News for the Hospitality Executive
|By Jerry W. Jackson, The Orlando Sentinel, Fla.
Knight Ridder/Tribune Business News
Dec. 14, 2003 - Walt Disney World opens its Pop Century Resort today without the company's legendary publicity blitz or other fanfare. Yet, with 2,880 rooms on 235 acres, it is the single-largest hotel to open in the giant resort's history -- and almost certainly the largest in state history.
Disney World will boost its local hotel portfolio by more than 10 percent to more than 25,000 rooms.
Lodging-industry specialists say that Disney's growth as a hotel operator in the past decade has gone largely unheralded. But in the shadow of the Magic Kingdom, a lodging empire has mushroomed.
"When they started out, they were in the theme-park business, not the hotel business. That's not true today. They are a huge operator," said Dave Theophilus, an Orlando hotel expert with Cayuga Hospitality Consultants.
On a global scale, Walt Disney World ranks among the top 40 hotel operators, according to estimates by the American Hotel and Lodging Association. If only companies' U.S. properties are counted, Disney ranks in the top 25.
In the Orlando area -- by far the state's largest hotel market -- Disney has about 10,000 rooms more than Marriott International, its closest local competitor. And Disney owns and operates all of its rooms, unlike Marriott and most other chains, whose rooms are divvied up among multiple franchise owners.
"I doubt anyone in the state owns and operates more rooms than Disney," says Tom Waits, chief executive officer of the Florida Hotel and Motel Association.
The company controls more than 6 percent of the estimated 400,000 hotel rooms in Florida. In the Orlando area, it controls about 20 percent.
Pop Century Resort alone is 20 times larger than the average hotel in the statewide lodging association, Waits said.
Waits and other industry specialists said Pop Century is probably the largest hotel in the state based on number of rooms. The second-largest is another Disney hotel, the Caribbean Beach Resort, with 2,112 rooms. The Orlando World Center Marriott, which was the state's largest hotel when it opened with 1,500 rooms in 1986, recently completed a $100 million renovation and now has 2,004 rooms. South Florida's largest hotel, the Fontainebleau Hilton Resort & Towers in Miami Beach, has 1,200 rooms.
Disney has one resort, the All-Star, that's larger than Pop Century, but the All-Star project opened in three phases, each with a distinct theme. The All-Star Sports Resort opened with 1,920 rooms in April 1994. The All-Star Music Resort opened seven months later with 1,920 rooms, and the All-Star Movie Resort opened with 1,920 rooms in January 1999.
Disney lists the All-Star sites as separate hotels in its roster of 20 hotels and resorts.
And a second phase of Pop Century is planned -- another 2,880 rooms -- though no timetable has been set. During Disney World's first two decades, the company built about 6,000 rooms and relied mostly on independently owned hotels on its property to meet demand.
After opening its Contemporary Resort and Polynesian Resort in 1971, the year Disney World debuted, the company waited another 17 years to build another lodging -- the 867-room Grand Floridian, one of only two Disney hotels built in the 1980s.
Waits said he thinks Disney's stunning growth within the hotel industry since 1990 -- nearly 80 percent of its rooms have been built since then -- was purely a matter of money.
Disney does not break out its hotel revenue in corporate filings, and company representatives won't discuss financial aspects of the business, but the lodging industry in Orange County grosses nearly $2 billion a year in room revenue. Disney's 20 percent hotel-market share would give it at least $400 million of that $2 billion a year -- but possibly as much as an $800 million, given that its average room price and occupancy rate are higher than the market as a whole.
Food-and-beverage sales typically add another 20 percent to 23 percent to the revenue of a full-service hotel. Merchandise sales, telephone charges and other fees usually add another 15 percent to 20 percent, according to estimates by senior hospitality analysts with Ernst & Young.
That would mean Disney's total hotel and resort revenue from its rooms in the Lake Buena Vista area probably totals well over $500 million -- and perhaps as high as $1.1 billion -- a year.
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