Few people venture into the abandoned buildings that used to house Walt Disney Imagineering. Overgrown and layered with years of dust, this haunted place is no longer fit for mortal man. But if you are brave, they say you can stand outside the front door late at night, when all of Glendale is fast asleep and the quiet settles onto Flower Street...and hear the painful moans of tormented rumors echoing down the long, empty and dark corridors...
There was a concept early on to surround the then new Disney/MGM Studios with hotels, just like the Magic Kingdom and Epcot have their "own" hotels. It all goes back to how to organize WDW and the marketing possibilities of selling "3 days at Epcot" trips as opposed to the full week to experience all of WDW. One thought that had been floating around was to think of WDW as composed of regions, each regions anchored by a theme park.
Some of the concepts are in place (like referring to the "Magic Kingdom Resorts"), but initially there was supposed to be a much stronger sense of place. Each park region has/was to have its own unifying theme for its hotels the Magic Kingdom hotels are all based on the lands of the park, the Epcot hotels were (and if you stretch it somewhat are) geared towards international vacation regions*. The concept behind the proposed hotels for the Studios was to allow people to actually stay "inside" the movies.
Initially the hotels ideas were based on specific movies. Disney had paid MGM a lot for the rights to some films and this was a way to "get a bang for the buck". There was an idea for the Emerald City, another for Tara from Gone With the Wind, Ric's from Casablanca, and a few others. At the time the higher ups at the company didn't think the Disney brand was strong enough in film, so most of the ideas centered on non-Disney movies.
That didn't sit right with a lot of people internally. So the idea gradually changed into resorts based on movie genres. Among the ideas were an Art Deco palace to represent musicals, a town and ranch for westerns and a haunted hotel for thrillers. This was also a time when Disney was growing dramatically and people were clamoring for unique Disney resorts. To keep up the "Disney standard", the hotels were meant to be attractions in their own right. Instead of building a hotel in a theme park, they were going to put themed shows inside the hotels.
Since the idea for the hotels was to feel like you were "in" the movie, each hotel would have featured unique interactive elements. For example there would have been bank robberies in the western hotel and the showdowns at high noon. The lobby at the Musical was to feature a big time, show stopping musical production number several times a day. But everyone's favorite hotel was going to the haunted one because there were so many great things that would have happened.
Faces would appear in your bathroom mirror. Deathly cold drafts would suddenly fill the halls. Furniture would glide across the lobby all on its own. Corridors would suddenly change (thanks to sliding walls). Strange and eerie sounds would beckon you in the dark, dark broom closet.
But the hotel's biggest surprise was that it was convention time. All of Hollywood's biggest (and deadest) ghouls, monsters, demons and studio executives were in town. They were having a huge party in the hotel's basement/boiler room (and one of the hotel's restaurants). You're invited, but the only way to get there was this old service elevator. Most of the time the elevator would take you gently to your destination; other times
Before the paint was dry on the first random sketches for this new series of hotels, the entire Disney Decade came crashing down. The lavish Grand Floridian was making much less than expected, the Yacht and Beach Clubs weren't much better on the margins. The idea of building more expensive hotels (with higher costs because of the show elements) quickly lost appeal. The Disney/MGM Studios proved to be less of a draw than hoped and real movie production (to fill up all the rooms in the Swan and Dolphin with high paid union members and their families) proved to be a bigger illusion than the Emerald City was.
But at Disney good ideas are seldom forgotten (they may despised, denied, maltreated, ignored and squandered but someone always remembers them). The western resort quickly mutated into the publicly announced (and never built) Buffalo Junction and was actually built at Euro Disney the project that forever killed the Disney Decade and sent WDW down the path of motel rooms with forty foot letters spelling out AWESOME on the roof.
The elevator ride to the basement restaurant at the haunted hotel was remembered as well. When Disney/MGM Studios needed a big new attractions, WDI knew exactly where to start (the 'Twilight Zone' part was because Eisner had been trying to buy CBS for years and thought the extra change thrown their way for the rights would help it didnt). There are very few projects at Disney that cannot trace a long ancestry to plans, concepts and ideas from sometime earlier.
People haven't forgotten about the actual hotel either but it's strictly talk among the fan types. Disney's interest in full scale resorts is very low. They will make "sure thing" bets like the Grand Californian, but all they want now are high margin, high volume motels to keep the cash flowing in.
* - the original concept for Epcot was to have international themed resort ring the World Showcase area. Think of the Caribbean Beach but on the Polynesian Resort level. I think there was an Australian and the Mediterranean one as well (as well as a vague memory of an African and an Alpine resort). All but the Med** were just very early sketches. When it came time to actually start building the place, Eisner insisted on bringing in Big Time Architects. And those people weren't going to build "cartoony" hotels they were going to be "unique" places. Sometimes the master plan works, sometimes it doesn't.
** - when the Grand Floridian failed to win the coveted five diamond/star rating, Disney toyed with the idea of building it near the Ticket and Transportation Center. But the costs quickly grew beyond what they wanted to pay for another luxury resort. Fortunately the Japanese had more faith in the plans and the Med was built as the Mira Costa Resort inside DisneySeas. And the designers had faith as well. After Disney fired them, they headed up the road and built the Med for Lowes at Universal Orlando and called it the Portifino. Maybe Universal would be interested in building a haunted hotel as well.