Could virus + market aftermath finally reverse resort increases

[mystery222184]

Taking a glass half full (from a discount perspective) approach to the Coronavirus outbreak. Let’s assume this continues to spread and both Disney and the overall stock market continue to be severely impacted.

Going back around 10 years (post recession), Disney had to significantly up their discount offers to entice visitors. I remember booking the Grand Floridian & Poly around 45% off. Once you offer big discounts, you can’t just take them away Immediately. These discounts have slowly fallen, to a point where you’re lucky to get 20% off during select times of the year. Additionally, MSRP resort, ticket, and food prices have continued to go up annually.

There has been much discussion over the years about when Disney will finally hit that breaking point, where attendance falls enough at a certain price point to curtail the increases. Once this calms down, and the negative stock market impact is fully realized, I wonder if this would finally force them into offering bigger discounts again to fill room capacity. With lower discretionary income and an temporary fear about travel, this could be the case.

 

[AngiTN]

This isn't going to impact the stock market in a way that is going to prevent people from traveling. It's not long term enough. I think there's too much sky is falling going on. 90% of folks are going about their daily business like nothing has happened. More than that at Disney (we just got home).

 

[Yarbogash]

There will be a negative impact, question is how severe it will be.
Imho the state government, the Orange County Mayor and Disney do not find it in any way acceptable or even feasible that WDW might close due to the virus. And while conventions are canceling the anecdotal evidence is that individual visitors are still coming in strong numbers. And the state gov is doing everything it can to drag it’s behind when it comes to expanding testing for the virus.
So if this goes on until the virus reaches pandemic levels and is so widespread it becomes normalized then the impact on WDW will be small. But as soon as there is a positive test for a visitor or more importantly a staffer all bets are off. And it will happen. Later is better for WDW. If it’s sooner then the impact on crowds and resulting discounts will be more severe.

 

[mystery222184]

This isn't going to impact the stock market in a way that is going to prevent people from traveling. It's not long term enough. I think there's too much sky is falling going on. 90% of folks are going about their daily business like nothing has happened. More than that at Disney (we just got home).

May be true, even likely. However the S&P is already down 12% off recent highs and there has been a lot of emotional selling, less so based on fundamentals. If this virus gets worse and has a greater impact on let’s say the financial sector (I work in NY and we are about to be told to WFH for the foreseeable future), then fundamental weakness will come into play.

Add to that how the market takes the upcoming election results, there could be a large impact.

 

[snappy]

Disney may opt to close resorts instead of reduce rates.

 

[hereforthechurros]

Disney may opt to close resorts instead of reduce rates.

I agree with this. Or just cut down on staffing and not place guests in certain wings so they won’t have to staff them. They won’t drop pricing much if anything outside of normal discounts. We could however see more inventory on third party discount sites.

 

[mystery222184]

Well they may be forced to close resorts due to the virus. However, Disney won’t keep them closed any longer than they have to. Similar to the last recession or 9/11, they upped their discounts rather than let inventory sit open. For example, they do much better increasing the Yacht Club resort discount from 25% to 35%, rather than leave it open.

 

[Thecouch]

I went to disneyland a year after gfc. It was empty. I talked to bus driver on the way to universal and he said they use to 3 or 4 busses from anaheim but was down to 1 and it wasn't even half full. He said if it wasn't for the aussie they wouldn't run any busses. Australia was lucky as China was just taking off and buying all our minerals. Our government was handing cash payments (every adult who payed tax got a $900 payment in there bank was one of them). But this time I don't think anyone will be spared. Even with record low interest rates most countries have huge debts

 

[Heather07438]

It depends what happens with this virus I think. There are definitely huge impacts just starting for travel in the short term. How quickly or slowly this situation unrolls (spread, case rates, severity) over the next several months will decide how bad WDW gets whacked. If we're lucky, the virus will quiet down and we'll become armed with effective understanding of progression and treatment, then one season of bad numbers won't bother WDW much. Zika gave them a scare but it turned out not to live up to its feared potential. They had a dip in attendance and quickly recovered.

Worst case is that the potential of this virus actually plays out and it's RNA mutates in such a way that brings the affects closer to SARS (10% mortality) or MERS (37% mortality) across human populations and this gets revisited winter over winter and doesn't subside, then I'd expect big discounts at some point. Fortunately both MERS and SARS were quickly extinguished. A worst case outcome is unlikely but I think the possibility is why epidemiologists are taking this more seriously than H1N1 and the other 4 common coronaviruses currently circulating. It could become more devastating. Not likely, but possible and then I'd expect WDW to have some fire sales like after 9/11 and bubble burst '08.

 

[Disneylover99]

I definitely see the possibility of a decrease in rack rates in the future, depending on how all of this unfolds.

 

[MDIME]

I definitely see the possibility of a decrease in rack rates in the future, depending on how all of this unfolds.

I agree, especially in the resorts that have convention facilities. Maybe even some deeper discounts than we have seen in quite awhile?