New Disney Hotel??

[Reddog1134]

- Disney sold the land at Flamingo Crossings for the two Marriotts to be built aka moderate/value need.
- Disney sold other land at Flamingo Crossings for a Walgreens and Hess.

AFAIK, Disney owns the Flamingo Crossings land.

 

[minnie-apple-mouse]

This. Exactly.

Disney's biggest hotel "problem" is that the pool of deluxe guests is dwindling due to a number of factors including:

- DVC sales (people who formerly stayed Deluxe buying into the timeshare)
- Comparative low cost of DVC rentals
- Competing properties like Four Seasons and Bonnet Creek which are essentially on-site
- And (naturally) the high cost of Deluxe stays

Many well-to-do guests would rather pay $300 for an Art of Animation suite rather than $400 for a Contemporary standard room.

I agree with this.

We have stayed deluxe a lot, and still do on occasion. But DVC 1, 2 and 3 BR's are way better than just a "hotel" room-no matter how "deluxe" you finish it. Throw in a great location to a park or 2 and it's not even close.

 

[HopperFan]

AFAIK, Disney owns the Flamingo Crossings land.

No they do not own the land being developed right now.

Have researched Property Records for the area and it is very interesting. It appears "Disney" did purchase much of the property back in the 70's and 80's mostly using Reedy Creek Improvement District. Many of the parcels still held by Reedy Creek are for things like antennas, water treatment, electric substation.

Then around 2008 land began to be sold to Disney who turned around and sold it to Flamingo Crossing LLC which is a subsidiary of Disney. Flamingo Crossing LLC then began to sell the land to other companies. They used quite a few channels to move the land around to ultimate owners. Kinda like when they bought up the land but in reverse.

JI-FX Hotel Real Estate Developer bought 12 acres which is the two hotels currently being built. In 2011 they sold land to Walgreens. In 2013 they sold land to Hess Corp who in turn sold the land to Hess Retail Stores. There are plenty of parcels left so if this is a pattern they will be selling to future developers. Even sold they all will be within the Reedy Creek Improvement District so would need "Disney's" approval for eveything.

 

[umichigan10]

This. Exactly.

Disney's biggest hotel "problem" is that the pool of deluxe guests is dwindling due to a number of factors including:

- DVC sales (people who formerly stayed Deluxe buying into the timeshare)
- Comparative low cost of DVC rentals
- Competing properties like Four Seasons and Bonnet Creek which are essentially on-site
- And (naturally) the high cost of Deluxe stays

Many well-to-do guests would rather pay $300 for an Art of Animation suite rather than $400 for a Contemporary standard room.

The deluxe people buying DVC is an angle I never really thought of for some reason. I think they need to cut prices to fill hatthat occupancy but I think we all know that'll never happen (and a price cut might chip away at the other accommodations capacity)

 

[Reddog1134]

No they do not own the land being developed right now.

Have researched Property Records for the area and it is very interesting. It appears "Disney" did purchase much of the property back in the 70's and 80's mostly using Reedy Creek Improvement District. Many of the parcels still held by Reedy Creek are for things like antennas, water treatment, electric substation.

Then around 2008 land began to be sold to Disney who turned around and sold it to Flamingo Crossing LLC which is a subsidiary of Disney. Flamingo Crossing LLC then began to sell the land to other companies. They used quite a few channels to move the land around to ultimate owners. Kinda like when they bought up the land but in reverse.

JI-FX Hotel Real Estate Developer bought 12 acres which is the two hotels currently being built. In 2011 they sold land to Walgreens. In 2013 they sold land to Hess Corp who in turn sold the land to Hess Retail Stores. There are plenty of parcels left so if this is a pattern they will be selling to future developers. Even sold they all will be within the Reedy Creek Improvement District so would need "Disney's" approval for eveything.

Disney must have changed plans since the original 2007 announcement. Originally, it was supposed to be Disney owned land with 3rd party developers building on the property (with Disney's design approval).

 

[Andrew015]

This is fundamental to WDW's business model. They are not a theme park destination. They're a full vacation Resort Destination. You can sleep, shop, eat, swim, view entertainment, mini golf, golf, boat, bike, and go to theme parks all on property. There's no need to go anywhere else on a vacation because WDW does it all. You can book your multi day package that includes several days admission, the dining plan, and room nights. You take the free Disney shuttle from the airport to only your hotel. You take free transportation to only Disney properties. You use a proprietary wrist band to buy only Disney products at Disney points of sale. You use a proprietary photo buying website that only allows you to buy photos from them from Disney. You get hungry and go get food with your dining plan that works exclusively at Disney Restaurants. After dinner and some Fireworks you take the free bus back to your Resort and open the door with you wrist band. After a few days of this you have an idea. Why not try that new Harry Potter Ride? Oh wait, your free shuttle bus doesn't take you there. The dining plan you already bought doesn't work there. The multi day pass isn't compatible. Your wrist band doesn't work, and to make matters worse you have Fast Passes for Mine Train. Never mind, that idea never would've worked...

This is a well-written response with some valid points, but I have a bit of a different perspective. I just don't see how adding more Disney "owned and operated" resorts fits into the existing equation as of the present. Sure, Disney is absolutely interested in "locking guests in" via the Magical Shuttle Bus and Pixie Bands. However, there's another vehicle that does just that... AND it locks guests in for ~50 years all while capturing upfront construction costs and yearly dues to help mitigate ongoing operational expenses. From a pure dollars and cents perspective, DVC is clearly the better mousetrap (pun intended) from the bean-counter's perspective.

Sure, DVC doesn't work for everyone, and as a result, Disney will always need to have a good product mix that caters to everyone, hence there will always be a need for other options - either "owned and operated" resorts or "3rd party". However, a quick look around property (Four Seasons, Flamingo X-ing, DVC expansion), it doesn't take long to see which of these vehicles is currently preferred by management, and it's not the "owned and operated" route. Disney is currently in the mode of taking "owned and operated" resort inventory offline and converting it to DVC. I just don't see how it would make sense to add new inventory as part of an all-new resort on one hand, while simultaneously taking it away and converting it to DVC on the other. Also worth mentioning, we know that "all new" construction is the most expensive kind. Another reason why it's probably the "last resort" (no pun intended).

In looking at "near-future" hotel needs across property, I currently see 3 of 4 parks with completely flat demand YOY. MK demand has risen a handful of points consistently, but nothing that would warrant another AOA sized resort anytime soon with ~2,000 rooms that need to be 85%+ occupied for 12-months a year. If Disney took Universal's approach to construction and actually delivered something worthwhile in a reasonable amount of time, then I would agree that it wouldn't be unrealistic to potentially see another new resort in the works. However, at Disney's current rate of delivering new, innovative experiences across property, coupled with the recent 3rd party hotel / DVC additions, I just don't see a short-term need. If Avatar is a huge success and we ever hear anything definitive about Star Wars arriving before 2025, then maybe the conversation changes. Until then, I don't believe that Maelstrom 2.0 and the Great Mall of Buena Vista are enough to justify it.

 

[916chipndale]

After the WL cabins are built and some rooms are converted I wonder what the next DVC project will be. Perhaps Poly part 2 or Grand Floridian pt 2? I would like to see them build something at the River Country site, but even if there are plans for that I don't see it happening for a while.

 

[rteetz]

After the WL cabins are built and some rooms are converted I wonder what the next DVC project will be. Perhaps Poly part 2 or Grand Floridian pt 2? I would like to see them build something at the River Country site, but even if there are plans for that I don't see it happening for a while.

Beach club is supposed to be after WL and then yes back to MK area.

 

[Reddog1134]

After the WL cabins are built and some rooms are converted I wonder what the next DVC project will be. Perhaps Poly part 2 or Grand Floridian pt 2? I would like to see them build something at the River Country site, but even if there are plans for that I don't see it happening for a while.

There ARE plans for that.

http://www.disneydrawingboard.com/WDW/MKArea/Wilderness Junction/WildernessJunction.html

 

[HopperFan]

Disney must have changed plans since the original 2007 announcement. Originally, it was supposed to be Disney owned land with 3rd party developers building on the property (with Disney's design approval).

Numerous sources talk about how Disney has been selling the land. I looked at land records to verify since it often comes up that folks think it's leased land. DTD was out of necessity. With Reedy Creek approval system they don't need to own the land anymore.

http://www.orlandosentinel.com/business/os-disney-flamingo-crossings-20141002-story.html

 

[minnie-apple-mouse]

The deluxe people buying DVC is an angle I never really thought of for some reason. I think they need to cut prices to fill hatthat occupancy but I think we all know that'll never happen (and a price cut might chip away at the other accommodations capacity)

I rented points this week to a family that was planning 3 deluxe rooms. Needless to say we both came out way ahead, and they are super impressed with the whole layout compared to what they were originally planning.

 

[umichigan10]

I rented points this week to a family that was planning 3 deluxe rooms. Needless to say we both came out way ahead, and they are super impressed with the whole layout compared to what they were originally planning.

It makes sense though. My family has owned DVC since I believe 1997 and I could never imagine staying in a standard hotel room compared to what we stay in now (especially with the money charged to deluxe rooms)

 

[tjkraz]

The deluxe people buying DVC is an angle I never really thought of for some reason. I think they need to cut prices to fill hatthat occupancy but I think we all know that'll never happen (and a price cut might chip away at the other accommodations capacity)

The approach they seem to be taking is to use DVC as a vehicle for reducing Deluxe availability. Poly is the most direct example, with three longhouses removed from the hotel. Same happened at AKL (two floors of Jambo) and Contemporary (Garden Wing=BLT). Wilderness Lodge and others may follow.

Fewer rooms + fewer guests means they can still keep Deluxe prices high.

I think it's a mistake to extend any of these analogies to other resort tiers, though. Disney has considered repurposing a Moderate as DVC but that's still far in the future...and far from a done-deal.

As for things like Flamingo Crossings and deals with other hoteliers, it's worth noting that those deals aren't really viewed as a direct threat to Disney's own hotel business. Look at the hotel row off DTD. Do we really think that guests who value the on-site experience view those properties as a viable option to the Beach Club, Coronado Springs or Art of Animation? The Walt Disney World parks draw guests from dozens or hundreds of hotels in the Central Florida area. When Disney leases or sells a plot of land on its fringes to Marriott or some other developer, they do so knowing that whatever is constructed there will be viewed as competition to other "off-site" lodging alternatives.

I'm not saying that Disney is on the verge of breaking ground on a new hotel. However, nothing I've read here convinces me that their on-site hotel business is completely maxed-out across all prices, types and styles.

From a pure dollars and cents perspective, DVC is clearly the better mousetrap (pun intended) from the bean-counter's perspective.

It is...however, as you say DVC isn't for everyone. Also the up-front dollars they receive for a DVC purchase pale in comparison to what they can earn in hotel revenue over that 50 year period.

A single Poly villa represents about 8000 DVC points. At the current rate of $165 each, that one room would yield around $1.3 million in revenue.

A single Poly hotel room rented for an average of $400 per night would yield nearly $100K in the first year assuming 90% occupancy. Apply modest 3% annual increases and total revenue over 50 years is over $10 million. (5% annual rate increases would take the 50-year total over $19 million.)

Granted there are many other factors which would be very difficult to apply. Disney pays all operating costs & taxes on the hotel room while DVC owners are responsible for that on a villa. There's interest to be earned on the up-front DVC dollars. But there are also significant sales & marketing costs involved with the timeshare--I've seen estimates of up to 50% of revenues going toward developer costs on timeshares.

I also understand that average guest spending tends to be much higher among hotel guests. Those occasional visitors tend to spend a lot more on meals and souvenirs compared to DVC owners who have a full kitchen in their villa and simply do not need another t-shirt or beach towel.

DVC has proven to be a very beneficial business for Disney. But they make a whole lot of money off of hotels when every room is rented out 330+ nights per year.

 

[tjevans]

Not following this. If they are occupied DVC properties wouldn't they count as part of the 90%? Or why shouldn't they?

According to Len Testa (of Unofficial Guide fame), DVC rooms do not count as part of the "available" rooms to a hotel, so they are not considered when calculating occupancy rates.

 

[skier_pete]

After the WL cabins are built and some rooms are converted I wonder what the next DVC project will be. Perhaps Poly part 2 or Grand Floridian pt 2? I would like to see them build something at the River Country site, but even if there are plans for that I don't see it happening for a while.

Rteetz beat me to it, but rumors are the River Country site idea was junked. The most likely next spot is the Epcot resort area, probably expansion at Beach Club or Yacht Club.

Disney is overall very high occupancy rates, but some of the Deluxes are hurting for occupancy rates. A resort like WL, which only has about 700 rooms. If you take a 75 % occupancy rate in a 700 room resort, and a 95% occupancy rate at say All-Star Movies with their 1900 rooms, you get a 90% occupancy rate. Part of the reason they converted Poly rooms to DVC versus building new rooms was Poly occupancy was way down.

DVC gives Disney not only near 100% occupancy but also 50 years worth of profit up front. Which is why you will likely continue to see DVC built faster than other hotels.

That said, I could envision them building another "moderate" hotel in the next 5 years. (I know AoA is called a "value" hotel, but it is NOT priced like one.) But I do not think that the current plans include this.

 

[916chipndale]

Rteetz beat me to it, but rumors are the River Country site idea was junked. The most likely next spot is the Epcot resort area, probably expansion at Beach Club or Yacht Club.

Disney is overall very high occupancy rates, but some of the Deluxes are hurting for occupancy rates. A resort like WL, which only has about 700 rooms. If you take a 75 % occupancy rate in a 700 room resort, and a 95% occupancy rate at say All-Star Movies with their 1900 rooms, you get a 90% occupancy rate. Part of the reason they converted Poly rooms to DVC versus building new rooms was Poly occupancy was way down.

DVC gives Disney not only near 100% occupancy but also 50 years worth of profit up front. Which is why you will likely continue to see DVC built faster than other hotels.

That said, I could envision them building another "moderate" hotel in the next 5 years. (I know AoA is called a "value" hotel, but it is NOT priced like one.) But I do not think that the current plans include this.

I remembering reading in one of the Spirited threads on WDWMagic about the resort occupancy, but even before that I had an idea that the occupancy wasn't great. Although I didn't know what their percentage actually was. I think the Poly is a great example about how you could tell their occupancy wasn't great. I believe the original plans were to add a building over by the Luau Cove but instead they converted 3 longhouses, 2 of which are I believe the biggest longhouses. (Tokelau and Moorea).

 

[minnie-apple-mouse]

Also the up-front dollars they receive for a DVC purchase pale in comparison to what they can earn in hotel revenue over that 50 year period.

A single Poly villa represents about 8000 DVC points. At the current rate of $165 each, that one room would yield around $1.3 million in revenue.

A single Poly hotel room rented for an average of $400 per night would yield nearly $100K in the first year assuming 90% occupancy. Apply modest 3% annual increases and total revenue over 50 years is over $10 million. (5% annual rate increases would take the 50-year total over $19 million.)

Hmm, so Disney is dropping the hotel cost to the consumer by 10 times or more. Funny it never gets that press.

 

[Andrew015]

It is...however, as you say DVC isn't for everyone. Also the up-front dollars they receive for a DVC purchase pale in comparison to what they can earn in hotel revenue over that 50 year period.

A single Poly villa represents about 8000 DVC points. At the current rate of $165 each, that one room would yield around $1.3 million in revenue.

A single Poly hotel room rented for an average of $400 per night would yield nearly $100K in the first year assuming 90% occupancy. Apply modest 3% annual increases and total revenue over 50 years is over $10 million. (5% annual rate increases would take the 50-year total over $19 million.)

Granted there are many other factors which would be very difficult to apply. Disney pays all operating costs & taxes on the hotel room while DVC owners are responsible for that on a villa. There's interest to be earned on the up-front DVC dollars. But there are also significant sales & marketing costs involved with the timeshare--I've seen estimates of up to 50% of revenues going toward developer costs on timeshares.

I also understand that average guest spending tends to be much higher among hotel guests. Those occasional visitors tend to spend a lot more on meals and souvenirs compared to DVC owners who have a full kitchen in their villa and simply do not need another t-shirt or beach towel.

DVC has proven to be a very beneficial business for Disney. But they make a whole lot of money off of hotels when every room is rented out 330+ nights per year.

I'm not disputing your logic. IMHO, the bean counters (and more specifically, executive management - most of which won't be around much past the next 5-7 years) are only concerned with the short-term and pumping up their golden shutes', and DVC is certainly more fruitful in that regard, with any given resort providing massive gains within a very short period of time. It's a quick hit with a huge cash injection, and once a resort sells out, you can be guaranteed that many exec's are receiving incredible incentive bonuses.

More importantly than anything, though, DVC is a hedge against a bad economy. DVC *HAS* to come regardless of the economic climate. If/when the next downturn strikes, ~100% of DVC will be making the pilgrimage to buy overpriced food and park tickets while the standard hotels sit gasping for people. As I mentioned above, having a well-balanced product portfolio is key, and Disney currently has an incredible mix of standard resorts, DVC and even 3rd party options in their tool bag.

 

[rteetz]

I remembering reading in one of the Spirited threads on WDWMagic about the resort occupancy, but even before that I had an idea that the occupancy wasn't great. Although I didn't know what their percentage actually was. I think the Poly is a great example about how you could tell their occupancy wasn't great. I believe the original plans were to add a building over by the Luau Cove but instead they converted 3 longhouses, 2 of which are I believe the biggest longhouses. (Tokelau and Moorea).

Correct

 

[minnie-apple-mouse]

More importantly than anything, though, DVC is a hedge against a bad economy. DVC *HAS* to come regardless of the economic climate. If/when the next downturn strikes, 100% of DVC will be making the pilgrimage to buy overpriced food and park tickets while the standard hotels sit gasping for people. As I mentioned above, having a well-balanced product portfolio is key, and Disney currently has an incredible mix of standard resorts, DVC and even 3rd party options in their tool bag.

Yep agreed, but then again many DVC folks kept going starting in 2008 (the "great" recession), and arguably many were just paying a "dues" rate. It was a great hedge against the recession in our family that's for sure. A lot of folks rented their points out as well, by far covering their dues. Others sold obtaining otherwise lost cash (if they had cash rented all those years).