Disney Mass Layoffs Signal Bleak Future for Tourist Businesses

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Caitlin Busscher, a nearly 10-yearWalt Disney Co. employee, had been looking forward to returning to work after maternity leave. Busscher, who started out taking customer surveys on Main Street of the Magic Kingdom Park, worked her way up to designing custom tours for families coming to Orlando. Last week was supposed to be her first back. It didn’t turn out that way. Busscher was notified on Oct. 1 that her job was being eliminated—along with about 28,000 others at Disney’s pandemic-slammed U.S. resorts and consumer products division.

“I think people understand it’s a business decision, it’s not personal,” says Busscher, 34, who’s looking for another job, possibly one that isn’t travel-related. “I don’t know what’s around the corner.”

Theme parks, purveyors of family fun and good times, are looking like anything but the happiest places on Earth these days. In addition to Disney’s firing of about a quarter of the employees in its U.S. resorts business, other operators, includingComcast Corp.’s Universal Studios andSeaWorld Entertainment Inc., have idled or let go thousands of workers recently. That’s because attendance by domestic guests has been limited, both by social distancing requirements and the unwillingness of Americans to get on airplanes for family vacations. International visitors are almost nonexistent because of travel bans. In California, home to Disneyland, state officials have been reluctant to evenlet parks reopen.

“People are just not ready to come back yet, and we’re experiencing that in every segment of the industry—theme parks, water parks, family entertainment centers,” says Dennis Speigel, a theme park consultant in Cincinnati. “It has been catastrophic.”

The pain at the parks mirrors what other businesses dependent on travel and big crowds are experiencing, from casinos inLas Vegas to your localmovie theater. With the virus still a significant risk, a feeling likely reinforced by President Trump’s diagnosis, it’s possible many tourist-dependent cities will see a second wave of economic damage this year, brought by the new rounds of job losses. “The Disney layoffs signal the leisure industry won’t be the same, not anytime soon,” says Mark Zandi, an economist at Moody’s Analytics. “It’s going to take two to three years to fully catch up. This is not coming back fast.”

After shutting its parks in March, Disney kept paying its employees. A month later, it shifted to furloughs, meaning employees continued to receive benefits but didn’t get paid. When summer came and its Florida parks reopened to disappointing traffic, Disney began telling workers many wouldn’t be coming back. But the size of the cuts has shocked them nonetheless.

Workers United Local 50, which represents food service staff at the still-shuttered Disneyland in Anaheim, Calif., stands to lose more than one-third of its 7,800 members in the layoffs, says Chris Duarte, its president. The union has spent the past few months running food banks, handing out boxes of pasta, canned pears, and peanut butter to out-of-work park staffers. It’s assisted them in applying for unemployment benefits and has prepared meals for those who’ve gotten the coronavirus.

Negotiations have now begun with Disney over what role seniority will play in determining who gets cut, Duarte says. Discussions also involve the possibility of early retirement for some workers and ongoing health-care coverage. “What we know right now is how many,” he says. “The who is still yet to be determined.”

Some of California’s unions pushed back on reopening earlier in the year,writing a letter to Governor Gavin Newsom in June urging him to make sure the parks were doing so in a way that protects employee safety. Soon after, Disney indefinitely postponed a planned mid-July reopening date for its California parks.

More recently Disney’s unions turned to the governor again, asking him to sign legislation requiring companies to give priority to workers they laid off when they do rehire. Newsom vetoed the bill on Sept. 30, saying it was too broad.

Relations between the company and the state’s leadership in Sacramento have grown frosty, with Disney Executive Chairman Bob Iger stepping down from a state reopening task force last week and Disney’s theme parks chief saying in thememo announcing the layoffs that the company’s predicament has been “exacerbated in California by the state’s unwillingness to lift restrictions that would allow Disneyland to reopen.” Besides strict distancing requirements, the state was proposing that the county where a park is located must be in the lower tier of Covid-19 cases statewide before it could reopen—potentially keeping Disney’s propertiesclosed indefinitely.

After preliminary guidelines for reopening began circulating last week, a theme park industry group told the governor they needed revising, and California’s health department delayed releasing them publicly.

Newsom’s veto of the worker-rehiring bill was another disappointment in a year of them for Glynndana Shevlin, 60, a 32-year Disney employee who served as a concierge at the E-Ticket Club at the Disneyland Hotel in Anaheim. She’s waiting to hear if she’s among the workers to be let go.

Shevlin was among the last employees locking up when the hotel closed in March and has been on unemployment for much of the year. She’s been able to keep up with her rent and other payments but worries that if she permanently loses her $18-an-hour job she’ll also be without health-care coverage. “We all thought we’d be back sooner,” she says. “We didn’t see the future being the way it was.”

For workers at Disney’s Florida attractions, there’s similar uncertainty. About 14% of workers in the Orlando/Kissimmee area are employed in accommodation and food service, making it the nation’s second most tourist-dependent city (after Las Vegas), according to data researcher SeoClarity. With the entire industry hit by Covid, that doesn’t bode well for laid-off workers trying to find new jobs quickly.

Maxine Wild, a wedding planner and 23-year veteran at Disney World, started a Facebook group in August to help furloughed workers find side gigs. Called Ear For Each Other, the group has since swelled to almost 12,000 members, with Disney chefs offering to deliver meals and others mowing lawns or washing cars. Seamstresses are selling Halloween costumes, bakers are baking cookies. Since the layoffs were announced last week, members have begun offering classes in résumé writing or just trading job leads. “We’re getting all these wonderfully talented people in the room,” Wild says. “It’s become a place of how to.”

Disney is also taking a financial hit. Its theme park division could swing from a $4.9 billion pretax profit last year to a $1.5 billion loss in 2020, says researcher MoffettNathanson LLC. Earnings might not return to last year’s levels until 2024, the firm says.

For all hotels in the Orlando and Anaheim areas, revenue per available room in August—normally one of the year’s strongest months—was down almost 70% from a year earlier, according to market researcher STR. Richard Maladecki, president of the Central Florida Hotel & Lodging Association, estimates that as many as a third of the region’s 125,000 hotel rooms are closed and will remain so through the end of October. The hotels that are open have been averaging occupancy of under 30%.

Charles Schnaars, who runs the Destiny Palms Hotel near the Disney World complex, says just 12% of his rooms are full, when that figure would normally be as high as 70%. And the Christmas season isn’t looking any better, with bookings for December less than 10% of what they’d normally be. “It’s horrible,” he says.

Lance Boyer, who with his wife, Karin, has for 24 years run Florida Dream Homes, a vacation home rental business, says he’s had almost no bookings for the past five months. Some of the people he’s depended on for listings have sold their properties or taken them off the market. The 59-year-old has survived on government stimulus funds, but they recently ran out and last week he sold his company truck for $11,000 to help pay bills. He’s hoping the federal government passes another relief bill soon. “We don’t need tax cuts for billionaires,” he says. “We need help for average Americans.”

After reopening its Florida parks in July and seeing weak visitation from faraway guests, Disney said it switched to emphasizing locals. Len Testa, who follows theme park attendance for the site TouringPlans.com, says it’s now much easier for season-pass holders to get a spot on the parks’ reservation system, which is used to avoid overcrowding. He estimates attendance at Magic Kingdom has been at about 19,000 guests a day on weekends, well below the capacity of 90,000.

There appear to be fewer kids, he says, although Disney disputes this. “When you see that big family, with everyone wearing the same color shirt, you notice it now,” Testa says. “It’s like, ‘Oh, they decided to come.’ ”

Park patrons are definitely experiencing a very different Magic Kingdom in the Covid-19 era, though a dozen visitors on Oct. 2 told a Bloomberg reporter that the new precautions don’t significantly detract from the fun.

Roving Disney customer service workers chided patrons for letting their face coverings fall below their noses, and even families huddling together for photos in front of Cinderella Castle had to mask up.

Lines for the rides appeared discouraging at first, as Disney spaced parties 6 feet apart for social distancing. The queue for the Seven Dwarfs Mine Train, for example, stretched the length of three football fields from the ride’s entrance, down the sidewalk, and around the back side of the artificial mountain. The wait time, though, was relatively short by Disney standards: 70 minutes on Oct. 2, compared with 2½ hours on some pre-pandemic peak days.

Several customers said Magic Kingdom seems to be slowly gathering some momentum. The park was noticeably busier than a month or two ago, when wait times were as short as 20 minutes, a few said.

Jacob Irwin, 44, had flown from Connecticut to be among 11 family members celebrating his parents’ 47th wedding anniversary. His brother and sister-in-law had visited Disney earlier in the summer and gave the family the thumbs-up after judging it clean. “Honestly the airport and the flights were more of a concern than the park,” Irwin says.

Tori and Matt Minton, tending to their two young boys in the Tomorrowland area, had made the trip from Arizona because the much-closer California parks have yet to reopen. The extra distance wound up tripling the cost of the vacation, Tori says, but they were relieved to make the trip nonetheless. “After not traveling for so long, it definitely has been nice to be out of the home, out of the shell,” she says.

Universal Orlando, home of the Harry Potter-themed lands, has been offering a promotion allowing Florida patrons who buy a single-day ticket to get into the park for the rest of the year. SeaWorld has offered free attendance to active-duty military and three family members. In California, parks have found ways to attract business even if they can’t let guests on their rides. Cedar Fair LP’s Knott’s Berry Farm in Buena Park is offering outdoor food-tasting events this fall. And Legoland, in Carlsbad, is staging an outdoor Halloween event for kids.

Busscher, the former Disney parks employee, thinks it’s just a matter of time before people feel comfortable visiting the attractions again. She hit the Magic Kingdom resort the day after Disney announced its big layoffs, going with a friend to her favorite ride and one of the parks’ scariest: Big Thunder Mountain Railroad. “I hadn’t been on a roller coaster for months,” she says. “I just wanted to forget everything else for a little bit and feel like a child again.” —With Saijel Kishan
 
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