Weather a Force to be Reckoned with Now and Forever by the Theme Park Industry!

Dennis Speigel - Founder & CEO, ITPS

For several years, we at ITPS have been indicating the severity that the changing weather patterns have been having on our industry at both regional parks as well as the large destination parks. Once an ambiguous excuse for missing attendance projections during the season to senior management, today it is a real threat that must be considered in line-item budgeting, and in both annual attendance and revenue projections.

We have identified weather to be among the top 5 issues that continue to annually negatively impact parks, along with admission pricing, higher wages, labor shortages, and correct capital planning. ?As we are seeing, weather’s impact is no longer a joking matter.

As Hurricane Helene approaches the Southeastern United States, concerns rise about its potential financial impact on Orlando’s theme parks and the broader travel industry. Orlando, home to world-famous destinations like Walt Disney World, Universal Studios, and SeaWorld, is particularly vulnerable to the economic repercussions of such natural disasters. In previous years, Walt Disney World has provided insight into the financial ramifications of hurricanes. For instance, in 2004, Hurricane Charley forced the park to close for a day, leading to an estimated $40 million in lost revenue. More recently, in 2017, Hurricane Irma caused a similar closure, with Disney reporting significant impacts of $65-$75 million dollars not only on park revenue, but also on hotel bookings and overall guest spending at retail and outside dining.

I am often asked by the financial community how finances at parks are impacted by weather, and particularly Florida hurricanes.? The potential financial losses for theme parks like Disney World, Universal Studios, and SeaWorld due to Hurricane Helene can be substantial. ?These losses stem from several factors.? Let’s take a closer look. ?

Park Closures: ?Immediate in-park revenue loss from ticket sales, food and beverage purchases, and merchandise.

Operational Costs: Additional expenses for securing and preparing the park before the hurricane and cleanup afterward.

Damage Repairs: Costs associated with repairing damage to infrastructure, attractions, and landscaping.

In addition to these major factors, there could be a decline in future bookings as potential visitors may be deterred by the risk of hurricanes. This may not be immediately reflected in lost revenue, but on future travel losses. ?

Hurricane Helene’s approach is already affecting travelers' plans and airline schedules.? We have seen hundreds of cancellations over the last several days.? Airlines are preemptively canceling flights to and from Orlando. The ripple effect of these cancellations will cause significant financial strain on airlines due to the cost of rebooking passengers and providing accommodations.

Also in many cases, there is travel hesitation. Potential visitors might postpone or cancel their trips, leading to reduced demand for flights and vacation packages both now and in the future.? Airlines may need to issue refunds or travel credits, further impacting their revenue, and the state taxation planning projections.

The hotel industry in Orlando faces several challenges as Hurricane Helene nears.? First, local area and park hotels will experience a surge in cancellations as travelers simply opt to stay home. This leads to lost revenue and, in some cases, financial penalties for those who booked non-refundable rooms. ?It can affect everyone!

Second, hotels may need to accommodate displaced residents and emergency workers at discounted rates, thus generating less revenue than planned.

Third, the severity of Helene’s potential structural damage to roads and hotels, as we have seen in the past, can lead to expensive repairs and a decrease in available rooms, affecting future booking.

Fourth, families planning to visit Orlando’s theme parks may cancel their trips due to safety concerns, leading to a direct loss in park revenue.

And?finally, for many families, rescheduling a trip can be difficult due to work and school commitments.? This results in declines in attendance. Expenses such as pre-booked tickets, accommodations, and transportation can add to the financial burden on families, leading to negative sentiments and future hesitancy to book during hurricane season.???

You can bet if the hurricane is as severe as is currently reported (as of Thursday afternoon at 6:00PM), the economic impact of Hurricane Helene on Orlando’s theme parks, travel plans, and the broader tourism industry will be profound. As indicated, our past findings on historical data from Disney’s reports on past hurricanes highlights the potential significant financial losses (tens of millions of dollars.? This, added to the operational challenges faced by these entertainment giants, can be financially catastrophic! ?

As Hurricane Helene approaches, businesses and travelers alike brace for the storm’s immediate effects and long-term repercussions, hoping to mitigate the financial blow and ensure a swift recovery. ?We will be a lot smarter in a few days, but for now, Orlando theme parks……brace yourselves!!

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dennis speigel