Posted this on another thread. Seems to be pertinent to this discussion also.
https://www.bizjournals.com/orlando/news/2022/11/15/florida-disney-cost-cuts-jobs-freeze.html?utm_source=sy&utm_medium=nsyp&utm_campaign=y
What do Disney’s cost cuts mean for Orlando theme parks?
By
Richard Bilbao – Digital Producer/Senior Staff Writer, Orlando Business Journal
Nov 15, 2022
The Walt Disney Co. (NYSE: DIS) surprised some on Nov. 11 when it announced plans to cost cuts via measures that include a hiring freeze and possible job cuts.
The company owns and operates one of the region's largest assets in Walt Disney World — Central Florida's largest single-site employer,
with nearly 70,000 Orlando workers — that has four local theme parks: Magic Kingdom, Epcot, Animal Kingdom and Hollywood Studios. Disney also owns two area water parks, Blizzard Beach and Typhoon Lagoon, as well as several themed hotels, golf courses, a camping resort, timeshare properties, ESPN Wide World of Sports and
the Disney Springs dining/shopping/entertainment district.
Walt Disney World alone is
the top generator for visitation to Orlando, with more than 36 million people going through its turnstiles in 2021, according to the
2021 Aecom and Themed Entertainment Association Theme Index and Museum Index Report. Thus, any major changes could have ripple effects to the local region.
Why this matters: Disney is a huge economic driver in Orlando via construction, supply-chain needs and tourism. Cost-structure plans can have local effects on the workforce.
What do we know so far about Disney's cuts?
Disney CEO
Bob Chapek,
via a memo obtained by CNBC, said the company would limit head counts with a hiring freeze and expects some staff reductions.
“We are limiting headcount additions through a targeted hiring freeze,” Chapek said in a memo,
said CNBC's report. “As we work through this evaluation process, we will look at every avenue of operations and labor to find savings, and we do anticipate some staff reductions as part of this review," said another part of the Disney (NYSE: DIS) memo obtained by CNBC.
No other details were shared, and Walt Disney World executives were not available to provide further comment.
Still, the uncertainty on where Disney may focus cost reductions brings up the possibility of what affect it will have on the theme parks segment. That segment has been a highlight of the company, earning $7.425 billion in revenue in its fourth quarter ending Oct. 1, up 36% from $5.45 billion for the same quarter last year,
according to the report.
Will Disney's cost cuts include theme park workers?
John Gerner, managing director with Leisure Business Advisors LLC, a Virginia-based theme park consulting firm, said the theme parks likely aren't much on the radar when it comes to cuts. He said the plan is an acknowledgment that Disney has segments that can use better cost management to improve certain situations.
"This freeze should help preserve current jobs within the theme park division, but could involve transferring some cast members from less important positions to more important ones when other cast members quit," Gerner told
OBJ.
As of now, Disney has not informed local Walt Disney World workers of possible cuts, said
Eric Clinton, president of Unite Here Local 362, a local Disney workers union. Clinton does not expect the company's cost cuts to affect local theme park operations workers or recent hires. "In addition, our contract calls for schedules and hours to be worked by seniority as well as any reductions in the workforce to be done the same," Clinton said.
How may Disney's cost cuts affect theme park additions?
In fact, the theme parks may be on the lighter side of any ill effects of the cost cuts,
David Heger, an analyst with Edward Jones who follows Disney, told
Orlando Business Journal. Heger expects Disney's cuts to fall on the shoulders of its media segment.
"[The] cost-cutting efforts might impact the Disney media and entertainment distribution segment more than the parks and experiences segment because that side of the business faces risks to ad spending in a slower economic environment, the box office has not returned to pre-pandemic revenue levels, and it faces very high content costs to continue growing the
Disney+, ESPN+ and Hulu streaming services," he said.
He said the parks and experiences segment's revenue has recovered well and is performing better than before the pandemic. Thus, he said he doubts Disney would look at projects such as new attractions or expansions as a way to pinch a few pennies.
"A majority of Disney's capital spending is targeted at the parks and the company typically sees a good return on investment from adding new attractions," Heger said.
Meanwhile, Disney continues to invest in its local theme parks to keep tourists coming back. For example, the
Tron Lightcycle/Run coaster at Walt Disney World's Magic Kingdom theme park will debut in spring 2023. That Disney attraction has riders on the iconic Lightcycles from the Tron film and racing through the computerized world. The Tron coaster is inspired by the Tron Lightcycle Power Run at Shanghai
Disneyland.
Disney also is transforming its Epcot theme park that will develop new attractions, such as
"Journey of Water, Inspired by Moana" attraction, and will revamp other areas of that park.