Disney, Universal parks may see no immediate cheer as international visitors return

Disney, Universal parks may see no immediate cheer as international visitors return
FILE PHOTO: Disney's Magic Kingdom theme park sits empty after it closed in an effort to combat the spread of coronavirus disease (COVID-19) in Orlando

By Eva Mathews

(Reuters) – A surge in international visitors to the United States may not benefit Disney and Universal theme parks in the country until next year, since early arrivals will focus on family reunions and holiday trips will need planning.

While domestic footfall rose in the parks operated by Walt Disney Co and Comcast Corp, capacity constraints, rising costs and fewer international travelers visits to its U.S. parks weighed on profits.

“Disney World in Orlando has more international travelers in general (compared to Disneyland) – it’s a very big destination. And so it’s not something people do on a whim, people need to plan that out,” said Neil Macker, senior analyst at Morningstar.

In recent weeks, the United States opened its borders to fully-vaccinated international travelers and approved vaccines for children aged 5-11, boosting investor hopes and Disney shares.

Disney executives said they expect a recovery in international attendance only by the second half of next year and signaled a ramp-up in costs as well.

Some see domestic travelers keeping parks full.

“There is an expectation that stronger domestic demand will make up (for) the shortfall with signs of pent-up demand from holidaymakers who have been starved of vacations,” said Susannah Streeter, analyst at Hargreaves Lansdown.

However, the costs of running theme parks during a pandemic remain high and international travelers, who make up 10% to 20% of total U.S. theme park visitors, often buy more souvenirs and other high-profit items.

Executives at Comcast, which owns Universal theme parks, one of Disney’s closest competitors, said that pre-pandemic profit levels are dependent on international visits.

“We are encouraged by the continued recovery, but getting back to and then exceeding pre-pandemic levels of EBITDA will likely require an improvement in international visitation,” Comcast CFO Brian Roberts has said.

(Reporting by Eva Mathews in Bengaluru, writing by Subrat Patnaik; Editing by Devika Syamnath)