Member-only story
Money Talks
Forget Shutdowns. It’s ‘Demand Shock’ That’s Killing Our Economy.
Gyms, restaurants, and movie theaters are all reeling for the very same reason
Money Talks is a column that explores what happens when business, the economy, and culture collide.
On July 11, the American economy hit a key milestone in its recovery from the coronavirus: the Magic Kingdom at Walt Disney World reopened. The world’s most popular theme park had been shuttered since March 16, and the expectation was that Disney lovers from across the U.S., frustrated after months indoors, would flock to Orlando. And in the weeks leading up to the reopening, Disney had more than enough reservations to fill the park to its new, limited capacity. But as reopening day approached, the number of Covid-19 cases in Florida began to rise, and in response people started doing something Disney visitors almost never do: cancelling their reservations. In the three months that have followed, customer traffic has stayed well below where Disney hoped it would be. The portion of visitors who are from out-of-state, who are the park’s most lucrative customers, has dropped below 50%. In September, Disney reduced opening hours at all its parks, and in early October, it said it would be laying off 28,000 workers.
Disney hasn’t been alone. Theme parks were allowed to open back up in most of this country this summer, and initially believed that pent-up demand would translate into a resurgence in traffic. Instead, attendance has been well below expectations — at Six Flags, for instance, it’s been around 25%–30% of capacity — and not by choice. Because of this, some park operators, like Hersheypark, have cut back hours, while others, like Cedar Fair, are just keeping some of their parks closed for the year. There’s no secret about why. As Six Flags CEO Michael Spanos said in a conference call with analysts: “What customers are telling us is when they see a flattening of the curve, they want to get out. We also see a chunk of guests that are saying that when they’re comfortable with the vaccine, they want to get out.”
As lockdowns have been lifted in most of the country and businesses have been able to reopen, that…
