The Economy and DVC

[a Really Bad Egg]

I think Disney should find ways to market both WDW and DVC more aggressively in the Southern U.S.

Why?

 

[KevGuy]

The economy is expected to stay a bit stronger in the South

Really, I would have thought that the south gets hit harder during recessions. It has in every other one.

 

[starbox]

I think Disney should find ways to market both WDW and DVC more aggressively in the Southern U.S.

The economy is expected to stay a bit stronger in the South and many can go to Disney without airfare. (Its a toss up for us with a 9 hour drive.)

Last I heard, Atlanta was leading the nation in foreclosures.

But....

On a positive note about DVC - there is always the option (like a PP mentioned) of taking fewer but longer trips, using points for a shorter stay in a larger unit, doing a stay at a beach resort (I personally would not miss eating out at either HHI or VB) to save on the extra $$$$ that park tickets/transporation/dining entails for a year or two.

And on another positive note - maybe, just maybe, Disney will have to stop being so darn aggressive about raising ticket prices and taking value out of DDE/DDP - and perhaps we'll see something like off-season crowd levels once again..........

With a recession - it seems like the surrounding timeshare/hotels will offer very attractive deals and Disney will have to come up with something to make staying onsite economically competitive - which will probably end up in the form of sweet CRO deals - like free dining and free ticket upgrades. DVC members will probably end up paying the most and unwittingly subsidizing all these great CRO promotions (do free upgrades to 1 bedrooms at OKW and SSR when you book a value resort during free dining sound familiar???)

 

[JimMIA]

Really, I would have thought that the south gets hit harder during recessions. It has in every other one.

I don't think that's accurate. I know Florida is usually somewhat insulated from recessions. We still get hit, but not as bad as places which have heavy manufacturing.

Also, the economies of the states in the South are so different, I doubt if you could lump them together very accurately.

 

[NewmanFam6]

I can tell you that we just returned from the DCL and they were definitely zealous about pushing sales for DVC! I made sure to wear my DVC hat so they would leave me alone

 

[JimMIA]

Last I heard, Atlanta was leading the nation in foreclosures.

I think you're right, but foreclosures are not the same thing as a recession.

A lot of us tend to evaluate things based on where we are. For example, a common description of the difference between a recession and a depression is "A recession is when you lose your job; a depression is when I lose MY job!"

The truth is, the economic definition of a recession is a period of time where GDP (Gross Domestic Product - the total value of all goods and services produced) declines for two successive quarters. We are not only NOT in a recession, we're nowhere near a recession.

The latest GDP figures we have are for the 3rd quarter of 2007 (the 4th quarter just ended on 12/31, so those numbers are not in yet).

In the third quarter of 2007, GDP increased 4.9%.

In the second quarter of 2007, GDP increased 3.8%.

There's no denying the seriousness of the global credit crunch, but we are nowhere near a recession yet.

 

[a Really Bad Egg]

The truth is, the economic definition of a recession is a period of time where GDP (Gross Domestic Product - the total value of all goods and services produced) declines for two successive quarters.

This above quote is exactly correct. The following one may not be...

We are not only NOT in a recession, we're nowhere near a recession. The latest GDP figures we have are for the 3rd quarter of 2007...

If the GDP declined in the 4th quarter '07 and is declining in the 1st quarter '08, then we are most likely in a recession if Q1 GDP finishes lower.

We won't know until we get the figures as GDP is a lagging indicator. You don't go into recession after you get the GDP, you get the GDP after the event takes place.

 

[dcamdad]

There's no denying the seriousness of the global credit crunch, but we are nowhere near a recession yet.[/QUOTE]

We may not be in recession yet however consumer spending is way off. As an HVAC business owner in the Washington DC area (normally recession proof) I have seen about a 45% drop in business over the past 8 months. I have actually had homeowners tell me they will have to passed on getting their heat system repaired or replaced because they can not afford it at this time. That being said those with disposable income are still spending, proof in point go out to eat on Friday or Saturday night and wait up to 2 hours for a table at Olive Garden or Outback.

 

[BWV Dreamin]

This above quote is exactly correct. The following one may not be...



If the GDP declined in the 4th quarter '07 and is declining in the 1st quarter '08, then we are most likely in a recession if Q1 GDP finishes lower.

We won't know until we get the figures as GDP is a lagging indicator. You don't go into recession after you get the GDP, you get the GDP after the event takes place.

And so, once we get the figures that confirm we are "officially" in a recession, in reality we will have already been in one, no secret to the consumer.

 

[Flyerfan]

I personally don't think it's "The Best Kept Secret" any longer.

I said the same thing. They need a new slogan.

 

[JimMIA]

This above quote is exactly correct. The following one may not be...



If the GDP declined in the 4th quarter '07 and is declining in the 1st quarter '08, then we are most likely in a recession if Q1 GDP finishes lower.

We won't know until we get the figures as GDP is a lagging indicator. You don't go into recession after you get the GDP, you get the GDP after the event takes place.

You're right, IF and IF. GDP is a lagging indicator, and therefore we can always say "might." I'm not saying we won't have a recession; We might. I said we are not yet in one.

However most of the forecasts I've seen are for slowing growth in Q4, with early 2008 looking flat or down slightly. Whether or not we actually go into a recession will depend on a lot of things.

The point I was trying to make is that a downturn in one industry does not equal a recession. A recession is a decrease in the total economic output, and we haven't seen that.

We have seen warning signs certainly, but there's no need for "Chicken Little" yet.

 

[AKV707]

From what I read on the boards, people are still buying DVC, and still planning DVC vacations. I also see lots of add ons. Ultimately if a recession is a reality, that could definitely slow DVC sales and use.

I guess we will have to see how the GDP does in q1.

This being an election year could also ultimately impact the economy. In the meantime, DVD keeps building DVC resorts, which will be ready when the economy turns itself around, which we know it will.

 

[a Really Bad Egg]

I'm not saying we won't have a recession; We might. I said we are not yet in one.

I think the point was missed.

GDP determines recession - not one's opinion.

No one here has Q4 or Q1 GDP data yet.

No one here can say we are or we are not in recession...they can only give their opinion - much like which DVC resort is best.

 

[a Really Bad Egg]

And so, once we get the figures that confirm we are "officially" in a recession, in reality we will have already been in one, no secret to the consumer.

Exactly! We feel the pain before we get the data.

And to go one step further, by the time you know that GDP declined for 2 consecutive quarters and the economy was in recession, it could be that GDP in the current quarter is increasing and you are already coming out of it.

This is why GDP is considered a lagging indicator and you don't know when you entered/exited recession until after the fact.

 

[CDNmouse]

The Disney marketing team are a smart group. They have figured out how to get people to come to Orlando when times are not so good at home.

Remember a few years ago when the US dollar was soaring. For us living north of the border it was costing is almost $160 CDN to buy a US dollar. It was so expensive travel to the US was not affordable.

What did the folks at Disney do?

Offered deals to CDN travellers such as 1/2 price children's tickets with an adult ticket puchase. They also offered free character breakfast with the purchase of tickets. They tried to make it affordable for us when the US doller was strong.

As the ecomony takes a dip Disney will respond by offering special packages to keep people visiting.

While I can't see the DVC price dropping there are things that they can do as the economy heads south. They may look at added value by giving more incentives to purchase and perhaps a few more member's only bonuses to increase preceived value of a DVC membership.

Gary

 

[PamOKW]

Don't forget the global appeal of WDW. I would expect DVC (and Disney in general) to step up marketing to the European and Asian markets. It's "no secret" to the folks in the UK about the value of DVC. They were among the first to purchase. With UK tourism to the US back on the rise -- there may be more of an international flavor to DVC.

Family just recently came back from a Caribbean resort where there were many Europeans -- particularly Russians. One fellow guest who was a Russian who has lived in the States for many years remarked that the Russians have so much money they don't know where to spend it all......another market for DVC to tap.

 

[BrentR]

I agree with JimMIA that Disney's businesses are cyclical. However, Disney has been around for a long time and you can bet they have already been discussing, planning and strategizing for a possible economic downturn and how they will deal with it.

We can discuss all we want whether we are or are not in a recession but the fact remains many many Americans are feeling the effects of the economic strain these days and this will no doubtebly have an effect of the purchasing of luxury items of which DVC is one.

I for one beleive that DVC will weather the storm and if there needs to be incentives to stimulate sales we will see them, however, any large discounts/incentives will certainly be short lived. My advice is when and if we see them and you are in the market for an add-on (or initial purchase) you should be ready to act.

 

[tomandrobin]

We may not be in a recession, but growth is almost flat.

My company does Mechanical, Electrical engineering for offices, stores, buildings, facilities, etc. We are usually about 6 months ahead of the rest of the economy. We started getting really slow in mid-August. Our work was really slow in the fall, but in mid December started picking back up.

 

[Pootle]

Don't forget the global appeal of WDW. I would expect DVC (and Disney in general) to step up marketing to the European and Asian markets. It's "no secret" to the folks in the UK about the value of DVC. They were among the first to purchase. With UK tourism to the US back on the rise -- there may be more of an international flavor to DVC.

Family just recently came back from a Caribbean resort where there were many Europeans -- particularly Russians. One fellow guest who was a Russian who has lived in the States for many years remarked that the Russians have so much money they don't know where to spend it all......another market for DVC to tap.

You may be right about the Russians, I wouldn't know, but I'm not too sure about us western Europeans. Our economy in the UK has been wobbling recently and a downturn is widely predicted, along with decline in the value of our homes. The US sub-prime mortgage issue has affected us all as banks worldwide bought into this debt.

Additionally, and O/T many people are put off visiting the USA with ever-tighter immigration controls. The Times (a national 'heavy' newspaper) has run several articles about this recently, including this one making suggestions for other destinations for your Theme park/gambling/cowboy etc fix: http://travel.timesonline.co.uk/tol/life_and_style/travel/article3209119.ece

I do think that UK visitor numbers could well be affected by the combination of economic gloom and more time-consuming immigration controls.

 

[BWV Dreamin]

Global markets just had a huge selloff over the weekend......dow was gonna open down 500 until Paulson just announced the Fed is gonna pump more billions of dollars into the economy. Good news for those waiting to pass ROFR..........................