Are we in an economic recession right now, or a depression?
For the travel industry, that question really doesn't matter at the moment... because it's worse than that. For all practical purposes, the travel industry no longer exists. Flights are grounded. Hotels are closed. Attractions are empty. For travel businesses, a "depression" - at this point - would be an upgrade.
Even when travel returns, theme parks likely will face a substantial downturn in their business. The question is - for how long?
Theme parks already have lost at least three months of income with parks closed due to stay-at-home orders. And those losses will continue for parks in states such as California that have yet to clear parks to return. Even in locations where parks have reopened, capacities are limited, and it's likely no park will get back to full-sized crowds by the end of 2020. Not while international borders are closed, and the majority of the public remains concerned about catching or spreading the virus.
I've written before that I expect some parks to delay opening their new attractions for this year until 2021, as Cedar Point has announced. It's smart strategy. New attractions are designed to boost attendance, and while parks would love to see a surge that helps dilute the red ink from the first half of the year, social distancing rules and public reticence to be in large groups will make those gains tough, if not impossible.
Furthermore, 2020's financial losses will mean that park owners won't have money in the bank for new attractions in 2021. All major chains have announced deep cuts in the capital spending for this year and beyond. So why not save the new attraction you already paid for until 2021, when you wouldn't otherwise have anything to lure reporters and influencers into the park for new-attraction-media-day coverage?
But that's just 2021. What happens in 2022, and beyond? It's unlikely that 2021 will set any attendance and revenue records, especially if we suffer a second wave of infections, as history suggests we might. Don't count on a vaccine coming to our rescue, either. The current record for vaccine development is four years, for mumps. And there's never been a successful vaccine for a coronavirus.
Aggressive, mandatory testing - backed up with contact tracing and isolation for those infected or exposed - can help eradicate the virus in a community without blanket stay-at-home orders, but it's going to take a massive change in leadership before that happens in the United States. Assuming that comes by the beginning of next year, it would still take months of testing and isolations before the travel business could return to anything approaching 2019 levels. So even a best-case scenario would bring us to at least 2022 before theme parks could even think about returning capital spending to pre-corona levels. That would mean 2023 or later before we'd see major new coasters or other attractions at theme parks again.
History teaches that theme parks are a capital intensive business. And that creates the "chicken or the egg" dilemma for those planning the industry's future. If parks don't spend money on new attractions, it's tough to earn the money they need to build new attractions. That capital barrier to entry is why we don't see new parks popping up around the United States anymore. It's also why this pandemic creates the very real risk of a death spiral for theme park industry.
If some parks or chains can't invest in new attractions for 2022, their attendance might continue to slide even as the rest of the travel industry begins to recover. That could leave them to skip anything new for 2023 as well, starting the spiral.
As park of multi-billion dollar corporations with multiple sources of cash flow, Disney and Universal probably are best positions to avoid this spiral. They likely will find a way to bring back their capital spending to boost attendance as soon as the market is ready to travel again.
What about Six Flags, Cedar Fair, SeaWorld and independent theme parks? Many of those businesses are borrowing money just to stay alive right now. But every disruption in the business world creates an opportunity.
The theme parks that win the post-corona era will be the ones that find ways to create innovative new attractions that bring in the crowds without having to spend tens of millions of dollars up front. Parks that create these new attractions will then enjoy the benefit of having these new crowd-pleasing rides, shows, or experiences... as well as the increase in income that then allows them to supplement those new attractions with expensive, pre-corona-style new attractions as well.
So what will these innovative new attractions look like? I don't know. No one does... yet. And it's possible that no one will crack the code on post-corona innovation in the theme park industry, and we will be looking at many years of sluggish "recovery" before the industry returns to 2019 levels.
But I don't want to believe that. As Epcot's Horizons told us, "if we can dream it, we can do it." I want to believe that somewhere, right now, a theme park design professional - or aspiring designer - is working on the idea that will have people like me raving in 2022, "you've got to come out and experience this!"
Because the future of this industry might depend upon it.
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The Pence livestreamed "meeting" with Orlando's business leaders was a total...well...you know what. The only guy who kind of told truth was Harris Rosen, but the way he spoke made him come across as a senile geriatric. I guess you could say George Kalogridis told the truth as well, but he only said one sentence and was probably sitting there thinking "wtf am I doing here?" the rest of the time.
Robert is absolutely right, a depression in Orlando would be an improvement, but you wouldn't know that by all the smoke everyone is blowing everywhere. Clearly none of them wanted to play the political football and risk causing a news storm and alienating many of their customers, but that was just sad to watch and a perfect example of why having political meetings broadcast to the public is counter productive. I'm 100% sure if they were behind closed doors the truth would have come out and stuff could have gotten done.
To elaborate more on what I said in above post, here's what Pence needed to know
-The president is making us all look like morons which is really bad for tourism.
-Extend unemployment benefits or do something equivalent because there's no way we're going to get full employment by the end of July.
-We are over two months into this pandemic and somehow still don't have nearly enough tests.
That's what's amazing to me, we still have not done mass testing when scores of nations are so much better than us on that.
But then that would reveal how it's widespread and not "the whole thing overblown" and certain people would much rather not have that over reopening fast to get economies back on track.
Again, we should be lucky it's something with a relatively low fatality rate, Lord help us if we were hit by an Ebola-like killer.
Hmmm, a difficult question with an even more difficult answer. The hardest part about answering the key to overcoming the theme park recession lies in one of the more immeasurable statistics....resilience of the general public.
It's obvious that major capital projects are going to have to be placed on hold and in many instances indefinitely. Heck, the future of Epic Universe looks to be in serious jeopardy with a timeline all but eliminated for development. New breakthrough attractions may not be the savior here since the reality of that is simply unlikely.
It lies in us and how comfortable we are to get back out there. Are we willing to live knowing this virus is still out there and take risks? There's no poll, or survey, or test that can really give us a true picture. On one hand, folks are scared and would rather not chance it until there is a known treatment and/or vaccine. On the other, Florida beaches were packed this weekend and people got out. There may very well be a much bigger amount of the population that want to be out in the world and enjoy what is made available.
True a vaccine may not be available anytime soon but there have also been stories on some vaccines entering clinical trials that are showing promise. Maybe we do get a vaccine by the end of the year. Too much unknown to rely on this one.
Ahhh, the one that has everyone ready to jump to one side of the spectrum or the other....leadership changes in the US come beginning of next year. This is a huge unknown as none of us on this site know how the upcoming election is going to turn out. We also don't know what the ramifications could be of either side. There is a side that believes it is necessary and we need new direction to climb out of this. But on the other hand, new leadership may not bring confidence to the markets and other industries could suffer leading to an even bigger problem. Again, we don't know at all on this one.
Maybe I'm an optimist here but I really do have a strong belief in our resiliency regardless of our divide. We've been through some tough times and we've always managed to bounce back. The timing has always been variable but the result has been constant. In my opinion, I think parks will bounce back faster than we think and not on the backs of new attractions but rather the idea that we as people want to get back. We will throw on our masks, grab our hand sanitizer, and get in line for Flight of Passage. Sure some folks will resist and that's totally ok. I do however believe that we as theme park fans, heck as people will at some point choose to live and bring this industry back sooner rather than later.
I do agree it will not be new attractions that pull the industry out of this rut. Reality is human nature dictates we have a hard time appreciating things until they are taken away. For park fans, the simple pleasure of visiting a theme park has been stripped away. So when various parks do reopen, the entire park will carry the weight of a 'new attraction'. For a prime example of renewed novelty, just look at the Coca-Cola / New Coke fiasco of 1984. Coke sales were falling and they were on the verge of being overtaken by rival Pepsi. So Execs at Coca Cola decided to re-invent the wheel by introducing "New Coke". The public hated it. After 87 days, The brass at Coke decided to bring back the "Classic" formula. Sales surged as the general public embraced getting 'their' original formula back. Something old was indeed new again. Same will be true with theme parks when they eventually reopen. Save the 2020 new attractions for '21 (if possible).
(For the record, I was one of the few that actually liked 'New Coke')
I don’t think this is an innovation problem, at least directly for the leisure sector. I believe there is/will be pent up demand - people wanting to go. The questions I think are will it be safe and practical to do so. If the risk level of going to the US doesn’t drop to the level where an “air bridge” agreement can be negotiated, internationals like me won’t be going. I’m not going to blow my entire years annual leave on a trip where I can only use half of it actually on the trip, and the other half self isolating at home.
The innovation here I think comes with vaccines and treatment. On one hand, there is a lot of hype around it, and there’s one I know here in the UK that is being mass produced for a September release (this isn’t secret, it’s mentioned at the official press conference)... but before anyone gets their hopes up, the testing for it is being done concurrent with this mass production - we could end up with millions of doses of nothing.
There is a great big beautiful tomorrow. But right now it’s nap time.
(Just an aside, the New Coke thing was kinda repeated here in Scotland with Irn Bru {the Scottish National soft drink} when they reformulated to avoid the high sugar soft drinks tax, funnily enough I did predict the original formula would be back as a premuim product. A few months ago they released Irn Bru 1902” as a premium product in glass bottles, and twice the price of regular. Until then old out of date bottles of pre reformulation were trading for stupid money on eBay)
Given enough time, the travel industry will recover. How long will it take? I don't know; your guess is as good as mine.
Seeing what I saw this Memorial Day weekend, I think I seriously underestimated the power of a big chunk of people to be complete dingbats. That's even with the consideration that the news media always follows the mantra that "If it bleeds, it leads." We've got way too many idiots (and proud-of-it-too idiots) in the USA for this virus to go away any time soon.
Sadly, we're just going to have to get used to the idea that an extra thousand or so people are going to die every day until a vaccine is developed. Contact tracing, social distancing, and enhanced testing aren't going to make a big enough difference because there's just too many people unwilling to make the least sacrifice for the greater good. ("What? Me wear a mask? I ain't afraid!") As a result of their attitudes and actions, we as a society are being forced down a sociopathic path that has no good end to it.
Robert hopes for a change at the top. I don't think a change at the top or the middle or the bottom of the political leadership is going to make a difference. The problem largely resides with too many people who expect their leaders to be accountable but not themselves. And then there's the impression that both sides of the political aisle would like to see less media coverage for their presidential candidate rather than more media coverage. This presidential election is shaping up like a WWE headliner event: The Orange Man vs. Creepy Joe. How did we ever get to this point?
Hey Tim - Perhaps we would not have the 'I Ain't wearing no mask' BS if all lets say the WH staff wore masks when out in the Public.
When the leaders at the Top say it won't look good if I wear a mask, the idiot followers also repeat this same genre, and the Virus spreads.
It is called Leading by example. I guess those not willing and social distance or wear mask actually believe it all just a HOAX... As someone once called it. There is an old saying - a fish rots from the head down.
Robert, I have been a daily reader for years. Your site is where I go to read on topics that have nothing or very little with the news cycle, it allows to me to detach for a few minutes, I even often enjoy reading the comments. I am disappointed that you have begun to interject politics in to you article. I hope you reconsider your decision. Your articles in the past, is why I chose the name 2relax!
Interesting:
As a UK resident I don't see any politics in Robert's post. There's one comment about the likelihood of something happening regarding mass testing being highly unlikely under the current US administration. That's not a political comment - it's just a statement of fact. Love or loathe the Trump administration it has made its stance very clear so extrapolating what can or cannot happen isn't a political opinion, just an observation of the future, which is essential for any plans a theme park can make.
I agree with you, Brian, the White House certainly could do a better job of presenting a good role model image. In addition, several political leaders and public figures on both sides of the political spectrum could do a far better job of doing what they tell us to do. Somehow, too many people in power have the idea that the rules don't apply to them.
And the rules apply to you, too. If you want people to listen to you, you need to stick a little closer to the truth.
1. A fish rots from the inside out. (Yeah, I know it's an old proverb.)
2. Trump called the Democrats politicization of the coronavirus their new hoax (referring to the Russian collusion, impeachment, etc.) Check Snopes if you don't believe me.
One day, hopefully, you'll quit gacking up hairballs on the keyboard. ;>)
>> Somehow, too many people in power have the idea that the rules don't apply to them.
Was someone watching UK news over the weekend?...
My personal opinion is that the theme parks will rebound sooner than people expect, especially if the infection numbers are low. If there is a sizable spike, then all bets are off. But if not, I think the demand as been building in fan's minds for two months. They are itching to go back just to be in a theme park again, just as beach goers were eager to go to the beaches last week. So I think they will be so thankful to be allowed back, that new rides won't really be necessary to drawn them back, at least for a while.
As Robert said, there has never been a vaccine for a coronavirus and none for SARS, so why is everyone expecting a vaccine? I guess you can try, but that seems like hopeful thinking. But is it a pipe dream to calm people's fears, or give politicians an excuse to remain shut down 'until there is a vaccine'? I think more cases are inevitable, Brazil has a lot of new cases, and they're entering their fall season. It's going to go around the world and hopefully eventually die down.
According to the CDC website, SARS began in 2003 and is no longer a threat. I know Covid 19 is much worse, and there are still a lot of unknowns, but let's arm ourselves with all the information.
@David Brown: And let's face it, the UK not handling this much better than the U.S. did to prove it's not just America packed with idiots....
Quite frankly, I'm not sure how you can have a thorough discussion about government response to the pandemic without it getting political. There are too many factors in play at the federal, state and local levels to not point out inconsistencies and puzzling behaviors.
@Disfan: Well slight difference in that SARS never forced us to shut down the nation without sports and such so obviously a much bigger push on that fast.
And I actually agree on folks wanting to go back. As I've noted, my mom is a nurse in her 70s, well aware of risks. Yet she's hoping to find out how soon she can go to WDW as a graduation present for her grandson (it was supposed to be next week) and her concerns more on wearing a mask in heat and if pools open,etc. So yeah, there will be folks wanting to back even with risks.
It will be telling next week when Universal opens and see how the crowds gather, that's the real litmus test which the rest of the industry is closely following.
Chad H. - Once in a while I check in on the BBC, but my local ABC news station and of course Fox News gets most of my news eyeball time. What'd I miss out on?
How could someone rationally think Mr biden would do a better job. He would do much worse. He said on fri. "I will beat Joe Biden" on national tv. A couple of months ago he said on video "vote for me for senator". The sad man doesn't even know who he is or what office he is running for (at least some of the time). I feel really sorry for him. The democrat party and his wife and demo political donors and corp CEO's are committing elder abuse. Just get it over with and replace him with the communist, Mr sander's already.
For those of you that are seeing politics in your soup please sit down. I am sorry to have to tell you this, you have become polarized. It can happen to any of us. When I see Robert write "a change in leadership", I instantly associate with a change in views and policies not people or politicians. We have seen the response, I view it as apolitical.
FEMA is no stranger to poor response or criticism, and it has been problematic across multiple administrations.
We now know the limitations of the current agencies quarterbacking the response and how the have effectively turned their back on data. That is not politics and I dont view it as political. Embracing data, science, new ideas and even failures are not a trait condemned to a political party.
They are all traits of leadership.
We will at some point need to see a new or different response. That is what is meant by a change in leadership.
When I see "change in leadership" I default to "change in approach". That can include operational changes at parks.
Well said...
@Tim the big story over here at the moment is the PM’s most senior adviser was caught breaking lockdown rules, at least twice.
The first time he’d been told he was exposed, and his wife was severely symptomatic so he drove from his London home, with his wife and child 250-odd miles to his fathers estate to state in a cottage. The excuse given was if he got really sick, he Had his father nearby for childcare, which is in my view a reasonable excuse, if perhaps symptomatic of affluenza.
But The second is... bizarre. After symptoms had passed he decided he wanted to return for London for work (which he would be entitled to do) but his wife wasn’t sure he could make the trip, so he did a 60 mile round trip to a beauty spot to, and I quote “test his eyesight”, with his wife and kid in the car.... I can understand a proving run (I’ve got my first motorbike with gears just recently and I won’t be riding it to work until I can convince myself I’m capable of more than the 1 mile supermarket run) but I’ve always been taught the fundamental rule with operating a vehicle is (to quote an old gliding instructor of mine) “if in doubt, don’t”. Operating a vehicle is not a valid way of testing your eyes.
@DisFan -- A major reason there was never a SARS vaccine is that it kind of petered out before they could finish one. There was no longer a need to develop one, so they stopped.
They certainly COULD have had a vaccine for it, it's not that making one was impossible. Or at least, we don't know that.
Also -- all these vaccines or at least many of them are using a new technique that has not been used before to make vaccines. mRNA vaccines. There's where part of the hope comes from, too. New technology, could be more effective (and quicker) than a more traditional approach.
@DaveDisney -- I don't know if actual facts will sway you, but I'll try anyway.
"How could someone rationally think Mr biden would do a better job. He would do much worse. He said on fri. "I will beat Joe Biden" on national tv"
He did not say that. He said he will BE Joe Biden, not BEAT Joe Biden. It made sense in context, but of course right wing agitators intentionally cut the clip too short and did some bad lip reading...
He was asked if he would govern like Sanders or Warren, and if so, what message that would send to more moderates. He said no, I'm going to be Joe Biden. As in, he's going to govern in his own style.
You can look at a more full clip or take a look at the CNBC transcript.
But even if he DID say that -- which he didn't -- you really wanna go there? Trump has said some out there things that make HIM sound like he's not with it. Could go queue up those clips. Fact is, they're both really old. And campaigning for president is exhausting, and exhausted people can slip up with their words. What you could criticize about one in this regard, you could criticize the other.
One certainly seems more with it than the other to me though!
Oh and btw, deaths are back up in Georgia, so your post the other day about a low figure in the middle of a holiday weekend was meaningless.
P.S. -- it's the Democratic Party, not the Democrat Party (though its members are called Democrats).
@atlblaze
It's not what Biden says, its that he can't handle more than 10 minutes of talking before his handlers shut him down before he says something stupid or incoherent.
Trump says stupid stuff, but he says it in the first 5 minutes and the last 120 minutes. At least he can be coherent for hours at a time, unlike Biden.
Also, you can't correlate a jump in cases in Georgia a couple days or a week after opening. It takes weeks for the data to come in from the actual opening date to be accurate. Also, every state is doing more testing now, so any correlations are completely false.
If you want jobs to come back and an economic recovery you can vote Trump, if you want higher taxes, continued unemployment and a VERY long recovery, vote for Sleepy Joe. Hate Trump all you want but that statement is absolute FACT!
@ MrTorrance: well it’s been nearly 5 weeks since Georgia began to reopen — April 24. So more than a few days or just one week, lol.
I wouldn’t say there’s been a spike, not yet anyway, but cases and deaths do appear to be trending up now.
DaveDisney was trying to make a correlation for a decrease in deaths based on ONE day — this past Sunday, smack in the middle of a Holiday weekend. Reporting is already poor on weekends — even worse during a holiday. I said at the time 1 day does not make a trend.
All I’m pointing out now is that deaths are back to where they were before the low numbers this past weekend.
“Hate Trump all you want but that statement is absolute FACT!”
Perhaps you don’t know what a fact is, but what you’ve just described is an opinion... one based in seemingly absolutely nothing (and that’s my opinion of yours).
“Hate Trump all you want but that statement is absolute FACT!”
Perhaps you don’t know what a fact is, but what you’ve just described is an opinion... one based in seemingly absolutely nothing (and that’s my opinion of yours).
It's FACT because my salary and 401K increased more in 3 years of Trump than 8 years of Obama. That is until the Chinese virus!
I think before you get into who did better on the economy you need to look where both presidents started.
MrTorrance, could you describe how the economy was performing, with statistics, at the Bush-Obama transfer, and the Obama-Trump transfer?
Would you also agree that turning a bad situation into a long sustained growth period is more impressive than simply not messing up a growth period?
Long sustained growth? The slowest economic recovery in US history.
His policies and regulations killed incentive for companies to hire, invest and increase pay. There was nowhere to go when Obama was elected but up, unfortunately up was SLOW!
yes. growth in the US economy was UNDER 2 percent every single year of the obama admin. every single year. Under pres trump growth was above 2 percent ( i believe) every single year before the CCP socialist big government virus. unemployment the lowest since 1960 for every single ethnic group. every single one. Black, brown and asian populations gained more wealth per capita than white populations. Pres trump has been the best president for non white populations since Pres Lincoln, before the big government virus. While still being a great economic/jobs president for white people in addition
I never thought I'd hear myself say this but can we actually go back to discussing themeparks..?
Mr Torrance:
I will shed some light on the 401k stuff..
The DOW was at 67,000 when Obama took office after Bush started Two unfunded wars and send us into depression after having a surplus of monies from the Clinton administration.
Then the DOW was at 19,800 when Obama left office..
Trump took the DOW to 25,000 currently from the 19,800 Obama - and you say you have the greatest gains in your 401k under Trump who took over a booming economy…. Those numbers do not add up in your HUGE 401K gain theory.
Plus you have to factor in if you add more to you 401K – Like every year I add 1% more from my salary therefore automatically increasing how much I contribute. If this is true and you are now contributing 8% when you were contributing 5% - 11 years ago also have to be factored in.
If there are any other financial numbers you need me to explain to the ignorant few, just let me know.
And there are now 40 Million unemployed under Trump, True facts by the way go look it up.
Your 401k Theory in untrue.
I can't believe I'm actually agreeing with Brian Emery - sort of.
The DJIA increased on average 14.8% per year for the Obama years starting from the bottom of the market which happened shortly after he took office. The DJIA increased 13.8% per year for the first three years of the Trump administration. So Brian is right as far as the DJIA is concerned.
But MrTorrance could also be right as the DJIA is only for a select group of stocks and is just one indicator of market performance. MrTorrance's 401K could have been invested in a broad market index fund which could have a different return than the DJIA. So, this could be an apples to oranges argument.
OH MY - There might be God after all, Tim said I was correct.... Hahahaha...
Despite Our political differences, I do hope all stay safe and virus free...
I had to attend a wake this weekend for a fiends father who was 83 and passed since he was hit with the Virus while living in a care facility.
But my point was simple, some Trumpsters say this ridiculous crap all the time. Look at my 401k, bla bla bla...
The presidency does not have a lot to do with your salary and the ability to save monies in a 401K. 401K's monies have more to do with selecting the correct funds that will preform for your individual needs...
I have an IRA that I manage and I am up 91% on it over the past 10 years. I have between 5 and 10 individual stocks at any given time and one ETF fund I like. Which has nothing to do with whomever is in office...
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Interesting points here. I believe that people will visit theme parks, whenever they feel safe, mostly to return back to a sense of normalcy. In other words people are not going to go to a park for the newest attraction rather they'll go and visit an old friend they weren't able to see for a long time. How many people would love to feel the thrill of the Hulk Coaster, enjoy a classic ride on Pirates of the Caribbean, or feed a dolphin right about now? All experiences that have been around for decades and they have been taken away. When different people decide it's time to visit parks than the industry hopefully will be held up by these visitors. Then theme parks can go back to building the newest, coolest attraction when the bottom lines allow for it.