- Disney has temporarily closed its Shanghai and Hong Kong theme parks as Wuhan coronavirus sweeps across Asia.
- The entertainment titan’s stock fell nearly 3% on Monday.
- The shutdowns are poorly timed as protests in Hong Kong and weaker consumer confidence have weighed on crowd sizes at both parks.
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Disney has temporarily closed its Shanghai Disney Resort and Hong Kong Disneyland Resort in an effort to slow the spread of Wuhan coronavirus. The news pushed Disney’s stock down nearly 3% on Monday.
The SARS-like virus has infected more than 2,700 people and killed 80 at last count. Chinese authorities have quarantined upwards of a dozen cities, restricting the movements of more than 40 million people.
Disney owns 43% of the Shanghai park and 47% of the Hong Kong park. It plowed cash into decorating both of them and organising “Year of the Mouse” events for the Lunar New Year holiday, which began on Saturday. Closing the parks means missing out on one of their busiest periods of the year, and stomaching the costs of refunding tickets and hotel bookings.
The shutdowns are poorly timed for Disney, as both parks have struggled in recent months.
Operating profits at the Hong Kong park fell by $US55 million in the three months to September as regional protests deterred tourists, Disney told analysts in November. The company warned they could drop by $US275 million this financial year if the disruption continues.
Meanwhile, smaller crowds at the Shanghai park dragged attendance down 2% across Disney’s theme parks last financial year, the group’s annual report shows. On an earnings call in February, CEO Bob Iger blamed lower consumer confidence for discouraging visits to the Shanghai park. “That has made it less profitable than we hoped it would be at this point,” he said.
China’s prolonged trade war with the US has weighed on consumer spending, and the rapid spread of a lethal virus won’t help matters.
Theme parks are a key element of Disney’s business. Its parks, experiences, and products division generated about $US26 billion in revenue and $US6.8 billion in operating income last financial year, or about 38% of its total revenue and 45% of its profits, according to its annual report.
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