The Future Of Magical Express

[Pedler]

The rumor is Disney tried to buy Starwood out of the lease. The lease was signed pre Eisner. They couldn't, in part, because Starwood likes having on-property hotels to offer their guests and they placed a high value on being able to offer something other hotel chains can't offer. I was told they had a 10 year exclusive on significant convention facilities and CSR was opened almost exactly 10 years after S/D.

Out of curiosity how is it that those hotels, being so close to Epcot, are not controlled by Disney? Did they not want to build them and let someone else do it?

 

[Lewisc]

Out of curiosity how is it that those hotels, being so close to Epcot, are not controlled by Disney? Did they not want to build them and let someone else do it?

Pre-Eisner Disney wasn't sure if they wanted to be in the hotel business. They leased the land to two hotel companies which later merged to become Starwood. The hotels were built, along with huge convention facilities.

Under Eisner Disney decided to be involved with the construction of hotels but Disney was unable to buy out the lease.

When Disney was first built the hotels near DTD were a significant portion of the total number of rooms. Disney had the Contemporary, POLY and FW and you had 7 (?) hotels by what is now DTD.

 

[Horace Horsecollar]

If they could casually force Starwoods out of the Swolphin, they'd probably try to do that, as they could do far more with the Swolphin than they can get from it with Starwoods operating it.

The Walt Disney World Swan and Walt Disney World Dolphin are not owned or operated by Starwood Hotels & Resorts Worldwide, Inc., and they never were.

The Swan and Dolphin are owned and operated by Tishman Hotel Corporation, and they have been since they were built. Here's the Tishman Hotel Corp. portfolio of hotels.

The only connection to Starwood (parent of Westin, Sheraton, and several other hotel brands) is that the Swan was originally branded as a Westin and the Dolphin was originally branded as a Sheraton (back when Westin and Sheraton were two different companies). The Swan and Dolphin are now affiliated with Starwood, and the Westin and Sheraton branding of the Swan and Dolphin are no longer emphasized. You can book the Swan and Dolphin through Starwoord's website, and they participate in the Starwood Preferred Guest program. Such franchise agreements are common in the lodging business. For example, Marriott International owns almost no hotels, and the majority of Marriott-branded hotels are operated by other companies.

Also, keep in mind that Disney is embracing the outside lease model more and more. The new business model for Downtown Disney, including Pleasure Island, is to let outside companies build and operate restaurants. Disney collects rent — probably substantial rent — without the capital expense and operating risks.

See this thread for a discussion of the reasons that Tishman was allowed to build the Swan and Dolphin.

I am sure they would love to participate. I don't think Disney will offer to them.

I doubt that Tishman has much interest in the paying the substantial costs of transporting guests and luggage between MCO and the Swan and Dolphin.

Paying for DME makes business sense for Disney because Disney not only benefits from increased occupancy and room rates, Disney also benefits from the captive audience that spends money on on-site attractions, dining, and shopping — because most DME guests don't leave the WDW property.

Tishman would have to justify DME entirely with increased occupancy and room rates.

It all comes down to business. Keep in mind that Tishman pays Disney to allow Swan and Dolphin guests to use Disney transportation. Maybe, some day, Tishman and Disney could reach a business agreement about DME, especially if Disney would subsidize what Tishman would pay because Disney would get the benefit of the captive audience.

 

[mickeyfan1]

DME was announced as Free during the Happiest Celebration on Earth. Once that is over, at the end of 2006, I am sure Disney will be offering it as an additonal charge service. If they keep the rates competitive, people will still use it.

 

[Horace Horsecollar]

DME was announced as Free during the Happiest Celebration on Earth. Once that is over, at the end of 2006, I am sure Disney will be offering it as an additonal charge service. If they keep the rates competitive, people will still use it.

Yes, Disney announced that DME would be complimentary during the Happiest Celebration on Earth, but Disney hasn't said anything one way or the other about charging in 2007 and beyond.

I wouldn't be so sure that Disney will begin charging.

In another thread, I posted:

Here's a paragraph about "Domestic Resorts" (which means Disney's theme parks and resorts in the United States) from Disney's first quarter earnings press release, The Walt Disney Company Reports Higher First Quarter Earnings:

Operating income growth at our domestic resorts was primarily due to increased guest spending and attendance, continued strong sales at Disney's Vacation Club and higher hotel occupancy. Higher guest spending was driven by increased ticket prices and merchandise sales at the theme parks and a higher average daily hotel room rate. Increased attendance for the quarter was driven by the celebration of the 50th anniversary of Disneyland at both domestic resorts.​

These results, especially the "higher hotel occupancy," the "higher guest spending," and the "higher average daily hotel room rate," suggest that Disney's Magical Express is achieving the business results that Disney was seeking when they launched this service. Sure, there are other factors contributing to the improved "Domestic Resorts" income. But this means that Magical Express is likely to stay around and to remain complimentary beyond the end of 2006.​

 

[mickeyfan1]

Horace, you could be correct. But the bottom line will be the real teller. IF Disney can figues a way to charge us, either in raising resort rates or charging for DME, they will.

Personally, I would pay for DME. It would be less than a town car. It would be less hassle than a rental car. And it is better than standard MEars because it only stops at WDW resorts.

 

[bicker]

The Walt Disney World Swan and Walt Disney World Dolphin are not owned or operated by Starwood Hotels & Resorts Worldwide, Inc., and they never were. The Swan and Dolphin are owned and operated by Tishman Hotel Corporation, and they have been since they were built.

Thanks for the reminder. With so many folks on the boards saying that they're Starwoods hotels, it is sometimes hard to remember that that is not the case.

DME was announced as Free during the Happiest Celebration on Earth. Once that is over, at the end of 2006, I am sure Disney will be offering it as an additonal charge service.

Pardon the subtle distinction: The Happiest Celebration on Earth is over on September 30. However, DME will be free through at least the end of 2006.

 

[seashoreCM]

The way the story was told to me was that Disney needed money to build Epcot and leased the land where Swan and Dolphin are located to Tishman in order to raise such capital.

WDW has lots of empty space for more of its own hotels. IMHO Disney really should treat Swan and Dolphin and Bonnet Creek as nice neighbors as opposed to thorns in its side. Making ME available to them if a mutual agreement that is directly revenue positive to Disney can be achieved should not be out of the question.

 

[Horace Horsecollar]

IMHO Disney really should treat Swan and Dolphin and Bonnet Creek as nice neighbors as opposed to thorns in its side. Making ME available to them if a mutual agreement that is directly revenue positive to Disney can be achieved should not be out of the question.

I don't see that Disney has ever treated the Swan and Dolphin as "thorns in its side." The Swan and Dolphin are on Disney property. They are licensed to use "Walt Disney World" in their names. They receive bus and boat transportation as part of the Walt Disney World transportation system. (Of course, Tishman pays Disney so that the Swan and Dolphin can have these benefits.) And Disney Cruise Line uses the Swan and Dolphin for land-sea packages. I agree that adding DME to the Swan and Dolphin would not be out of the question — if Disney and Tishman could work out mutually beneficial terms.

The Fairfield Bonnet Creek timeshare resort is another story. It's not on Disney property. It's an off-site resort (although a very close resort), just like the hotel and timeshares at Marriott's Orlando World Center. And Fairfield Bonnet Creek is not part of the Walt Disney World transportation system. Fairfield is competitor of Disney Vacation Club.

 

[NotUrsula]

The follow-up article in today's Sentinel (3/17) addresses the issue of it becoming a paid service:

"... Other transportation providers were hoping the service would end or, at least, begin charging for the bus ride and baggage delivery.

"I don't think I'll last another six months if they don't start charging," said Leonardo Dale, owner of limousine and sedan service Image Transportation. "From 40 reservations a day we dropped down to three or four. You can't survive on that."

Disney spokeswoman Kim Prunty said the company has no plans to begin charging for Magical Express.

Though the service is free to passengers, Disney along with its contractors Mears Transportation Group and Aircraft Services International Group will pay the airport an estimated $4.4 million next year to run the program. Mears runs the buses; ASIG transports the luggage.

... Now that may just mean that they haven't held the "what will we charge for it?" meeting yet.

 

[seashoreCM]

Does anyone know -- Does Mears pay the airport a fee per boarding ME passenger or a fee per ME bus entering the airport on top of the to-be-75-cent fee Disney pays the airport for each passenger checking in at the welcoming area?