Disney World Is About to Take the Next Big Step

It may not be a small, small world at Disney World for long. Florida Gov. Ron DeSantis -- presenting at a theme park roundtable in Orlando on Wednesday -- suggested that area theme parks could be ramping up their capacity soon.

Speaking to executives from Walt Disney (NYSE: DIS), Universal Orlando parent Comcast (NASDAQ: CMCSA), and SeaWorld Entertainment (NYSE: SEAS), DeSantis praised the protocols that the gated attractions have put in place to make a day at the park safe for both guests and employees. New COVID-19 cases in Florida have fallen sharply since Disney World opened in mid-July, silencing critics who felt crowds gathering at the state's signature attractions in thousands and in some cases tens of thousands would make the pandemic worse. 

The industry opened to limited guest counts starting in early June, but DeSantis apparently feels it's time to start giving the theme parks a longer leash. It's not official, but DeSantis did say on Wednesday that he thinks the operators have earned the right to increase the number of guests that are allowed through their turnstiles on any given day. It's a positive step for the vital Florida tourism market, but will demand keep up with the increased supply? The answer may not be very comforting.

A guest using a MagicBand to tap into a Disney World theme park.

Image source: Disney.

Waiting for the ride to start

Tugging on yellow straps is a rite of passage for Disney World thrill seekers. A few of the more wild rides there have seat belts that have yellow straps that cast members ask guests to pull before the ride starts. It's a safety protocol to make sure that they're secure and ready to enjoy the ride. 

Florida giving theme parks the ability to increase capacity -- and it's pretty much a given now that DeSantis is talking about it publicly -- is a lot like a yellow-strap check. Disney World, Universal, and SeaWorld are pulling on the tabs, but what if there's no guest to secure?

Comcast's Universal Orlando has never reached capacity at its two signature theme parks since opening in early June. Only its much smaller water park has had to turn away guests after hitting its small cap. SeaWorld Orlando has required guests to make dated reservations to make sure that they don't surpass maximum occupancy levels, and they have never run out of those digital claims. 

Disney World is a different story. It went the reservation route like SeaWorld, but it's been allocating its daily entrances into three baskets. Guests with overnight stays at an on-site resort and folks buying single-day tickets have had pretty open availability. The third basket of reservations -- annual pass holders -- have faced a more difficult time securing daily access. This is the only group that would immediately benefit from a bump in capacity restrictions, but will it matter?

The peak summer season is done. Florida schools are starting the fall semester. Disney and Comcast have canceled their popular hard-ticket Halloween events, a move that hurts Disney but crushes Universal Orlando where Halloween Horror Nights is a major draw. International travel restrictions are still in place. Interstate travel is possible but still largely frowned upon. We're also in a recession, and a week or weekend of escapism is fun, but not a necessity.

DeSantis is giving theme parks the green light just as the light's turning yellow. Pull-strap yellow. It may not make sense, but it may actually be for the best. As long as social distancing measures are in place and crowd-eating experiences like parades and firework displays aren't allowed, where would the extra people go? You can't put more folks on ride vehicles and in show theaters where wide gaps of empty seats exist to keep parties six feet apart. These problems will continue until COVID-19 is truly contained and those safety measures are lifted. Until the world can collectively pull on the yellow strap to make sure the safeguards are secure, this ride's not going anywhere. 

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Rick Munarriz owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool recommends Comcast 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.


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