Disney's Energy Crisis of 1973

Summary

In 1973, Disney World faced a major downturn due to the oil embargo triggered by the Yom Kippur War, leading to reduced park attendance and financial struggles. With fuel shortages and fewer visitors, Disney adapted by securing fuel supplies, diversifying into new industries, and focusing on local and international markets. The crisis led to canceled resort projects and layoffs, but the company ultimately recovered after the embargo ended. This period marked a pivotal moment in Disney's history, highlighting its resilience during times of global economic challenges.

Takeaways

• 😀 The oil crisis of 1973 had significant impacts on global businesses, including Disney World, which was heavily reliant on tourists driving from out of state.
• 🚗 Due to the fuel shortage, many people reduced travel, leading to a decrease in attendance at Disney World and Disneyland during the Christmas season of 1973.
• 🛑 Disney World attendance dropped by nearly 9% compared to the previous year, while Disneyland's attendance was down by almost 14%.
• 🏨 Florida's tourism economy, reliant on attractions like Disney World, faced severe challenges, with hotels in the area operating at under 30% occupancy during the 1973 holiday season.
• 💰 Disney's revenue was heavily reliant on its parks at the time, which made the drop in attendance particularly damaging for the company.
• 💡 In response to the crisis, Disney took steps like stockpiling fuel, advertising more to local Floridians, and expanding into international markets through the Walt Disney World Travel Co.
• 🌍 Disney tried to diversify by utilizing their land for other ventures, including beef cattle farming and reforestation for the paper industry.
• 📉 Disney's stock value plummeted from $120 per share to just $37, and the company had to lay off 1,700 cast members while cutting work hours for those who remained.
• ⛽ As the oil embargo ended and access to oil was restored, Disney's attendance began to rebound, and reservations at its resorts saw a sharp increase.
• 🏰 Despite the rebound, the oil crisis had lasting effects on Disney, with planned resorts like the Asian Resort and Venetian Resort being shelved in favor of the Grand Floridian Resort.

Q & A

What was the impact of the 1973 oil crisis on Disney World attendance?

The 1973 oil crisis significantly impacted Disney World attendance, with a reported drop of 8.9% during the Christmas season. This decline was attributed to the fuel shortage, which made long-distance travel more difficult for guests who relied on cars to reach the resort.

Why did Disney World face particular challenges during the oil crisis?

Disney World faced unique challenges because 85% of its visitors arrived by car, with the majority traveling from outside Florida. The fuel shortage made it harder for tourists to travel long distances, resulting in decreased attendance.

How did Disney respond to the declining attendance caused by the oil crisis?

Disney responded by diversifying its operations and adjusting its marketing strategies. They purchased 1 million gallons of jet fuel to ensure their power generators could run, promoted local tourism, expanded international marketing efforts, and even ventured into the paper and beef industries.

What long-term effects did the 1973 oil crisis have on Disney's development?

The crisis led to delays in several planned projects, including the Asian and Venetian resorts at Disney World. These projects were ultimately shelved, which opened the door for the development of the Grand Floridian Resort, which remains a major hotel at Disney World today.

How did the oil embargo affect other businesses in Florida, particularly in the tourism sector?

The oil embargo caused a sharp decline in tourism across Florida. Many hotels near Disney World operated at less than 30% occupancy, and smaller attractions like SeaWorld and Lion Country Safari also struggled. Some local hotels even went out of business due to the lack of visitors.

What was the role of OPEC in the 1973 oil crisis?

OPEC (the Organization of the Petroleum Exporting Countries) initiated the oil embargo in retaliation for U.S. support of Israel during the Yom Kippur War. They reduced oil production, leading to a global shortage that affected the U.S. and Europe.

What measures did Disney take to ensure they had enough fuel during the crisis?

Disney purchased 1 million gallons of jet fuel and stored it for use in case of a fuel shortage, ensuring that their on-site power generators would remain operational despite the ongoing crisis.

How did Disney World attempt to attract more visitors during the oil crisis?

Disney World launched marketing campaigns targeting Florida locals to boost attendance from within the state. Additionally, the company established international offices in Tokyo and London to attract overseas tourists.

What financial impact did the oil crisis have on Disney in 1973?

The oil crisis led to a decline in Disney's revenue, with company shares dropping from $120 to $37 by early 1974. As a result, Disney had to lay off employees and cut work hours, although they managed to recover faster than many other businesses.

How did Disney's stock perform during the oil crisis, and how did the company respond?

Disney's stock price fell drastically, from $120 to $37. In response, Disney made significant layoffs (700 full-time employees) and reduced the hours of remaining staff. However, after the oil embargo ended and tourism picked up, Disney's financial situation began to recover.