by Ray Keating
News/Analysis
DisneyBizJournal.com
May 18, 2023
Today, the Walt Disney Company made a couple of major announcements regarding their investments in and around Walt Disney World. One announcement came as the result of bad decision-making by the company, while the reasons behind the other decision can, and will be, debated.
First, the Star Wars hotel – or the Star Wars: Galactic Starcruiser – will end its voyage after just a year-and-a-half of journeying among the stars. This immersive, cosplay hotel, built on frighteningly expensive two-day stays, was launched in March 2022, and it will come to an end in September of this year. As DisneyBizJournal has argued previously, this was a rather bizarre decision that seemed destined to crash and burn – but few thought that the end would come so quickly and without trying other options.
According to various reports, Disney has not announced any plans for the building at this point.
Second, Disney has announced that it's pulling the plug on a $1 billion office complex known as the Lake Nona Town Center.
During its most recent earnings call, when Disney CEO Bob Iger was addressing the company’s feud with Florida Governor Ron DeSantis, Iger noted that the company plans to invest $17 billion in Disney World over the coming decade. But he also asked, “Does the state want us to invest more, employ more people, and pay more taxes, or not?”
The project was estimated to bring 2,000 jobs to the area, including 1,000 being relocated from California.
It must be noted that Disney is in the midst of cost cutting and restructuring, and both of these decisions could tie directly into this effort. Plus, many expect a recession later this year, and if Disney is concerned about that, then closing the doors on a very expensive hotel with limited appeal makes sense, as would reining in this development project.
At the same time, there will be plenty of speculation about the development project decision being related to the Disney-DeSantis battle. Indeed, The New York Times pointed out the following:
When he announced the [Lake Nona] project in 2021, [Josh D’Amaro, Disney’s theme park and consumer products chairman,] cited “Florida’s business-friendly climate” as justification.
Mr. D’Amaro’s tone in an email to employees on Thursday was notably different. He cited “changing business conditions” as a reason for canceling the Lake Nona project. “I remain optimistic about the direction of our Walt Disney World business,” Mr. D’Amaro said in the memo. He noted that $17 billion was still earmarked for construction at Disney World over the next decade — growth that would create an estimated 13,000 jobs. “I hope we’re able to,” he said.
But the company’s battle with Mr. DeSantis and his allies in the Florida Legislature figured prominently into Disney’s decision to cancel the Lake Nona project, according to two people briefed on the matter, who spoke on the condition of anonymity to discuss private deliberations.
The Orlando Sentinel reported that a DeSantis spokesman said, “Given the company’s financial straits, falling market cap and declining stock price, it is unsurprising that they would restructure their business operations and cancel unsuccessful ventures.” Meanwhile, state Rep. Anna Eskamani, D-Orlando, was quoted: “Governor Ron DeSantis is a job killing moron who cares more about his own political ambitions and culture wars than Florida and our future.” Before this news broke, U.S. Senator Rick Scott, a Republican from Florida, noted that “cooler heads need to prevail,” and declared, “I think we’ve got to figure out a way forward here to bring everybody back to the table. So, we can continue to grow tourism, grow jobs, you know, give opportunities for people.”
The Disney-DeSantis feud ranks as one of the most bizarre I’ve seen in writing on the economy and business for more than three decades. It was triggered by the company staking out ground on a social issue that has nothing to do with their business, with a Republican governor who wants to be president, DeSantis, then not merely criticizing the business for doing so, but bringing the power of government down on that business for staking out ground with which he disagrees. Politics, populism, the Constitution and freedom of speech, the courts, egos, and the economy are all stirred into this toxic stew. And the only thing we know for sure is that Florida taxpayers and workers will be screwed in the end.
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Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, and the Alliance of Saint Michael novels; and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.
The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?
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