HEAT waves and heavy rain wreck the pleasure of outdoor amusement parks.
That simple fact has hammered the shares of Oriental Land, which operates Tokyo Disney Resort. Sweltering temperatures this summer coupled with increasing bouts of torrential rains have kept visitors away from the parks and as a result, the company’s stock has plunged 25 per cent this year, the seventh-worst performer on the Nikkei 225.
Japan had a record number of overseas tourists in July and their preferences are shifting in accordance with the weather. Companies that offer indoor entertainment have seen visitor numbers swell along with profits and their share prices. Sanrio, the owner of the Hello Kitty brand, operates two indoor theme parks and has enjoyed a 93 per cent gain in its stock this year. Round One, which operates a chain of air-conditioned arcades with bowling alleys and video games, has seen shares rise 56 per cent.
Like much of the world, Japan has suffered from extreme heat this year. Average temperatures in July reached an all-time high for the month according to meteorological agency data going back to 1898. That may continue in the months ahead as the weather agency has forecast high temperatures nationwide from September to November.
“When there’s a risk of heatstroke and you have kids, you are going to stick to staying indoors,” said Norikazu Shimizu, an analyst at IwaiCosmo Securities. “With intense heat, you just avoid going out.”
Oriental Land expects operating income to drop in the fiscal first half ending September. It has cited the ongoing heat and heavy rain as key factors in keeping visitors away. It is not alone. Fuji Kyuko, which runs the roller coaster-filled amusement park Fuji-Q Highland, has seen its shares tumble 38 per cent so far in 2024.
In contrast, Sanrio saw an increase in customers, led by more visitors from South Korea, Taiwan and China. The company’s first-quarter profits and full-year outlook exceeded analyst expectations.
If the heat wave continues, the shift from outdoor entertainment to indoors will become even more pronounced, according to IwaiCosmo’s Shimizu. BLOOMBERG
