Make us your home page
Instagram

New Disney hotels on hold

ORLANDO — Nearly five years after it outlined an ambitious vision of standalone hotels, niche parks and retail centers built in outposts far beyond its world famous theme-park resorts, the Walt Disney Co. today has no such projects in its public development pipeline.

That's the case after the company recently abandoned plans to build a roughly 500-room, Disney-branded hotel near Washington, D.C. Disney, which spent $11 million to buy land in the area in early 2009, said the timing simply isn't right for the project.

The move follows an early stumble at Disney's first big foray into standalone resorts: Aulani, the roughly $850 million hotel and timeshare that opened Aug. 29 on the Hawaiian island of Oahu. Disney was forced to suspend sales in the project for two months this summer after it realized it had underestimated the annual fees needed to cover the resort's operating costs; Disney will now have to subsidize the fees paid by early timeshare buyers for the next 50 years.

At the same time, Disney executives have pledged to investors to reduce capital spending once the company completes a current slate of projects that includes the Hawaiian resort, two new cruise ships and park expansions around the world. Capital spending at Disney's theme park division nearly doubled during the company's 2011 fiscal year — from $1.5 billion to $2.7 billion — and is expected to approach $3 billion in 2012.

"They have more than enough to chew on for the next three to four years," said Tony Wible, a media and entertainment equities analyst at Janney Capital Markets. "And the early headwinds in Hawaii — to put it politely — probably lead them to be less confident."

Disney says it may yet build more hotels outside Central Florida and Southern California, where it operates its massive Walt Disney World and Disneyland resorts.

"We have seen tremendous enthusiasm for Aulani, and all of our key sales locations for Aulani are performing well. Based on our experience to date, additional standalone resorts in the future are a very real possibility," Disney spokeswoman Tasia Filippatos said.

Disney said the decision to back out of Washington was entirely unrelated to Aulani's timeshare problems; the company says it never planned to include a timeshare component in the D.C. project.

To be sure, there was always an element of uncertainty for Disney's presence in Washington. Even when the company announced it had bought 15 acres along the Potomac River in May 2009, it said only that it was "considering" using the site for a hotel.

And other, more pressing projects subsequently supplanted it on Disney's priority list. For instance, seven months after buying the Washington property, Disney, after years of negotiations, signed a framework deal to build its first theme park resort on mainland China. The first phase of Shanghai Disneyland, along with two hotels and a retail district, will cost roughly $4.4 billion, though more than half of that price tag will be borne by the Chinese government.

But analysts say the decision to scrap the Washington project also reflects just how challenging it could be for Disney to sustain standalone hotels, which, after all, can't bank on theme park visitors to drive occupancy. They are a particularly heavy lift in a still-moribund real estate environment in which Disney can't bank on quick time-share sales to help sustain a resort.

New Disney hotels on hold 12/05/11 [Last modified: Monday, December 5, 2011 8:26pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Tribune News Service.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. In advertising, marketing diversity needs a boost in Tampa Bay, nationally

    Business

    TAMPA — Trimeka Benjamin was focused on a career in broadcast journalism when she entered Bethune-Cookman University.

    From left, Swim Digital marketing owner Trimeka Benjamin discusses the broad lack of diversity in advertising and marketing with 22 Squared copywriter Luke Sokolewicz, University of Tampa advertising/PR professor Jennifer Whelihan, Rumbo creative director George Zwierko and Nancy Vaughn of the White Book Agency. The group recently met at The Bunker in Ybor City.
  2. Tampa Club president seeks assessment fee from members

    News

    TAMPA — The president of the Tampa Club said he asked members last month to pay an additional assessment fee to provide "additional revenue." However, Ron Licata said Friday that the downtown business group is not in a dire financial situation.

    Ron Licata, president of the Tampa Club in downtown Tampa. [Tampa Club]
  3. Under Republican health care bill, Florida must make up $7.5 billion

    Markets

    If a Senate bill called the Better Care Reconciliation Act of 2017 becomes law, Florida's government would need to make up about $7.5 billion to maintain its current health care system. The bill, which is one of the Republican Party's long-promised answers to the Affordable Care Act imposes a cap on funding per enrollee …

    Florida would need to cover $7.5 billion to keep its health care program under the Republican-proposed Better Care Reconciliation Act of 2017.  [Times file photo]
  4. Amid U.S. real estate buying binge by foreign investors, Florida remains first choice

    Real Estate

    Foreign investment in U.S. residential real estate recently skyrocketed to a new high with nearly half of all foreign sales happening in Florida, California and Texas.

    A National Association of Realtors annual survey found record volume and activity by foreign buyers of U.S. real estate. Florida had the highest foreign investment activity, followed by California and Texas. [National Association of Realtors]
  5. Trigaux: Tampa Bay health care leaders wary of getting too far ahead in disruptive times

    Business

    Are attempts to repeal Obamacare dead for the foreseeable future? Might the Affordable Care Act (ACA), now in dire limbo, be revived? Will Medicaid coverage for the most in need be gutted? Can Republicans now in charge of the White House, Senate and House ever agree to deliver a substitute health care plan that people …

    Natalia Ricabal of Lutz, 12 years old, joined other pediatric cancer patients in Washington in July to urge Congress to protect Medicaid coverage that helped patients like Ricabal fight cancer. She was diagnosed with Ewing's sarcoma in 2013 and has undergone extensive treatments at BayCare's St. Joseph's Children's Hospital in Tampa. [Courtesy of BayCare]