Markets
DIS

3 Things Disney World Hotels Got Right in the Pandemic

There's been a lot of backpedaling at central Florida's theme parks with crowds running lighter than expected. Parks are scaling back their operating hours. On-site resort hotels either are temporarily closing or haven't reopened. 

With area schools already getting back to at least virtual business, it's fair to say that this lost summer season is over. With Halloween hard-ticket events canceled at the two leading operators, the next few months should be quiet, but this doesn't mean that the whole park-reopening experiment was a failure. Disney (NYSE: DIS) and its smaller rivals have done a few things right during these unprecedented times. Even the Disney World resort hotels that failed to live up to the theme park giant's occupancy expectations have passed the first major test of the restart process. Let's go over what Disney's on-site properties got right this summer. Cinderalla walking to the Magic Kingdom castle with the sun rising in the background.

Image source: Disney.

1. Access is everything

Guests pay a premium to stay at a Disney World resort. There are comparable properties available offsite for less. In the past Disney has justified its widening universe of premium-priced lodging options by giving its guests a leg up on outside visitors. Select parks would open early or stay open later exclusively for resort guests. Disney would allow folks with resort reservations the ability to square away FastPass reservations -- giving them access to expedited queues -- at least a month earlier than other visitors. 

The new normal has obliterated those perks. FastPass has been temporarily disabled, and with guest counts relatively low, that's not a big deal. The parks are running abridged operating hours, and that means neither opening early nor staying open later for the benefit of overnight resort patrons. Why would folks continue to pay a premium to stay at a Disney hotel? Well, right now access is a pretty big deal.

Central Florida theme parks are operating at limited capacity levels, and Disney World has turned to a reservation system to allocate the available daily slots. The spaces are split among three baskets: resort hotel guests, annual passholders, and single-day admissions. Those staying at a Disney resort as well as those with day passes are being prioritized over annual passholders. The passholders aren't happy about it, but with folks spending so much more to stay inside Walt Disney World, it's easy to see why the media giant wants to make sure those guests get first dibs, over passholders paying between $1 and $4 a day for their annual passes. 

2. Passholders are now staying on-site

The workaround that enables passholders to practically assure access to Disney World's four gated attractions is booking a stay at a hotel, and we're seeing that happen even with folks who are local. A lot of passholders are from central Florida, and for the most part they have historically had little reason to pay up to stay at the property when they can just drive home at the end of the night. 

The new reservation system -- while far from convenient for all parties -- is helping drum up staycation requests from locals. This is a pretty big deal at a time when travel restrictions are in place. It's harder to get to Disney World these days, especially if you happen to be an international visitor, given the COVID-19 travel restrictions. Disney has helped partly fill that void by leaning on locals scoring easier access to park reservations by staying on-site. With the economy tight and consumer discretionary income at a premium, Disney has found a way to convince Floridians to be tourists in their own state.

3. The NBA did save Disney

We're now a month deep into the resumed pro basketball season, and things are going surprisingly well in the Disney World bubble. All of the games have been played at Disney World's sporting complex. The players, coaches, and support staff have taken over three Disney hotels to make sure they don't come into contact with outsiders. 

It was easy to wonder if Disney was saving the NBA or if the NBA was saving Disney, but with the playoffs now underway it's fair to say that it was a bit of both. Disney has been able to provide a largely clean and safe environment for the season to play out, unlike Major League Baseball, which has run into trouble with teams traveling across the country to play. The NBA provided Disney with a revenue boost in securing the hotels and sporting complex, but it also have the House of Mouse three fewer hotels to have to fill with guests in the new normal. 

Things are working. Disney World is not operating profitably right now, but as it conceded earlier this month in its quarterlyearnings call it would be losing more money if it had remained closed. Things aren't perfect, but for Disney, its guests, and its shareholders, things could be a lot worse.

10 stocks we like better than Walt Disney
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Walt Disney wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of August 1, 2020

 

Rick Munarriz owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short October 2020 $125 calls on Walt Disney. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

DIS

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More