It's not just a pun to say that amusement parks have been on a roller coaster ride this year. Parks have been in some stage of closure since March, with rules varying by state. Now as another wave of COVID-19 is forcing lockdowns, some states are reevaluating their rules just as people plan for winter holidays. All of this is putting tremendous pressure on companies that own these properties.
3 stocks feeling the pinch
For Disney (NYSE: DIS), the closure of amusement parks has had a devastating impact. Disneyland in Anaheim, California, has been closed since March and may not reopen until next summer. Disney laid off 28,000 workers in October. Due to the closed parks and other pandemic-related shifts, Disney revenue has dropped by 42% and 23% in the past two quarters.
Disney isn't the only publicly-traded company feeling the pain from closed amusement parks. Six Flags Entertainment (NYSE: SIX) reported that its quarterly revenue was down by 80% in the third quarter. Similar to what we've seen in the ski industry, Six Flags has extended its active pass memberships through 2021.
Cedar Fair (NYSE: FUN), an operator of water parks and amusement parks, including Knott's Berry Farm in Buena Park, California, has also seen revenue drop. A 90% decline in attendance contributed to an 88% decline in third-quarter revenues from last year, falling from $627 million to $87 million.
Restrictions vary widely by state
The impact of the pandemic on amusement parks has varied by state, which has made it hard for companies to plan ahead. California has a tier system with restrictions that can change quickly. The first park to open in recent weeks, the Santa Cruz Beach Boardwalk in Santa Cruz County, spent just one weekend allowing people to buy tickets for rides before closing off park rides again. Shopping, food, and outdoor games are still open for business. Similarly at Disneyland, while the park itself is closed, the Downtown Disney District is still open for shopping and dining. This will allow Disney to offer some holiday attractions. SF Gate recently published a list of all parks that are open or partially open within California.
In Virginia, new restrictions call for large amusement parks to operate at 50% capacity with no more than 4,000 people. Many parks have had to decide whether it makes fiscal sense to operate at a reduced level or simply stay closed. Michigan's newest three-week shutdown includes all places of public amusement, including amusement parks, casinos, skating rinks, and bowling alleys. Cases of COVID-19 have surged in Florida, but Governor De Santis has delayed putting new shutdown rules in place and Disney World has been gradually increasing the number of visitors it will allow into its parks.
Some parks have been doubling down on holiday fireworks and lights to attract people to the parks even though they can't fully open. Six Flags has opened a drive-through experience with different themes and food options. These types of events help keep the parks connected to their local community and still earn a bit of revenue.
Residential real estate still a safe bet
The restrictions on the many parks in Orlando, Florida, haven't devastated the real estate market. October sales data from the Orlando Regional Realtor Association showed that sales were up 25% over October 2019, and the median price increased 11.6% during that same time frame. This is similar to the phenomenon we've seen in Las Vegas, where a drop in tourism, the core driver of the local economy, hasn't hurt real estate.
With several promising vaccines on the horizon, real estate investors and park operators are betting that by the second half of 2021, we will be closer to normal and attendance will return to pre-pandemic levels. This will be good news not just for the parks themselves but for the restaurants, hotels, and other businesses that benefit from the return of visitors.