Is Disney World Sinking?

Passengers who were stranded at sea on Carnival (NYSE: CCL  ) cruise ships earlier this year now have vacationers ready to top non-functioning toilets as the top travel horror story of 2013. Guests staying at the Summer Bay resort just a few miles from Disney's (NYSE: DIS  ) Florida theme parks narrowly escaped getting swallowed up by a 40-foot sinkhole on Monday morning.

"In an unforeseeable natural disaster, one of the 26 buildings on our Summer Bay Resort property was affected by a sinkhole," the resort's website explains. "Thanks to the quick response of our staff and first responders, there were no injuries, and all guests were able to leave the building safely."

All's well that end's well, but will investors make it out in time?

The resort in Clermont isn't part of a publicly traded company, and we don't have enough details on the insurer. Recent Florida law changes find that an insurer will cover a sinkhole mishap only if there's structural damage and the property is condemned. It's safe to say that the Summer Bay villas meet both of those requirements.

However, will Disney suffer from this disaster? Will neighboring attractions including SeaWorld (NYSE: SEAS  ) and Comcast's (NASDAQ: CMCSA  ) Universal Orlando make it out unscathed?

These aren't unfair questions. The collapse took place several miles from Disney's massive Florida property, but the publicized disaster may keep guests away from trekking out to see the Magic Kingdom's inspired Fantasyland expansion.

Sinkhole activity is increasing in Florida, and just as all of the cruise lines suffered when Carnival had its miscues, it may be hard for all of the theme-park operators to ignore potential travelers who are skipping Central Florida until the sinkhole stories go away.

SeaWorld has two parks in the area. Busch Gardens Tampa is 65 miles west of Summer Bay, and SeaWorld Orlando is just 16 miles east of the resort. Comcast's Universal Studios Florida and Islands of Adventure are just a couple of I-4 exits away from the SeaWorld Orlando entrance.

Disney is the closest of the area attractions.

The industry has had a rough week. A day after the Summer Bay sinkhole, SeaWorld disappointed investors by reporting softer-than-expected earnings in its latest quarter. SeaWorld has experienced a 6% decline in attendance through the first half of the year across its parks.

If Florida tourism stumbles -- in the near term, at least -- you won't see Carnival gloating. The Miami-based cruise line has plenty of ships leaving out of its home state, and a lot of travelers combine a cruise with a trek out to the Central Florida tourist magnets.

Of course, Disney World isn't sinking. There has never been a sinkhole disaster at any of its resorts. However, if tourists stay away from the area, everyone's going to have that sinking feeling.

Don't turn your retirement into a roller coaster ride
The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "
3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.


Read/Post Comments (3) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 17, 2013, at 4:38 PM, DocEagle wrote:

    Disney always does a thorough land analysis before building anything. That big lagoon in the middle of Epcot Center? It's there because that area was dubious for any building.

    The one thing investors should keep in mind with regard to Walt Disney World is that, although there is still plenty of unused land at the resort, there is a significant percentage of it that is unbuildable. But Disney already knows that.

  • Report this Comment On August 17, 2013, at 4:45 PM, john05091966 wrote:

    I think Disney should lower their prices ive been their 3out the past 4 years yea I had a good time but it to expensive their should be incentive they should offer im not a expert on this stuff but they need to do something. they do treat you like family when your their.im even looking for employment their so me and my family can live their.

  • Report this Comment On August 18, 2013, at 12:12 AM, km00nster wrote:

    That is the reason why Disney is so successful. They do have pricing power. Even though they are increasing prices just about every year, They still have customers coming back constantly. This should benefit an increase in stock price, as well as there new Disney park which is opening up in 2015 in Shanghai, China.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2599386, ~/Articles/ArticleHandler.aspx, 8/23/2014 2:15:56 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement