Hurricanes Harvey and Irma will unquestionably be affecting North and Central America's economies for months, even years to come. Last class, we discussed how oil refineries in Houston have been impacted and will impact the gasoline market as a whole. The hurricanes also will affect industries such as housing and construction as those hit by the hurricane try to rebuild their homes. However, most of what we've been talking about is the hurricane's impact once it hits land, rather than what happens while the hurricane is still over the Atlantic.
The dangerously strong winds of both hurricanes (Irma is supposed to reach 185 mph winds) make being out on the water impossible and unsafe. This has impacted cruise ship's stocks so heavily that earnings for the year are expected to decline, as cruise ships return to port and reimburse customers that had booked vacations for the upcoming week. The dip in cruise company's stocks can be seen immediately, but it will be interesting to see how the hurricane impacts tourism in cities like Houston and Miami as the effects of the storm are cleaned up.
https://www.bloomberg.com/news/articles/2017-09-05/cruise-line-stocks-plunge-as-hurricane-irma-threatens-caribbean?cmpid=BBD090617_MKT&utm_medium=email&utm_source=newsletter&utm_term=170906&utm_campaign=markets
I agree that the economy will be heavily impacted by the Harvey and Irma hurricanes. Obviously, construction will be in high demand in Houston and Miami because of all the destruction. Parts of the cities will need to be completely rebuilt which means construction workers and disaster relief organizations will be hired. However, the people that live in these areas might have to find new jobs depending on the damage. I also agree that the cruise ships have been impacted by the hurricanes as well. Unfortunately, the cruise ship companies probably will not meet their revenue goals for this summer. Lastly, I would not expect as many people to visit cities like Houston and Miami because of all the damage.
ReplyDeleteWith the deep impact on oil companies in Houston,the U.S. may need to search elsewhere (abroad) to find oil (to replace the losses in the south. The rebuilding in Houston will definitely help (and be needed), however, nobody knows when the flooding will recede. The creation of jobs for rebuilding should help our economy bounce back slightly. The cruise ships are another interesting topic. Cruises, along with airlines are losing out on usual profit around this time (late summer). They could also see major damage to their respective industries, losing more time due to these devastating national disasters within a few weeks. Construction will be vital for many companies in the south.
ReplyDeleteI do believe the cruise ships and airlines will take a hit on their summer earnings due to the hurricanes. The construction industry will take off in the places hardest hit by the storm. Although the end of summer is near and i do have to believe for the cruise ship companies this means they were in the wind down stage of the big summer business. Most places have kids going back to school and people are getting ready for the fall season. The cruise ship companies will definitely be taking a hit but maybe not as big of a hit as people may think due to summer being over.
ReplyDeleteI agree with the others that airlines and cruise ships will suffer due to the hurricanes. I think that the cruise ships could also suffer even after the hurricanes have hit. When Hurricane Katrina hit back in 2005, federal officials chartered three of Carnival Cruise Lines' ships for six months in order to provide shelter for as many as 7,000 people displaced. Carnival fully refunded all guests with canceled bookings and gave them the opportunity to rebook on any Carnival cruise with a $100-per-person shipboard credit. If the Federal Emergency Management Agency does this again this year, Carnival could be out more money than they anticipated, although it is for a good reason.
ReplyDeletehttp://www.nbcnews.com/id/9188316/ns/us_news-katrina_the_long_road_back/t/cruise-ships-chartered-hurricane-refugees/#.WbH17ciGPIU
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ReplyDeleteWith the cruise ship and airline industry taking a financial hit from the hurricanes, we could see the tourism industry in Florida and the islands off the coast suffer as well. These islands see millions of visitors each year via boat and plane. The airline and cruise ship industry troubles will have affect on the tourism in these areas. Also the damage done to the infrastructure digs a deeper hole for the tourism industry on the islands. It is estimated that over 95% of Barbados island was destroyed by Hurricane Irma. These islands have millions of dollars in rebuilding to do and we could be seeing the affects on tourism in this area for several years.
ReplyDeletehttp://www.telegraph.co.uk/travel/destinations/caribbean/articles/hurricane-irma-hotels-open-island-damage/
In the short run, yes cruise stocks will fall. However, if you are an investor I would look at it as a buying opportunity. Younger generations tend to spend more of their money on recreation and entertainment compared to the purchasing of houses and cars by older generations. The main reason for this increase is because of how our generation prefers to live a life through Instagram and Facebook. They prefer to post pictures and videos of their life instead of buying a house or car. Instead, they would rather rent or buy a used car. Therefore, in the long run I think cruise stocks and REITs are great investments.
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