May 13th, 2008
Disney World Vacation & the Recession 2008
Recently I got into a discussion on how the recession of 2008 will impact the vacation market to Disney World. In any economic slowdown there are going to be winners and losers. Here is what our crystal ball says will be the effect of this year’s recession on a vacation to Disney World.
1. Disney World will not reduce rates. In all of the recessions and even with the huge down turn in traffic from 9/11, Disney World maintained their pricing structure. There will be specials and the marketing effort by the mouse will be centered on the drive market especially in and around Florida.
2. Where Disney World raises their attraction ticket prices as often as twice a year….the increase in Disney World tickets for 2009 may be only raised once and assuming the downturn significant, the increase might be very modest deed.
3. Nightly Rates at hotels both inside and outside of Disney World have been increasing at the rate of 9% per year. This has been the case for three years. These advances will come to a halt as hoteliers feel the pinch. Expect rates for 2009 to moderate significantly. We are expecting a decline of 10 to 15% in nightly hotel rates.
4. Airlines servicing the Orlando market are in a perfect storm. The recession will definitely hurt their occupancies. Further, the high cost of jet fuel will keep ticket prices out of the reach for many. Look for more consolidation in the industry. This will mean less flights to Orlando and that will ultimately result in significantly higher fares.
5. Car Rentals will be another area where rates will fall significantly in 2008-09. With inventories swelling at automobile manufacturing plants, fleet prices will surely decline. The rental car companies will find these outstanding prices to tempting to pass up. Couple this with the downturn in passengers flying to Orlando, rental car prices will decline upwards of 8% in the market.
6. We anticipate with the higher food prices, restaurants have no place to turn but to raise prices. Good management, higher utility rates and increased food costs will dictate higher restaurant checks. The good news out of all this is that with less traffic in the Disney World market, the lines at popular themed restaurants will moderate significantly.
7. Whereas those of us living in the Orlando market would like to see our traffic diminish, we will find that due to the economic slowdown, we may get our wish. However, where this will be considered a bonus, the lack of taxes paid by the tourist will be a huge concern as our public officials look for alternative means to make up the short fall.
8. Tourist advertising dollars will shrink. In every downturn, it is always amazing but the one area where the cuts are made are in the marketing and advertising sector of hotels, car rental agencies, restaurants, etc. This will be the case again as we go into 2009. We anticipate a more localized approach to marketing and advertising as the players target the drive market in Florida, lower Georgia and Alabama.
All in all the Orlando travel market, will suffer a significant decline in business. There will be a shakeout of the weak players…this has already started to show up in the hotel sector as banks are becoming less lenient with tardy payments. The stronger players will take up the slack and in the long run, will become even stronger. It will be an interesting 12 to 18 months as the slow down takes us down a road that we haven’t been on since back in the mid seventies.