What I want: A new Star Wars theme Hotel.

[lockedoutlogic]

I should add to my own comment: The latest talk is that after the Wilderness lodge DVC, the insider plan is to add DVC capacity to Beach Club / Yacht Club by converting rooms to DVC. So again - more at existing resorts.

That only makes 115% sense on all fronts.

I wish people would stop pining for rack hotels...you will not get one.

A conversion of all star sports...or better yet POP to Star Wars?

Yeah...I see it.

They could do marvel AND Star Wars there...and have yoda sitting on top of the rubix cubes

 

[DDLand]

It makes perfect sense, especially when you see Disney's current fixation on converting to DVC. Going the DVC route provides guaranteed revenue while requiring fewer housekeeping resources. As I've mentioned before, the paint isn't even dry yet on the Polynesian and they're already underway with the Wilderness Lodge conversion. If only Disney was so speedy with their construction in the parks...

And Disney's business on the parks and resorts side is selling trinkets in the gift shops with running hotels falling further and further down the priority ladder. The Swan and Dolphin are already on the campus and Flamingo Crossings is on it's way. No reason to see why this trend wouldn't continue. They can easily lease or sell the land to whatever hotel chain is willing to pay for the spot, sell a license to allow Mickey and Minnie to run around the lobby and everybody comes out a winner - Disney gets a check without having to hire additional staff or pay for construction and the hotel chain gets one of the most coveted spots in Orlando.

And what? The companies that operate the hotels paying a license to Disney don't make money? That's ridiculous. Theme park and hotel operators both are in rather low margin businesses. That comes with the turf. If they were worried about entering low margin businesses that require significant amount of labor to operate, they wouldn't be throwing billions into theme park expansions worldwide.

Disney has never been about just the gift shops. They're undoubtably huge, but food sales, admission, and hotel sales also are massive in their own right. I could see them saying that if they were going to either spend 100 million on a theme park attraction, or 100 million on a hotel they could argue the attraction makes more sense. That's something. If they were arguing that with their insane uncharging that they can't make enough money to support hotel operation that's ridiculous. I'd say their primary reason for not entering the space is timidity that remains from the 2000s when attendance was stagnate, occupied rooms were less than should be, and that signs were that a further slide in theme parks was imminent.

That's not what the current landscape looks like at all. Growth is forecasted for years to come, Disney has further blurred the lines between theme park and resort, and occupied room rate are in Jay Rasulo's words at a point where they would've started building in the past. Two of the other three major leaders in the Orlando market are building resorts either 50% owned or entirely owned. Spending 100s of millions in the process.

Things like My Magic+, Disney Springs, and massive increases in occupancy seem to be indicating that they're still committed to hotels. They have the scalability, expertise, and existing infrastructure to capably add more capacity. While I don't see it in the near future, I'd guess Disney hasn't ruled it out longterm. Why should they? With SWL, Avatar, and continued growth moving forward it seems like they should seriously be considering it.

 

[wareagle57]

That only makes 115% sense on all fronts.

I wish people would stop pining for rack hotels...you will not get one.

A conversion of all star sports...or better yet POP to Star Wars?

Yeah...I see it.

They could do marvel AND Star Wars there...and have yoda sitting on top of the rubix cubes

Why would POP be better than the All-Stars? Just because it's newer/nicer? I was thinking the exact opposite. All-Stars needs some love much more than POP does. Also, with the 3 campuses at All-Stars it would seem easier to divide the themes. Star Wars at Movies, Marvel at Sports, and... I don't know, Frozen at Music. Or it could be a collection of several Disney/Pixar movies like AoA. Obviously you could do this at Pop too, but you have less units to do so. But maybe that's a good thing. That way the family with the son who wants to stay in an Iron Man room and a girl that wants to stay in an Elsa room won't be as upset about where they end up. They can still walk around and see everything. Then again, All-Stars gives you a greater ability to do it in phases.

 

[skier_pete]

I also don't get why Disney hotels are comparible to other hotels. They are charging $100 - $200 a night for a hotel room at All-Stars that 5 miles away a resort can only charge $70-$100 a night for. These hotels are massive, and yes some staff (housekeeping) needs to be maintained on a per room basis, overall the scale of the hotel means that the staff / room ratio is higher than a motel 6. Meanwhile in the Deluxe hotels they can charge $500 a night for a 350 square foot room.

I'm just saying, while the profit margin on the hotels might not be as high as with say merchadise, you can't tell me that they are operating DISNEY hotels at the same profit margin as they are operating a Holiday Inn on I-drive.

 

[rteetz]

Now, I could see them building a resort combined with DVC all together.

This is essentially what OKW and SSR are. They are full DVC resort yet anyone can book them out of pocket if there is space. I think that's what the next resort will be like. Studios, and villas in a stand alone resort so that each room can be used as DVC but also be booked out of pocket and for packages. I have heard the river country site project is still being considered down the line. If Disney does build a non DVC resort its likely its not a deluxe nor a moderate but another AoA type family suite resort.

 

[rteetz]

DVC capacity to Beach Club

Beach Club only, Disney doesn't want to mess with the convention side.

 

[rteetz]

Why would POP be better than the All-Stars? Just because it's newer/nicer? I was thinking the exact opposite. All-Stars needs some love much more than POP does. Also, with the 3 campuses at All-Stars it would seem easier to divide the themes. Star Wars at Movies, Marvel at Sports, and... I don't know, Frozen at Music. Or it could be a collection of several Disney/Pixar movies like AoA. Obviously you could do this at Pop too, but you have less units to do so. But maybe that's a good thing. That way the family with the son who wants to stay in an Iron Man room and a girl that wants to stay in an Elsa room won't be as upset about where they end up. They can still walk around and see everything. Then again, All-Stars gives you a greater ability to do it in phases.

A permit was filed not too long ago for a model room at the Pop speculation is they could be converting some rooms to family suites there.

 

[lockedoutlogic]

Actually I think the next new hotel will be a stand alone DVC possibly still DHS focued.

Way more possible than a new rack

 

[lockedoutlogic]

Why would POP be better than the All-Stars? Just because it's newer/nicer? I was thinking the exact opposite. All-Stars needs some love much more than POP does. Also, with the 3 campuses at All-Stars it would seem easier to divide the themes. Star Wars at Movies, Marvel at Sports, and... I don't know, Frozen at Music. Or it could be a collection of several Disney/Pixar movies like AoA. Obviously you could do this at Pop too, but you have less units to do so. But maybe that's a good thing. That way the family with the son who wants to stay in an Iron Man room and a girl that wants to stay in an Elsa room won't be as upset about where they end up. They can still walk around and see everything. Then again, All-Stars gives you a greater ability to do it in phases.

I think location...they're moving the entrance for studios right across from AoA...you could do MGM tie ins and get people there from pop in about 5 minutes flat. Also goes as a nice compliment to AoA...animation on one side...older focused property on the other.

I like pop...but the theme was kinda...ehh

Did I mention I was at the groundbreaking?

 

[lockedoutlogic]

I also don't get why Disney hotels are comparible to other hotels. They are charging $100 - $200 a night for a hotel room at All-Stars that 5 miles away a resort can only charge $70-$100 a night for. These hotels are massive, and yes some staff (housekeeping) needs to be maintained on a per room basis, overall the scale of the hotel means that the staff / room ratio is higher than a motel 6. Meanwhile in the Deluxe hotels they can charge $500 a night for a 350 square foot room.

I'm just saying, while the profit margin on the hotels might not be as high as with say merchadise, you can't tell me that they are operating DISNEY hotels at the same profit margin as they are operating a Holiday Inn on I-drive.

Because they don't run them efficiently...and they tack things like transportation and capital improvements into the bill...like roads.

It's right there if you want to find it:

Roy Disney wanted nothing to do with the whole cost of hotels...that's why US Steel was hired to build/"own" them. They had to take them over.

Eisner 20 years later...the swan and dolphin...that was to be the new model and he didn't like the lack of control so he reversed.

The"money" is not in running hotels there.

The money is in DVC...but even that is because of vastly reduced overhead...that's reason #2 why they like it.

 

[wareagle57]

I think location...they're moving the entrance for studios right across from AoA...you could do MGM tie ins and get people there from pop in about 5 minutes flat. Also goes as a nice compliment to AoA...animation on one side...older focused property on the other.

I like pop...but the theme was kinda...ehh

Did I mention I was at the groundbreaking?

I did think of the complimenting AoA angle, and that's true. I guess I'm just of the opposite opinion as far as the theme goes. But that's just personal preference. I just assumed it was the more popular opinion since PoP seems to be much preferred to the All-Stars.

Location could definitely be a plus for PoP. But would they actually make it to where guests could walk from there to DHS? I would love it, but I don't see them doing that. All-Stars isn't quite as close, but it's still in that DHS area and no more than a 5 minute drive.

 

[lockedoutlogic]

Disney has never been about just the gift shops. They're undoubtably huge, but food sales, admission, and hotel sales also are massive in their own right.

You're not gonna believe a word I type...but oh...what the hell?

Look at the annual report...look and parks revenue that at least USED to be outlined as "product sales" and "everything else". (Paraphrased)

The numbers were identical...nearly all the overhead is deducted from one...

We can agree to disagree on the color of the sky

Why are they dumping 6 bil into Shanghai?

To capture the "vibrant middle class"?

Lol...or is it to try and keep good relations for all the factories out back and the other billion people that work there?

 

[DDLand]

You're not gonna believe a word I type...but oh...what the hell?

Look at the annual report...look and parks revenue that at least USED to be outlined as "product sales" and "everything else". (Paraphrased)

The numbers were identical...nearly all the overhead is deducted from one...

We can agree to disagree on the color of the sky

Why are they dumping 6 bil into Shanghai?

To capture the "vibrant middle class"?

Lol...or is it to try and keep good relations for all the factories out back and the other billion people that work there?

I think you're right, and I never suggested you weren't. Gift shops undoubtably are "huge." With that said, there's more to this Resort than just merchandise. The most on point comparison I could find comes from Tokyo Disney Resort. For their theme parks revenue breakdown 43.8% tickets, 36.7% merchandise, and 18.3% food. That doesn't include their rather minuscule hotel business and shopping dining district.

Now Tokyo Disney is a special case because there would likely be a higher proportion of APs, guests over there are known for spending insane amounts on merchandise, and they likely spend less on food than WDW guests (thanks to large use of dining plan).Still you're correct that running glorified McDonalds with an upcharge, selling upcharge Disney Store/Walmart items (not technically correct because all items in theme parks are specially made by WDP&R subsidiary, but same quality and margins), and selling decent photos are profitable. They also have higher margins than a typical theme park ticket that goes towards running Space Mountain or Pirates of the Caribbean.

You'll never hear me say otherwise.

With all that said, Disney is still selling millions of admissions at ever higher prices. They're also filling thousands of upcharge basic hotel rooms at ever higher prices. The reason WDW is so successful and so profitable is because they profit from everything you do on property. People have talked about feeling like Disney is draining the money out of them everyday they're there, and they're right too. The hotels have got to have some industry leading margins for their categories. The thousands of cast members are spread out over many more guests and rooms.

Also all those merchandise and food sales don't all take place at the theme parks and fewer would without the Disney hotels. If I knew I had a choice between upcharge theme park food or as I was driving to my offsite hotel that I could get reasonably priced food, I may just go hungry for a while and save $10. Knowing that as I took my Disney transportation back to my Disney Hotel that wouldn't be an option, I might as well spend the $20 now.

If moving merch and food is their only game (I'd say it's only part) than hotels sure help with the mission.

Edit: Changing uncharge to upcharge. Whoa, I really let auto correct get the best of me this time I promise I speak English... More or less.

 

[lockedoutlogic]

Revenue numbers...those are important but the only real important number is walkaway profit

 

[DDLand]

Revenue numbers...those are important but the only real important number is walkaway profit

I don't disagree. I wouldn't be shocked if Tokyo walks away with more profit from merchandise than profit from admissions. Now WDW has a higher breakdown of higher margin admissions, (because there are greater amount of APs in Japan) but it wouldn't surprise me if WDW's biggest profit making segment was food (they're really aggressive in that area). It's just that saying something that contributes 30-40% or even 60% of profit to your business is your only focus, that leaves the remaining 40% neglected. Like what I first said about merchandise and dining, they're undoubtably huge. Disney is also not a one trick pony. Each business is incredibly profitable. Each one contributes to the entire ecosystem that leaves pockets drained in the end.

Up charged Walmart items= profit.
Up charged McDonalds and Olive Garden= profit.
Up charged Fairfield Marriott= more profit.

 

[NH-to-FL]

I'll leave the detailed financial analysis to others but I propose that a Star Wars themed hotel placed within walking distance of the new Stars Wars land enhanced DHS would be filled to 100% capacity for many years after the last Star Wars movie is released. At whatever price necessary to generate profit.

 

[rteetz]

100% capacity

100% capacity is practically impossible for a hotel.

 

[andiraye]

Because they don't run them efficiently...and they tack things like transportation and capital improvements into the bill...like roads.

/QUOTE]

The other reason they charge more for rooms than Orlando area hotels is because they can. People will pay for the pleasure of not leaving the bubble and the convenience of Disney transport.

One thing that has struck me, though, is how much lower the rates can be at Orlando resorts than at comparable resorts in other popular markets. Room rates at Orlando resorts are much less than in big cities like NYC, Chicago, LA, Miami, etc. and also less than Carribean Islands, generally speaking. I have no idea how profit margins compare. I would imagine that taxes, labor, food and other costs are much higher in those markets. But Orlando is a funny market and it leaves me unable to say whether I think prices for WDW resorts are fair.

 

[wallrock]

And what? The companies that operate the hotels paying a license to Disney don't make money? That's ridiculous. Theme park and hotel operators both are in rather low margin businesses. That comes with the turf. If they were worried about entering low margin businesses that require significant amount of labor to operate, they wouldn't be throwing billions into theme park expansions worldwide.

Disney has never been about just the gift shops. They're undoubtably huge, but food sales, admission, and hotel sales also are massive in their own right. I could see them saying that if they were going to either spend 100 million on a theme park attraction, or 100 million on a hotel they could argue the attraction makes more sense. That's something. If they were arguing that with their insane uncharging that they can't make enough money to support hotel operation that's ridiculous. I'd say their primary reason for not entering the space is timidity that remains from the 2000s when attendance was stagnate, occupied rooms were less than should be, and that signs were that a further slide in theme parks was imminent.

That's not what the current landscape looks like at all. Growth is forecasted for years to come, Disney has further blurred the lines between theme park and resort, and occupied room rate are in Jay Rasulo's words at a point where they would've started building in the past. Two of the other three major leaders in the Orlando market are building resorts either 50% owned or entirely owned. Spending 100s of millions in the process.

Things like My Magic+, Disney Springs, and massive increases in occupancy seem to be indicating that they're still committed to hotels. They have the scalability, expertise, and existing infrastructure to capably add more capacity. While I don't see it in the near future, I'd guess Disney hasn't ruled it out longterm. Why should they? With SWL, Avatar, and continued growth moving forward it seems like they should seriously be considering it.

Where in my comments do I mention that the hotels that pay a license to Disney won't make money? I'd bet the farm that every hotel chain in the US has approached Disney at least once to discuss either planting their own flag or offered up to run those resorts. And it has little or nothing to do with their (Disney's) ability to financially support the hotel operation, it's just that Disney is no longer interested in that area. If they were would they not be constructing additional resorts? Why cannibalize existing properties in favor of DVC if the 'regular' hotel business was so profitable? Why go the Flamingo Crossings route instead of developing that property on their own?

And what 'massive increases in occupancy' are you referring to? Disney is either getting close to or has reached a price point on the hotels that the cash paying customer is starting to take notice (meaning walk away for something cheaper). No way would they be converting half of the Polynesian if that sucker was filling to capacity. They would instead expand that capacity. Same goes with the Wilderness Lodge.

 

[writerguyfl]

Oh come on. #1 - they clearly already have this data and #2 - the data already says that on-site guests spend more at Disney.

But My Magic Plus quantifies the data. For a company that's run by bean counters, that's huge.

I don't even need to see the data to tell you that. If I'm staying at "I-Drive Resort B", I'm not eating breakfast at Disney, not eating some dinners at Disney. Much more likely to go over to Sea World, or Universal or play mini-golf or whatever. MOST people staying on-site (more than 50%) don't have transportation to go off site - and spend ALL there money at Disney. (Our family does - and I know I'm not the only one.)

Sometimes, what seems like common sense turns out to be wrong. For example, adding a lane on a congested freeway almost always increases congested due to induced demand.

What is important isn't how many meals off-site guests eat off-site, it's the total revenue. Data might reveal that off-site guests eat cheaper meals off-site so they can indulge in one expensive meal in the parks. That might be more profitable than a on-site guest who eats three quick service meals.

Disney spent tons of money to combine disparate systems into one customer relationship management (CRM) database. Pretty much every future business decision is going to be made using that data.