Disney World Hotels react to Covid-19 … slowly

As the Covid-19 ravaged other countries, it was very clear that the United States was on the same path as other countries, just delayed.  Yet our federal government was in denial for a long time, and many people (to borrow a phrase from our President) behaved as if there would be no serious impacts from the disease.

There are many ways to monitor this sentiment, but I chose one very close to home: the price of a weekend stay at a Walt Disney World area hotel.  I’m not saying which hotel, other than that these are not Disney owned hotels but they are all nice hotels to stay at if you were going on vacation to Disney World.

My theory is that you can see the gradual dawning of awareness of how serious this is going to be as the prices of rooms drop. I believe that we are destined for a prolonged shutdown of the theme parks in Orlando and that, therefore, demand for hotel rooms will evaporate.  Will this collapse of demand be sudden, like the end of the bull market on February 28th? Or will it be gradual, as more and more people start to realize they need to back out of their travel plans?  I decided to watch and see.

I picked three hotels, two I like to stay at (so there’s some bias here), and one “low end” hotel (that’s still a very nice hotel).  They are all part of a single large family of hotels so presumably share a very well honed revenue management system.  Starting on March 1st, and every day thereafter, I have gone online to find the AAA rate for a weekend stay at the end of the months of March, April, May, June to use these as my sentinels.

The first hotel is high end, luxury hotel.  Think Waldorf, except it’s not a Waldorf:

For the High-end hotel, we can see that on March 5th and 6th there were huge drops in the closer-in rates, while the May and June rates (which are post spring break) remained relatively lower.  On March 12th there was another smaller drop in rates.

The second hotel is what Disney might call a deluxe hotel.  Think Hilton, except it’s not a Hilton.

While the first hotel is “outside” of Disney World, this hotel is inside the perimeter you might call “Disney World”; it is very close to the Disney parks.  You can see that the March rate dropped to a $98 a night, as the weekend I choose is one where Disney World is shuttered.  In fact, a sister hotel to this one closed completely (I was lucky to pick the “survivor” for data continuity purposes).

What’s interesting is the $98/night rate represents, clearly, the approximate incremental cost to the hotel of renting a room: additional staff overhead, wear and tear, and things like electricity, water, housekeeping.  There is almost no reason to stay at a hotel adjacent to a shuttered theme park, so this must pretty much be the costs of them keeping the lights on.

The final hotel is what Disney might consider a “moderate” hotel, except it’s not a Disney hotel.  Think a “inn & suites” hotel.  Like the first hotel (and unlike the second), it is just outside the perimeter of “Disney World”, although only by a bit.

I find it fascinating that it’s been able to keep its rates up more than the higher end hotels; this suggests to me that more price conscious travelers are not cancelling their travel as quickly as more spendy travelers.  All three hotels are co-located with convention facilities, so convention and meeting cancellations should affect each somewhat similarly.

While the March rates for the hotel have taken a bit of a battering, as we can see by the May rates, they still have a ways to go before they hit the rock bottom.  I expect that in the days to come we will see these prices collapse.  Let’s see if I’m right.

More details on the charts:

The dates on the bottom of the charts represent the date I checked the rates;  the lines represent the average nightly rate of a Friday-Sunday stay on the last weekend of the month indicated (note that this misses memorial day weekend in May).  I present the lowest offered AAA rate (which is not a prepay or other highly restricted rate).