Disney, Taking a Page From Shopping Malls, Boosts Experiences at Hotels to Lure Business

Walt Disney Co. isn't just opening an attraction at its Disney World park hoping it will also help boost nearby hotel business. It's planning to turn a hotel into an attraction itself.

Taking a page from retail shopping mall owners who are adding experiences to lure customers, Disney is designing a Star Wars-themed hotel in Florida called Star Wars: Galactic Starcruiser, where guests will have a simulated launch into space and participate in a story that involves Disney workers dressed as characters from the famous movies. The choices guests make during their stay dictate how their story plays out.

The company is betting that, compared with the normal hotel offerings of an ice machine down the hall, the blending of amusement park and hotel will help inoculate it from the vagaries of relying on whether some new attraction boosts attendance. Drawing crowds will start getting a lot harder for Disney in central Florida after rival Universal Orlando just announced plans for a new theme park.

If successful, the hotel experiment could be a model for adding experiences for guests that could be used by other hotels around the country in years to come. That would be similar to the way shopping centers are using best practices from elsewhere to add memorable interactive experiences such as escape rooms and rock climbing outlets to draw customers, all in an effort to edge out rival outlets and respond to online shopping competition.

For Disney, the stakes and the risks keep growing: The $1 billion Stars Wars: Galaxy’s Edge is opening this week at Walt Disney World near Orlando. The attraction, based on the iconic movie franchise launched by director George Lucas in 1977, failed to attract blockbuster crowds after opening at Disneyland in Anaheim, California, in May. That proves a single attraction can't be guaranteed to bring more customers to nearby restaurants, hotels and stores, potentially boosting the value of underlying commercial real estate.

Disney needs new experiences, from the hotel experiment to the Star Wars attraction, to reclaim the industry spotlight now that Universal Orlando is coming out of the ground with the new theme park called Epic Universe. It's the first traditional theme park in the Orlando area in more than two decades, said Dennis Speigel, president of International Theme Park Services, a Cincinnati-based consulting firm. The new park, Universal’s fourth, is expected to employ 14,000 people, though officials haven’t offered many details or said when it will open.

The less-than-expected result of the Star Wars attraction in California shows that more creative techniques are needed to compete in a theme park war that can affect the success of nearby commercial real estate. The expected large crowds at Disney didn't emerge, even though, "This is one of the best attractions to ever come along in our industry,” Speigel said in an interview.

The stepped up moves by Disney and the eventual opening of the Universal site could bring a needed jolt for the region's $70 billion tourism industry. Visit Florida, the state’s tourism marketing agency, does not make projections but reports that an estimated 112.6 million people visited the Sunshine State in 2018, an 8% increase year over year. Visitor estimates for the first half of 2019 are up 6% from the same time in 2018.

Metropolitan Orlando’s hotel metrics are steady but unspectacular, according to STR, a data and analytics firm for the travel industry. The occupancy rate for the first seven months of the year is 79.4%, down from 81.7% over the same time in 2018, STR data shows. The average nightly room rate is $131, essentially flat from a year earlier. Those figures don’t include Disney properties.

Hotel Experiment

As for the immersive hotel, an opening date and prices have not yet been announced, though Speigel said it will have 132 rooms, average about $3,200 for a two-night stay, and be an attraction itself that will help extend Disney guest stays by one to two days. The technique could be repeated across the country if successful because more rides on a successful hotel than that business alone, travel analysts say.

“When you extend the stay, not only do you get the extra room revenue, but you also get more spending outside the room,” said Jan Freitag, a senior vice president for STR.

The 490-acre Disneyland in California's Orange County first opened in 1955 and Walt Disney World in Florida followed in 1971. The economic stakes, including commercial real estate, are far larger in Florida. That East Coast resort is much bigger, encompassing 30,000 acres, employs more than 75,000 people and is the largest single-site employer in the country, according to Disney. The resort is southwest of downtown Orlando and is located in both Orange and Osceola counties.

Star Wars: Galaxy’s Edge in Florida, located on more than 14 acres inside Disney’s Hollywood Studios, is virtually identical to the one in California. It’s the biggest single land site expansion in Disney's history.

Both locations will feature two main attractions — Millennium Falcon: Smugglers Run and Star Wars: Rise of the Resistance. Rise of the Resistance opens in Florida on Dec. 5 and in California on Jan. 17.

Epic Universe, which will be about a 15- to 30-minute drive from Walt Disney World, is a major coup for Universal as it strives to unseat Disney as the most popular theme park operator in the world. Disney had 157 million visitors last year, while Universal was third with 50 million, according to the Themed International Association trade group.

“They just keep boxing,” Speigel said of the two companies. “We’re going to see this for the next decade. It’s not going to stop. Who’s going to be the winner?”