The history of Disney is peppered with ups and downs much like any other company that’s
nearly a century old would be.
A lot of the times those downs can be traced back to poor decisions the company made, whether
it was a general direction they went in or a specific project that just flopped.
However sometimes it’s completely out of their hands.
This was one of those times.
October 6th, 1973.
Just a few days prior Disney had celebrated the second anniversary of the opening of Walt
Disney World in central Florida.
It was a project dreamed up by Walt himself, however with his unexpected passing in 1966
it would be his older brother, Roy, who would lead the company to complete the first phase
of the east coast project.
Disney World opened on time and by all measures was a success.
So when its second birthday rolled around, they had plenty to celebrate.
Meanwhile just over six and a half thousand miles away, on the other side of the globe
there was far less celebrating going on, because that was the day that the Yom Kippur War,
otherwise known as the October war, had begun.
Egyptian troops carried out a surprise attack against Israeli forces in an attempt to retake
Sinai, starting with the Suez Canal.
Now this conflict, like multiple conflicts during that time, doubled as a proxy for the
Cold War tensions between the United States and the USSR.
The USSR sided with Egypt while the United States lent support to Israel to the tune
of 2.2 billion dollars in aid.
In retaliation, on October 17th, OPEC, or the Organization of the Petroleum Exporting
Countries, instituted an oil embargo against the United States as well as other nations
known to support Israel.
And it wasn’t just an embargo either.
OPEC began to lower their oil output so that there was less supply to go around.
What resulted was a shortage for not just the United States, but multiple European countries as well.
The US had to act, or more aptly, they had to react.
And they did just that with the Emergency Petroleum Allocation Act, which was introduced
in the senate just a couple of weeks after the embargo went into effect.
In short, it gave President Nixon the authority and responsibility to regulate the production
and distribution of petroleum in the United States.
As a nation we no longer had the seemingly unlimited access to oil that we were used to.
This Act meant that gas stations were limited in how much gas they could sell, who they
could sell it to, and even what days of the week they could sell it on.
That's where Disney comes in.
In 1973 commercial flight was around.
However it wasn’t as ubiquitous as it is today.
As a result, a reported 85% of guests visiting Walt Disney World were doing so by car.
On top of that, the majority of guests were coming from outside of the state of Florida,
with only 27% of the park attendance coming from locals.
That means a lot of Disney tourists were driving pretty long distances, and that posed
a problem during an unexpected fuel shortage.
By the time the Christmas season rolled around that year, Disney World attendance was already
down 8.9% over the previous year.
In California the Disneyland Christmas season attendance was down nearly 14%.
If that wasn’t bad enough, this was at a point in the company’s history in which over two
thirds of their revenue was coming from the two resorts.
And while those number were a concern for Disney, they were nothing compared to what other amusements
and vacation businesses in the state were experiencing.
See, on a smaller scale, the idea of cutting down on recreation to conserve gas was an
annoyance but one people could live with.
However with the opening of Disney World just a few years earlier, not to mention the long
list of beaches, tourism was Florida’s economic backbone.
It was reported hotels and motels in the Disney area were operating at under 30% occupancy
that holiday season.
It didn’t help that there was also an overabundance of hotel rooms due to everyone trying to cash
in on Disney’s success.
Smaller attractions such as Seaworld and Fort Lauderdale’s Ocean World struggled with
the same attendance issues.
As one spokesman for the Lion Country Safari put it: “Let’s face it, we get a lot of
travellers who come to Florida to see Disney World, then keep heading south stopping off
at our place and others.
If Disney has trouble, we’ll all suffer.”
Disney, like the US when faced with the initial embargo, had to react.
They did, and in some pretty interesting ways.
The first step they took was to build up their own supply of fuel for potential difficult times.
According to Realityland by David Koenig, Disney purchased one million gallons of jet
fuel to keep on the side in the event of a drastic shortage so that they could keep their
on-site power generators running.
They also looked to balance out the source of their guests, both investing in television
campaigns that advertised the parks more heavily to Florida locals, and also by opening the
Walt Disney World Travel Co.
The subsidiary set up offices overseas in Tokyo and London in hopes of winning over
more international guests.
They also pledged to put more of an emphasis on their film studios so that they would be
less dependent on park performance. However while these were shorter term solutions to
try and hold things over, the energy crisis had longer lasting effects as well.
They put the other two hotels slated for the Seven Seas Lagoon monorail loop, Disney’s
Asian Resort and Disney’s Venetian Resort, on the backburner.
After all, they had to worry about keeping their current hotels full before they could worry about
building new ones.
This is when we would see projects such as Pirates of the Caribbean, Space Mountain,
the Carousel of Progress, Star Jets which today is known as Astro Orbiter, and Treasure
Island which would later be known as Discovery Island.
Perhaps the most interesting reaction from Disney during the crisis however was their
attempt to diversify.
While fuel might have been in short supply, one thing Disney had plenty of was land, and
they wanted to put it to use.
That January Disney announced plans to utilize 9,000 acres of their property.
They formed Lake Buena Vista Communities Inc which set aside 1,000 acres for beef cattle
production, and 8,000 acres for re-forestation for the paper industry with the Hudson Pulp
& Paper Corp. Here's Disney was getting into the paper and beef industry just to offset these attendance drops.
Unfortunately, they still struggled.
Drop in attendance meant a drop in earnings, and a drop in earnings meant trouble for the stock.
Shares that earlier in the year were trading as high as $120 were now trading at just $37.
By early January they laid off 700 additional cast members on top of the 1,000 seasonal
cast members they were already planning to let go.
Work hours for those who remained were slashed by up to 20%.
Disney was monitoring how many cars were, on average, crossing state lines to try and
anticipate attendance and adjust their workforce on a day by day basis.
Yet, for as bad as that looked, this was Disney weathering the storm.
Many local hotels and motels were not so fortunate, and would end up going out of business altogether.
So what happened?
Well as much as the start of their oil troubles was out of their hands, so was the end.
The October War itself had ended back in… well...
October with a ceasefire.
However OPEC demanded that Israel withdraw from the territories it had come to hold.
While they didn’t withdraw to the point that OPEC demanded, they did pull back to
the east side of the Suez Canal months later on March 5th.
Just twelve days after that OPEC decided to end the oil embargo.
And so with access to oil returned, Disney, like much of the travel industry, rebounded.
Guests began to return to the parks, earnings began to climb again, and 500 of the 700 laid
off cast members were quickly rehired.
By April reservations for Disney’s Polynesian and Contemporary resort were up 42% over the
previous month.
But while the short term impacts of the embargo were quickly reversed, it still left a lasting
footprint on Disney’s history.
The Asian and Venetian resort would ultimately never get built, and without such a fate there
wouldn’t have been room for the Grand Floridian Resort we have today.
The oil crisis of 1973 was a stressful time, not just for Disney but for the state and the country as well.
It was a reminder that we lived in a global community and how quickly an event on the
other side of the world could impact our day to day life.
It was a lesson in coping with circumstances outside of our control, and it was one that
had a lasting impact on Walt Disney World.