How will DVC handle a recession/poor economy?

[Starr W.]

Wow, I'm impressed there Ms. Bobbi! Someone else who follows the financial markets! And you are straight on.........the start is with the 100 pt. buy-ins. We will see future incentives....

The 100pt buy in is a start, but when you have Morgan Stanlely saying oil $150 by July 4th I think we are going to have a problem, $11 bucks up yesterday. I'm just hoping we don't lose too many airlines. I think it's rather naive to think oil prices are not going to effect WDW.

I'm a Fast Money girl myself.

 

[Inkmahm]

Plus with the weak dollar, WDW is now cheaper for international travelers. Someone on this board mentioned that due to the weak dollar, the total cost (airfare, hotel, tickets..) of a WDW (Florida) trip was actually cheaper for them than a Disneyland, Paris trip.

Having just been to Disneyland Paris last week, I believe it. Prices there are truly scary. My best example is a favorite window shopping item of mine. The Arribas brothers have a Swarovski crystal and rhodium Disney castle for $37,500 for sale in Downtown Disney. We look at it every trip and wonder who would buy such a thing. Last week in Paris I saw the same castle for sale for 37,500 EUROS. That's about $60,000! It's an excellent example of the general pricing I found. Everything costs 80 to 100% more than at home.

 

[evaready51]

We are headed for an economic disaster of epic proportions. 5$ gas by 4 th of July, spiraling food costs, we are in the beginnings of a perfect economic storm. Oil went up $11.00 per barrel just yesterday. We are spending billions on a trumped up war. It doesn't take an economic Einstein to see the impending doom.

What is most disconcerting is that our leaders are strangely silent re: all of this.

 

[a Really Bad Egg]

I have 2 DS's who watch Cramer...

Hopefully all they are doing is watching...

 

[DisFlan]

WDW (and DVC) will feel the pinch sooner or later, and in a variety of ways. They'll hold it together, but I think we'll see some changes. Disney is fairly well padded, but it isn't immune to the economic downturn. People will still go, but probably fewer after this round or the next of already planned trips.

It's soon going to cost a lot more to fly from overseas just like it will here at home. The foreign contingent can't make up the difference forever (their economies are beginning to suffer too). At $5 or $6 or $7 a gal. for gas, the folks in North America who can't afford the high cost to fly will also be less willing to drive - or limited to folks within less than a day's drive.

I'm sure many DVC owners and potential owners are already feeling the pinch. Many of us will likely be taking one yearly trip rather than two or three. Or skipping a year altogether. We'll know how bad it can get if we see an upshot in resales - along with a downturn in sales. Personally, I think DVC has overbuilt at an especially bad time.

Do I think it's going to get bad? Probably. The bright spot might be more ease in getting DVC ressies - but for all the wrong reasons.


DisFlan

 

[Caren]

Well, go back to what they did in 2001. They cut park hours. They substituted the Character Caravan for extended hours for hotel guests, claiming people preferred it. They started shutting down restaurants. And they offered some killer AP discounts on rooms--I think I paid something like $129 for a savanna view at AKL.

 

[DisFlan]

Well, go back to what they did in 2001. They cut park hours. They substituted the Character Caravan for extended hours for hotel guests, claiming people preferred it. They started shutting down restaurants. And they offered some killer AP discounts on rooms--I think I paid something like $129 for a savanna view at AKL.

If enough people can't afford to get there, it won't matter what Disney cuts or what discounts they offer. It'll be great for the folks in Florida. Not so good for the rest of us.

The 2001 downturn was (economically speaking) a relatively short term event - and without the current pressures of fuel prices. This one will be worse.

DisFlan

 

[Starr W.]

If enough people can't afford to get there, it won't matter what Disney cuts or what discounts they offer. It'll be great for the folks in Florida. Not so good for the rest of us.

The 2001 downturn was (economically speaking) a relatively short term event - and without the current pressures of fuel prices. This one will be worse.

DisFlan

If you can afford it, you might not be able to get a seat. The major airlines are cutting Orlando capacity by about 8.4% starting in October.

 

[rutgers1]

I am not an economist, but my take is that DVC was probably a recession busting plan for Disney. How else could they guarantee a constant stream of money?

Even in the worst of economic times, there will be rich Disney nuts who will fork over 20K for some points, and the rest of us will have to still pay our monthly fees. Likewise, while our neighbors are vacationing close to home, we'll get our butts down to Florida so we don't lose our points.

 

[BWV Dreamin]

If you can afford it, you might not be able to get a seat. The major airlines are cutting Orlando capacity by about 8.4% starting in October.

It is interesting to note that Southwest has hedged against this fuel increase, as they bought fuel at a fixed rate that is good thru 2012. Might be one reason they haven't imposed the check-in bag fees. However, as with supply and demand, we will still see higher fares from SW as demand for them increases. Good numbers there Starr W.! Oh yeah, go #99!!

 

[Starr W.]

It is interesting to note that Southwest has hedged against this fuel increase, as they bought fuel at a fixed rate that is good thru 2012. Might be one reason they haven't imposed the check-in bag fees. However, as with supply and demand, we will still see higher fares from SW as demand for them increases. Good numbers there Starr W.! Oh yeah, go #99!!

Got that little tidbit out of the Toledo paper this morning. All the other airlines hedge also but not to the extent of Southwest. Southwest has pulled back to one direct flight a day DTW-MCO, I think they did that early April.

The other morning on CNBC they were talking about how different companies use hedging. IHOP is also big into hedging(wheat, pork, dairy products).

99 was fast in both practices today! Go AFLAC!

 

[DisFlan]

I read an interesting AP article yesterday about Americans being in denial about our current situation and how bad it's probably going to get. It was about the high number of Americans still going to Disney parks - "What do we do when the sky is falling? We go to Disney World!"

The article mentioned that things would probably look different a year from now when reality has set in - when more people can't afford oil to heat their homes, air travel is sky high/more limited and more people are out of work. But for now, Disney is riding high.

I'll admit that going to Disney is probably a typically American response. We still feel a sense of entitlement to do what we want just as we have in the past. We aren't always quick to acknowledge a bleaker future. And many Americans will do Disney now because they don't know when they'll be back.

And I'll agree that a lot of DVCers will still manage to get our butts down there. Maybe not quite as often, but we'll get there. I'm not quite as sure that sales will hold up or grow.


DisFlan

 

[jodifla]

I read an interesting AP article yesterday about Americans being in denial about our current situation and how bad it's probably going to get. It was about the high number of Americans still going to Disney parks - "What do we do when the sky is falling? We go to Disney World!"

The article mentioned that things would probably look different a year from now when reality has set in - when more people can't afford oil to heat their homes, air travel is sky high/more limited and more people are out of work. But for now, Disney is riding high.

I'll admit that going to Disney is probably a typically American response. We still feel a sense of entitlement to do what we want just as we have in the past. We aren't always quick to acknowledge a bleaker future. And many Americans will do Disney now because they don't know when they'll be back.

And I'll agree that a lot of DVCers will still manage to get our butts down there. Maybe not quite as often, but we'll get there. I'm not quite as sure that sales will hold up or grow.


DisFlan

Well, I think most Americans are having more of a "cross that bridge when we come to it" reaction.

No one knows what the future is going to hold. People can't even agree if we're in a recession or not.

 

[Chuck S]

Well, I think most Americans are having more of a "cross that bridge when we come to it" reaction.

No one knows what the future is going to hold. People can't even agree if we're in a recession or not.

I agree. Remember that the people predicting the $200+ per barrel oil are investment firms, wanting the best return for their investment. Oil industry analysts have said their is no current justification for the current high price, except for speculators trying to make a killing in the maket, we're in a financial oil bubble, like the housing market had before prices dropped. There is enough production to meet demand.

 

[Starr W.]

I agree. Remember that the people predicting the $200+ per barrel oil are investment firms, wanting the best return for their investment. Oil industry analysts have said their is no current justification for the current high price, except for speculators trying to make a killing in the maket, we're in a financial oil bubble, like the housing market had before prices dropped. There is enough production to meet demand.

Well we better hope that if it's a bubble it better burst soon or we are going to be having fewer airlines and definately fewer flights to major leisure destinations(ie Orlando).

 

[DisFlan]

Well, I think most Americans are having more of a "cross that bridge when we come to it" reaction.

No one knows what the future is going to hold. People can't even agree if we're in a recession or not.

If it walks like a duck and quacks like a duck....

There may be "no current justification for the price of oil", but we've got the high price just the same. It's here and it'll be here for a while. CNN just said today's national average for gas in now over $4.00 a gallon - and going up. I'll take a wild guess and say that bridge is coming up fast.

DisFlan

 

[CarolA]

SW has said that their hedges are NOT going to be enough to keep them from starting to lose money. I expect the problem is that while they have hedges they are NOT at the great rate as those currently expiring AND they are are not fully hedged so some fuel has to be purchased at going prices.

 

[jdg345]

I agree. Remember that the people predicting the $200+ per barrel oil are investment firms, wanting the best return for their investment. Oil industry analysts have said their is no current justification for the current high price, except for speculators trying to make a killing in the maket, we're in a financial oil bubble, like the housing market had before prices dropped. There is enough production to meet demand.

I agree ... it's not uncommon for them to announce these large predictions after they've had a chance to buy tons of derivatives at a lower price. It was recently down to the 120's -- great opportunity for them to buy back in -- and then mysteriously they announce these predictions. Strange considering that all reports indicate demand in the US is actually down year over year.

 

[tubtruck]

I think folks are worrying too much, yep fuel prices have risen, a gallon is now costing nearly $5, we in the UK pay more than that in tax on each gallon, you would have to go back to the late 1980s to buy it at that price here in the UK.
What will happen is that you will start buying smaller cars, when I visited the US in 1995 I could not belive the size of some of the vehicles and still marvel at the length and width of those Ford F series double axle trucks. I see that the Honda Civic sales passed those of the F series last month. (Still a medium sized car by UK standards but a step in the smaller more economical direction).
The Major US manufactures of Ford and GM (GM used the Vauxhall brand in the UK and Opel in the rest of Europe) have many smaller much more economical vehicles that are manufactured for the European and UK markets and I am pretty sure you will see variants on these in the US in the future.

Have a look at this example of a Volkswagen Polo Blue Motion it is capable of 88.3mpg on a motorway and 74.3mpg combined (UK GALLON), its diesel which is extremly common in the UK and puts the like of a Prius to shame on economical motoring.

http://www.volkswagen.co.uk/#/new/polo/which-model/engines/fuel-consumption/

 

[itsreally4mommy]

Perhaps a bit of denial w/worry in the back of their minds. It could be some families are trying to squeeze in a family trip in case the future proves too bleak to do it then.