Is the Disney Downturn Permanent?

Investor · Barcelona, Spain · Member since 2008 · 13 posts · 1 vote

I've been thinking about investing in a high-end STR in the Kissimmee/Davenport market (Reunion, Encore), but have seen that attendance at Disney World is way down. Most Airbnb calendars in that area are completely open for the next several months.

For any STR owners in this area, have you experienced this downturn? Are you concerned about the long-term viability of STRs in this area or do you think it's a blip? Any feedback from actual owners in the area is much appreciated.

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Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

There may also be an ancillary effect from their ongoing battle with Desantis over all the woke stuff.......

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@James Nicholson
Disney and local parks are getting crushed because of the significant price increases to the parks and we are getting closer to a recession
I do not see it getting better anytime soon.
Also What are you comparing it to? I would look at 2017-2019 and use those years to compare and throw 2020-2022 in the garbage as those years are artificially inflated
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Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
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Hey @James Nicholson, it is a blip most likely. Disney will turn things around as time goes on.
Now spending 2m on a property might be a stretch at this time.
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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
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Quote from @James Nicholson:

I've been thinking about investing in a high-end STR in the Kissimmee/Davenport market (Reunion, Encore), but have seen that attendance at Disney World is way down. Most Airbnb calendars in that area are completely open for the next several months.

For any STR owners in this area, have you experienced this downturn? Are you concerned about the long-term viability of STRs in this area or do you think it's a blip? Any feedback from actual owners in the area is much appreciated.

I think it's temporary but I am getting killed this summer. Bookings and rates have been abysmal. I have a 4/3 3k sf winter home in Four Corners that I rent the rest of the year. That said, Central Florida is virtually nothing but tourism and both the state and the major players - Disney, Universal, etc - won't just wither away without spending ship fulls of cash on marketing efforts. I would say if you can survive on current occupancy you'll be golden.
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Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 996 posts · 1k+ votes
3y
From the perspective of the STR market, it is like most markets right now. The high end properties are doing well, the average places are struggling. Maybe even moreso than most places, just because there are SO MANY average places here if you're not standing out then you're competing with 30,000 rentals on pricing.
As far as Disney itself, the solution is simple, dropping prices, which I think they'll do after this next earnings report (depends on when the earnings report covers, as April was still packed at Disney).
They just have to re-adjust their pricing approach as travel normalizes a bit with the covid boom wearing off. The Covid boom was INSANE here, with them doubling ticket prices and on-site hotel prices, starting to charge for things that used to be free (fast pass/genie), etc. And after that there was STILL so much demand that they had to implement the reservations system because the biggest problem was that even at the jacked up prices, the parks were still overcrowded.
They literally couldn't charge enough money to keep the crowds down.
That is finally starting to return to normal. They're already ditching the reservation system, and they'll likely start rolling back pricing some too in order to once again find that magic number in the middle to maximize revenue.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
3y
There may also be an ancillary effect from their ongoing battle with Desantis over all the woke stuff.......
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Homeowner · Celebration, FL · Member since 2023 · 37 posts · 14 votes
3y
I own and manage high-end property in 34747 zip code which is Kissimmee/four corners. While our numbers are statistically down 10% from last year, it is a market correction going back to 2018-19 numbers. 2021/22 was a boom, but Orlando doesn't bust, it's demand is global, and those who purchased in good STR resorts with lower 6+ bedrooms supply will continue to do well, as the Orlando market is proven to be profitable in any economy statistically for the last 40+ years.
Two things to know for this market:
1) Get reliable comprehensive data for the zip code you want to buy - do not jump on media headlines.
2) Lean into local professionals advice, who know the market - not armchair investors who feel the need to comment on every post to get a star/trophy next to their name.
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Brian Barch
Member since 2023 · 14 posts · 8 votes
3y
Disclaimer…I’m not in that market.
But I think with the cost of a Disney vacation being equivalent to a trip to Hawaii now, and Disney themselves going through somewhat of an identity crisis as a company, I do feel as though many are taking a pause on Disney.
That said, I think it’s temporary. I’m not naive enough to believe that the state of Florida and the Orlando tourism board are going to just allow visits to decline while they sit on the sidelines. You basically have a 4M person CSA that managed to convince people to go to the center of an otherwise coastal state.

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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
3y
Tourism is down everywhere, but particularly at Disney.  Unfortunately, Disney decided to play the Social Justice Warrior game. That might be noble, but it's terrible for business, and memories are long. Battle lines are being drawn in this country over these issues, and it is a colossal failure of judgement for businesses to jump into this cesspool. It's like a quiet civil war of values that has erupted. If you think people soon forget, consider the still considerable political support for a former president who has been indicted on multiple federal charges.

Companies such as Target, Budweiser, and Disney are committing suicide by jumping into these issues. I am awaiting the first blockbuster shareholder lawsuit against the management of these companies over financial malfeasance. Regardless of which side of these issues you pick, the shareholders of these companies didn't sign up for it; they want to make a profit so that they can pay for kids' college or retirement.

To the OP's question:  I think the freeze-out with Disney is going to be a long one.
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James Nicholson
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Investor · Barcelona, Spain · Member since 2008 · 13 posts · 1 vote
3y
@Collin Hays - that's precisely the concern I have. Is Disney going to turn into the next Bud Light for large segments of the population? If so, then this may not be such a temporary downturn. But on the other hand, the Disney brand and experience are so strong that it seems like they would be able to withstand this and make adjustments.
Hard to invest in a market with these uncertainties.
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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
3y
Quote from @James Nicholson:

@Collin Hays - that's precisely the concern I have. Is Disney going to turn into the next Bud Light for large segments of the population? If so, then this may not be such a temporary downturn. But on the other hand, the Disney brand and experience are so strong that it seems like they would be able to withstand this and make adjustments.
Hard to invest in a market with these uncertainties.

Disney has been declining in market value for at least 5 years. Sometimes it can be very difficult to recapture magic (no pun intended), when you’ve alienated massive chunks of customers by way of your social and ideological forays. Tough lesson, but other companies seem quite bent on following Disney’s path.

There’s an old saying that one never broaches politics or religion with friends. Your customers are your friends.
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Mark Cruse
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
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What has Disney done you all feel is so horrifying?
Is your sentiment based on what the gov is saying?
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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
3y
Quote from @Mark Cruse:

What has Disney done you all feel is so horrifying?
Is your sentiment based on what the gov is saying?

I can’t speak for Joe Public. Horrifying is overstated. Imposing, arrogant, and wearisome is likely the typical sentiment.
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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
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Quote from @Collin Hays:

Quote from @Mark Cruse:

What has Disney done you all feel is so horrifying?
Is your sentiment based on what the gov is saying?

I can’t speak for Joe Public. Horrifying is overstated. Imposing, arrogant, and wearisome is likely the typical sentiment.

I don't think anyone cares about this stuff who is/are inclined to go to Disney. A lot of our guests were foreigners and they have no idea about anything "woke" - that's a red herring. The stuff with DeSantis et al has been going on for well over a year and our bookings were solid until May. I think what we're really seeing is just a general downturn in short term rentals nationally. I have read at least 2 or 3 articles in the WSJ over the last week regarding downturns in short term rentals in various places around the US, including Orlando, Cape Cod, the Hamptons, beachfront towns everywhere.
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Mark Cruse
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
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@JD Martin thanks. That is pretty much what I was leaning towards in thought. Desantis just started saying certain buzz words and complaining about things when deciding to run, and now some feel there is some mass rage for Disney. Much of the talk about declining this and that (or woke whatever) is directly put out as political talking points. People are now repeating it as factual. Manufactured hostility. Honestly, I know people from all walks of life and I know of not one person who is boycotting or upset with Disney. Aside from this topic here, I never ever hear anyone who even thinks about Disney let alone has any problem it. Its been awhile but I had the time of my life there. The STR market is saturated from end to end and is down everywhere so I dont see why that area would be any different.
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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
3y
Quote from @Mark Cruse:

@JD Martin thanks. That is pretty much what I was leaning towards in thought. Desantis just started saying certain buzz words and complaining about things when deciding to run, and now some feel there is some mass rage for Disney. Much of the talk about declining this and that (or woke whatever) is directly put out as political talking points. People are now repeating it as factual. Manufactured hostility. Honestly, I know people from all walks of life and I know of not one person who is boycotting or upset with Disney. Aside from this topic here, I never ever hear anyone who even thinks about Disney let alone has any problem them. Its been awhile but I had the time of my life there. The STR market is saturated from end to end and is down everywhere so I dont see why that area would be any different.

Hard to believe you never “hear of anyone who even thinks about Disney let alone has a problem with them” unless you are living in a cave somewhere. Disagreeing with those that are boycotting Disney is a very different animal than denying that there exists such an issue.

Google the term “Disney boycott” and you will find that there are slightly over 11 million entries. Better yet, look at their shareholder discussions at any of various sites.

Luckily, I don’t hold any stock, nor have any rentals in central Florida, so I personally don’t care one way or the other.
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Mark Cruse
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
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@Collin Hays If I turn on certain news channels I may hear that but aside from that, I have never had any conversation with one person that has Disney on their minds. I hear all kinds of stuff on those channels that many people believe is a substantial mass movement that I never hear it being a problem anywhere else. Maybe the stock is down but the entire market is down. STR is also down. Where I do hear the arguments in certain media I really have a hard understanding what they are actually mad about. Eventually I stop wasting brain cells and forget. I try not to wade into political stuff in business but I remember the kapernic situation. So many who were in support of him believed there was some boycott that was destroying the NFL. I just think with some, when they are led to have some passionate personal battle they seem to believe its much more critical and widespread than it actually is. I'm inclined to believe most who are singing on to boycotts or believe in a rage filled movement most likely have never been in the first place. This will be the end of my political wading on this topic but it is what it is.
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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
3y
Quote from @Mark Cruse:

@Collin Hays If I turn on certain news channels I may hear that but aside from that, I have never had any conversation with one person that has Disney on their minds. I hear all kinds of stuff on those channels that many people seem to believe in their life as fact that I never hear of it being a problem anywhere else. Maybe the stock is down but the entire market is down. STR is also down. Where I do hear the arguments for certain media I really have a hard understanding what they are actually mad about but then I stop wasting brain cells and forget. I try not to wade into political stuff in business but I remember the kapernic situation and so many in support of him believed there was some boycott that was destroying the NFL. I just think with some, when they are led to have some passionate personal battle the yseem to believe its much more critical and widespread than it actually is. This will be the end of my political wading on this topic but it is what it is.
We are talking about two different things. You are trying to rationalize folks' discontent with Disney and/or determine the cause(s). I haven't the slightest idea. I'm not a political scientist. Regardless, the phenomenon is real.
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Shawn McCormickPro Member
Realtor · Central Florida-Orlando · Member since 2014 · 1k+ posts · 892 votes
3y
@James Nicholson
I do not own a STR locally, but have helped dozens to purchase. The ones the bought larger home that either were well themed out or they invested themselves to do that, have reported to me that they are still doing well. Considering what others have noted, not to include numbers from 2021-22, it will be tough to make numbers work.
The top 10 or so communities that have great amenities and location to Disney will continue to do well as they market globally, have the relationships of tour group operators, travel agents, youth sports leagues and all the others that come here for Disney or as a stop to get to the cruise ports or whatever.
You mentioned Reunion specifically. I typically only recommend that community to those that will get personal use out of it. If you are an avid golfer or enjoy the benefits of being at an actual luxury community as opposed to many of the others that are geared almost exclusively for families with children. Reunion is considered a different animal in that it caters to the more affluent guests and corporate lodging clients. With the HOA fees higher and on site management 'requirement', it is more difficult to cash flow here. If you can get personal use out of it, use it as a 'spiff' for your employees, friends/family or simply get creative with your accountant and write off as much as you can.
Most of the other resort-style STR communities top out around $1MM-$1.3 MM for 10-12 bedroom homes. Reunion has condos, townhomes, single family and ultra-luxury up to $14-15 MM. So if you have connections to influencers, television, athletes, producers, and musicians that could make use of a higher-end property consistently, you may have an advantage. Otherwise, Reunion carries higher risks than some of the others.
Best of luck, keep us posted
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Myrtle C Antao
Member since 2019 · 3 posts · 4 votes
3y
I agree with you Shawn. I owned a property on the Encore resort and had to sell it as the costs or taxes and the difficulty getting the guests through the prefered property management companies was very difficult.
I finally had the opportunity to manage it for a few months myself before I sold the property and had great success and higher rates than what the property managers were getting for me. This too was without the use of the resort.
DM me if you want contacts of people who can help with handyman and cleaning services.
You can manage your own home and get great results yourself,
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Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
3y
The STR market is maturing.
Like many new markets (remember when there seemed to be a cupcake store on every corner?) there's now an oversupply of STRs in many markets.
Guest income will decrease and some investors will have to sell as the market finds equilibrium.
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Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
3y
Several months ago, I said on here that Disney was headed down hill due to jumping in political moves that should be left to political people. Many disagreed with me, yet here we are months later and like I predicted numbers are falling. Airdna has Orlando listed as the top declined location for STR revenue at -10%.
No, I would not purchase a home there right now, unless you plan on personally using it a decent bit of the year.
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Andrew SteffensBusiness Member
Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
3y
1. STR Market is saturated in Orlando. If you have a great/unique/ property you can still do well just like anywhere else.
2. Disney has raised prices again and it is not going over well.
3. Flights are not only expensive but also unreliable as of late.
4. Politics as mentioned above.

I personally would not wish to stand in a line in 110+ heat index and pay hundreds (or thousands if I were to fly in and could not commute home).
I also recommend buying near the beach instead.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
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Quote from @Sarah Kensinger:

Several months ago, I said on here that Disney was headed down hill due to jumping in political moves that should be left to political people. Many disagreed with me, yet here we are months later and like I predicted numbers are falling.
And you were right! And that's a good way to put it...political crap should be left to political people and the political arena...
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Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 996 posts · 1k+ votes
3y
Quote from @James Nicholson:

@Collin Hays - that's precisely the concern I have. Is Disney going to turn into the next Bud Light for large segments of the population? If so, then this may not be such a temporary downturn. But on the other hand, the Disney brand and experience are so strong that it seems like they would be able to withstand this and make adjustments.
Hard to invest in a market with these uncertainties.

Disney has always been at the forefront of inclusion, diversity, hope. That is essentially their brand. It's not anything new. The people complaining about it now are the same type that complained about Disney movies with girls as the lead 50 years ago. They just have a louder megaphone now, with social media rather than the Thanksgiving dinner table.

But that group has always existed, and they've never been Disney's target demographic. They weren't going to Disney anyway.

Disney is an area that blew up during post-covid revenge travel, and has settled back some as that temporary travel trend recedes. Disney tourism is down basically the same amount as tourism for the entire state of Florida. The areas that blew up the most out of Covid are the ones seeing the largest pullbacks now. It's not two posts down from this one that this same exact thread exists about the pullback in travel in the Smoky Mountains.

It's no different in Disney or the Smokies or the Emerald Coast or Gulf Shores a dozen other markets that were very strong coming out of Covid. Temporary travel boom led to huge increases in supply, and as that temporary boom normalizes we're left with top/standout properties that still perform very well, and average homes lost in the shuffle of huge supply alongside normalizing demand. It's the most basic principle of supply and demand.

Being in this business requires sorting through a lot of fluff. I'm sorry, but this is fluff. Here on the ground, the only actual feedback or cancelations we've gotten are actually the opposite with some bookings being lost to Hispanic travelers that are afraid of the governor's immigration policies (actual guest message), but even those I'm sure are barely a rounding error and mostly fluff in the grand scheme of things.

So you have a bunch of markets acting basically exactly the same. Smokies, Disney, Miami, Gulf Shores, etc. But one of them happens to not align with people politically so they point at that one and say "See, I told you so! It's because they don't agree with my politics!". People just can't help themselves. But it's fluff. If you're worried about Disney itself I wouldn't be. When people get tired of the stuff they have they'll throw another $5 billion at something new. Visitors are down a bit from peak revenge travel, but still way up overall. The wait for 7 dwarves mine train right now is 120 minutes and the extra cost lightning lanes are sold out for the day.
They'll eventually have to give back some of the price increases they jacked up 100% during overwhelming covid demand, and things will level out. Which will probably start after the next earnings report.

So shed no tears for Disney, they'll be fine. The bigger concern is the 40,000 vacation rental properties there alongside the hundreds of massive hotels. If you want to do STR here you've gotta be prepared to stand out. There is just too much supply to be average here, which some people were able to skate by on during the post-covid travel explosion in the area. But ask the person buying an average 3br home in Destin with no pool for $1M or an average 3br forested cherry cabin in Gatlinburg with no view for $800k right now how they're doing and they'll say the same. And last I checked, neither the ocean nor the mountains and streams of Tennessee implied any stance about anything.

Just my $0.02, as someone hosting and elbow deep in this market every day. Take it for what it's worth, and at the end of the day make your own decisions. Because the biggest mistake anyone makes in investing is listening to people like me or any of the rest of us on the internet too closely.
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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
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Quote from @Ryan Moyer:

Disney has always been at the forefront of inclusion, diversity, hope. That is essentially their brand. It's not anything new. The people complaining about it now are the same type that complained about Disney movies with girls as the lead 50 years ago. They just have a louder megaphone now, with social media rather than the Thanksgiving dinner table.

Wow. That's quite a bit of opinion to cram into a single paragraph......
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