Fears jab tourism economy
Double-digit dip in hotel occupancy among signs of slowdown
Disney executive Bob Iger sought to quell investors’ fears of coronavirus Wednesday as Central Florida got more indications that the tourism industry is being hit — a double-digit dip in hotel occupancy last week and a warning from at least one investment firm that Disney could be forced to close its U.S. theme parks.
Unlike other major disruptions to tourism such as major hurricanes or the terrorist attacks of September 11, 2001, experts said the uncertainty surrounding coronavirus is unprecedented because no one knows how long the outbreak will last or how severe it will get. Late Wednesday, the Florida Department of Health identified three new cases, including one where the person participated in Daytona Beach’s Bike Week.
Companies across the nation are asking employees to work from home and cutting most business travel. The government advised people against going on cruises. And major events such as Chicago’s St. Patrick’s Day parades and Austin’s South By Southwest festival are canceled.
“Every crisis is unique in its own way, but this one is especially tricky for people because we really don’t have a precedent for it,” said Robert Niles, who covers the tourism industry on themeparkinsider.com and his Orange County Register column. “It’s creating a lot of anxiety.”
The spread of co
“This just a temporary moment of time that we will overcome together as a nation and as a world.” President Donald Trump
ronavirus could cripple Central Florida’s economy, which is driven by tourism. So far, no coronavirus cases have been reported in Orange, Seminole, Osceola or Lake counties.
Iger, Disney’s executive chairman, didn’t address speculation over whether Disney World and Disneyland could temporarily shutter and instead highlighted the resilience of the company and the tourism industry.
“We’re all sobered by the concern that we feel for everyone affected by this global crisis,” Iger said during Wednesday’s Walt Disney Company annual shareholders meeting. “But it’s also important to note that throughout our company’s nearly century-long history, Disney has been through a lot, including wars, economic downturns and natural disasters. And what we’ve demonstrated repeatedly over the years, is that we are incredibly resilient. Our future has always been bright, and it remains so for good reason.”
Local tourism officials continue to hope that leisure travelers, who made up most of Orlando’s 75 million visitors last year, will continue to take vacations.
Many families who visit Disney book in advance, meaning the tourists in town now already paid and were less likely to cancel, Niles said. And so far, theme parks in Orlando continue to see crowds this month.
The question now will be if people continue to plan future trips and if the busy summer season takes a hit.
Orlando Mayor Buddy Dyer said he’s heard from tourism executives who say leisure travel remains strong. And he noted last night’s Billie Eilish concert at the Amway Center was sold out. But he declined to gauge whether the climate could worsen.
“I think there is a lot more to this today than we anticipated two weeks ago, so I don’t want to speculate,” Dyer said. “But I know the theme parks and even us at the Amway Center are taking precautions.”
March is typically a top month for Orlando tourism as the region welcomes families from around the world whose children are on spring break, and business conferences keep I-Drive hotels and restaurants filled. Last year, occupancy averaged 89% in March and climbed into the mid-90s at peak times.
But Orlando hotel occupancy fell last week — seeing a steeper drop than the national average, according to STR, a firm that tracks hotel business.
The occupancy rate at Central Florida hotels fell during the first seven days of March to 76.7% compared to 87.4% during the same week last year, a decline of 12 percent. The average daily room rate is down, too, by 5.3% to $138.75, according to an STR analysis released Wednesday, the same day the World Health Organization declared the virus a global pandemic. Nationwide, hotel occupancy fell 7.3% and rates fell 4.6%.
“The question over the last several weeks was ‘when’, not ‘if’ this impact would hit — well, when has arrived,” said Jan Freitag, STR’s senior VP of lodging insights, in a news release. "This is quite likely the beginning of a bad run that will get worse before it gets better.”
STR data does not include hotels on Disney property.
Already, the coronavirus has cost Disney millions of dollars.
The company closed or partially shut down three of its international parks in China, Japan and Hong Kong. Disney is also likely feeling the sting of the virus through its cruise operations after the U.S. State Department and the Centers for Disease Control urged people to avoid cruise ships, where some outbreaks have occurred.
Investment management and research firm AllianceBernstein published an analyst note earlier this week that predicted Disney’s U.S. parks could also close.
“Rightly or wrongly, most investors we speak with believe Disney’s US parks will close,” the note published Monday said. “For them ‘whether the parks will close’ is no longer the operative question.”
Instead, it’s a matter of “when and for how long?"
“Imagine if a person with a confirmed case of COVID19 or even someone who has had close contact with a person with a confirmed case ... was known to have visited Disney World. Patient zero at Disney World. Setting off a diaspora of potentially affected people, across all age spectrums, traveling back to all ends of the Earth. It’s difficult for us to imagine a more potent way to spread a virus,” the analyst note said. “In addition to the human tragedy, the financial and brand damage from that would, obviously, be much worse than the cost of shutting down the parks temporarily.”
Amid the worries on Wall Street, stock prices have tumbled for Orlando-based SeaWorld Entertainment, which operates 12 theme parks across the country. The stock, previously trading above $35 per share for several days in February, fell to $15.89 Wednesday at the market’s close.
Disney’s stock price dipped about 5% on Wednesday to $105.51 per share.
The decline in occupancy comes as more than 15 conferences scheduled for the region announced cancellations over the past week, headlined by HIMSS, the international health conference that was expected to bring more than 40,000 participants and President Donald Trump to the Orange County Convention Center this week. In all, the region is missing out on more than 100,000 visitors, and more than $200 million in economic impact from the cancellations, according to estimates from the convention center.
On Wednesday, another group, the International Sign Association said it will postpone its show from April 2-4 to Aug. 23-25. The convention is estimated to bring 20,000 people to the center.
George Aguel, chief executive of Visit Orlando, said the decline in hotel occupancy along International Drive is the result of canceled shows this year compared with a full calendar during the first part of March last year.
He said he remains hopeful that concerns over the virus won’t impact leisure travelers as heavily as he’s seen in the convention and meetings market.
“While we never want to lose any business, the group industry accounts for just over 8 percent of the overall visitation to our region,” Aguel said in a written statement. “The mainstay of our visitation continues to be the leisure visitor, and we currently have no meaningfully significant indications that critical market is changing their travel plans.”