several posts, even as many readers have criticized us for being too bold and optimistic in our predictions.
I would take a victory lap here, but I’m honestly not entirely sure what Chapek’s quote means because his answer intertwines attendance limits and Disney’s face mask rule.
It sure sounds like he’s suggesting that Walt Disney World will be relaxing its face mask rule based upon the CDC guidance, and saying that’ll be a relief for anyone who has been to Florida in the summer. However, it was an off the cuff, non-binding statement that also related to attendance limits.
To be 100% clear, I’m not suddenly pessimistic about a relaxation to Walt Disney World’s face mask rules. If anything, I’m slightly more optimistic than I was before the call started. However, I’ve been pretty bullish for the last several months and this is more or less consistent with what I’ve expected since even prior to the last earning’s call.
In my view, the newly-released CDC guidance is the big news story of the day. It’s worth pointing out that the CDC press conference ended shortly before this earnings call began, meaning it’s entirely possible that Disney’s health team has not yet fully assessed and briefed Chapek on the implications and how Walt Disney World and Disneyland should proceed.
Trying to reconcile the new CDC guidance with Chapek’s statements, I think the most likely scenario is Walt Disney World relaxing the outdoor mask policy for everyone at or around the start of the summer tourist season.
As we’ve pointed out repeatedly, Walt Disney World cannot and will not enforce a policy that distinguishes between vaccinated and unvaccinated guests. Even setting aside the contentious vaccine passport debate, it would simply be overly burdensome for frontline Cast Members, who are already being asked to do too much.
More likely, Walt Disney World will continue requiring masks indoors while shifting from a rule to a recommendation outdoors, perhaps with some verbiage encouraging or “requiring” the unvaccinated to continuing wearing a mask for their safety and that of other guests. If it’s a requirement (air quotes), it’s likely that Disney would take a hands-off approach enforcement.
In our view, this would comport with the overwhelming body of scientific evidence about transmission as well as guest expectations. It would also mesh with the practical realities of wearing a mask during summer in Florida being “daunting,” as a certain CEO put it. Being able to take mask-less photos is already a huge win, and not having to wear them in the heat and humidity outdoors would be another.
Ultimately, I view both today’s new CDC guidance and Chapek’s answers to investor questions as very positive developments that should significantly accelerate Walt Disney World’s return to normalcy. I’m even more bullish than before, but also not taking his answers at face value. The how and when of any health safety protocol and rule relaxation remains to be seen.
Thoughts on Disney CEO Bob Chapek’s statements about face masks and attendance limits at Walt Disney World? Do you agree or disagree with him that it can be “quite daunting” to wear a mask in Florida during summertime? Do you think this signals that Walt Disney World has more plans to return to normal? Are you hoping that Disney follows the CDC’s lead, or keeps its mask rules in place longer? Please keep the comments civil. This is not the place for arguing about efficacy, politics, and so forth—all such comments will be deleted, irrespective of perspective. You are not going to change anyone’s mind via the comments section on this blog, nor are you going to change Disney’s rules or public policy. If you wish to contest this, rather than yelling into the internet abyss, have your voice heard in a meaningful way by contacting Disney or your local elected officials.