Why Disney World Visitors Could Be The Biggest Winners Of Disney's Feud With DeSantis

Walt Disney World’s feud with Ron DeSantis may have a happy ending for guests Photographer: David … [+] Ryder/Bloomberg

Anyone who has been to Disney World in Orlando knows how escapist it is. Its four theme parks are surrounded by lush landscaped grounds with public fountains and even color-co-ordinated road signs. Since the ornate iron gates to its Magic Kingdom park swung open in 1971 Disney has exercised careful control over the 43 square mile site so that it could maintain standards. Not any more.

Disney’s control came from an organization called the Reedy Creek Improvement District (RCID) which, until recently, even many ardent theme park fans weren’t aware of. Created by the Florida Legislature in 1967, this special taxing district essentially allowed Disney to self-govern its site in Orlando as a de facto county, controlling fire protection, policing, road maintenance and even development planning.

Disney lost this privilege in February when Florida governor Ron DeSantis seized control of the RCID and renamed it the Central Florida Tourism Oversight District. DeSantis got exclusive rights to select board members instead of Disney choosing them. He made it very clear why he had done this.

It followed Disney’s vocal opposition to an education bill passed by the Florida legislature in March last year. Nicknamed the ‘Don’t Say Gay’ bill, it prohibits teachers of younger students from discussing sexual orientation and sexual identity. With roughly 80,000 staff in Florida and a famously liberal leaning, it is no surprise that Disney opposed the bill. In response, DeSantis brought the curtain down on the RCID.

Earlier this month he explained that “under no circumstances should the state of Florida be subsidising woke activism by allowing [Disney] to have their own government so we took it away. They lost their own government.”

As we have reported, shortly before control of the RCID changed hands, it approved a new development agreement designed to keep Disney in the driving seat, limit the power of the incoming board and prevent it from changing these terms. It was futile.

On Wednesday, the Central Florida Tourism Oversight District voted to void Disney’s final agreement with the previous RCID board but it didn’t stop there. Within hours it came to light that Disney had filed a lawsuit against DeSantis alleging that he and his political allies have discriminated against the company for exercising its constitutionally protected right to free speech.

Unsurprisingly it yielded a swift response from DeSantis which was reported by WDWNT, the worldwide authority on Disney parks news and by far the most comprehensive source for the daily developments in Disney’s dispute with DeSantis.

“We are unaware of any legal right that a company has to operate its own government or maintain special privileges not held by other businesses in the state,” said DeSantis’ Communications Director Taryn Fenske in a statement reported by WDWNT. “The lawsuit is yet another unfortunate example of their hope to undermine the will of the Florida voters and operate outside the bounds of the law.”

By responding to each and every provocation from DeSantis, Disney appears to have fallen right into a trap set by the governor. Disney’s defensive reactions confirmed to DeSantis how important the RCID is to the media giant which is likely to have emboldened him.

Disney’s position doesn’t seem to have improved since the start of the dispute so it might have been better off if it had refrained from making any public statements from the start and had simply taken legal action when necessary.

Although Disney doesn’t seem to have gained anything from the dispute, it has given a tremendous boost to DeSantis’ exposure. He has made the most of it.

As the accusations between both parties were flying back and forth, DeSantis held a press conference to announce what was in store for Disney following its attempt to undermine him.

His laundry list of actions included introducing inspections of Disney World’s rides and its iconic monorail as well as adding taxes and tolls to Disney World’s hotels and roads. He wasn’t bluffing as Republican Senator Nick DiCeglie filed the amendment to require state inspections for the Disney World monorail the week after DeSantis announced it.

The Walt Disney World monorail could face inspections under the new regime (Photo by Joseph … [+] Prezioso/Anadolu Agency via Getty Images)

Anadolu Agency via Getty Images

By far the most sensational suggestion from DeSantis concerned the land that is owned by the district adjacent to Disney World. To audible gasps from the audience, DeSantis suggested that a rival amusement park or even a jail could be built there. However, neither of these options would be the best way of hitting Disney where it hurts most – the wallet. And, far from driving guests away, this could open up a whole new world for them.

The ability to maintain standards across its estate isn’t the only benefit Disney got from controlling the RCID. It also enabled it to lock out competitors and the importance of this stretches right back to 1955 when Walt himself opened the first Disneyland park on 160 acres of former orange groves in Anaheim, California.

Disneyland was an overnight success and it led to a string of motels and restaurants springing up next door. Not only did they spoil the immaculate theming of the resort but they also undercut Disney. Some of these satellite businesses are still there to this day, including the wintry Alpine Inn motel which backs directly on to Disney’s desert-themed Cars Land and has rooms starting at $148.49 in mid-May, compared to $464 on the same day at Disneyland’s cheapest hotel, the Paradise Pier Hotel.

Low price point hotels on Harbor Boulevard outside Disneyland in Anaheim (Photo by Kent … [+] Nishimura/Los Angeles Times via Getty Images)

Los Angeles Times via Getty Images

Disney took steps to stop this trend repeating when it was developing its outpost in Orlando in the mid 1960s. It is built on swamp land which Disney purchased using several shell companies with anonymous-sounding names such as Tomahawk Properties, M.T. Lott Co and Latin-American Development and Management Corp. If Disney had bought the land directly, the owners might have asked for more money safe in the knowledge that the buyer could afford it. In turn, this would have have made it more difficult for Disney to buy as much land as it did. This scale has cast a powerful spell on the media giant’s bottom line.

Anyone who has spent a good deal of time at Disney World knows that the isolation of the parks is their biggest strength but also their biggest weakness. Being located in the middle of a mass of swamp land means that real life rarely intrudes on the fantasy atmosphere in the parks.

It also means that guests are at Disney’s mercy when they want food, drink or essentials on the site. And with four theme parks and two water parks there, the average stay is a lot longer than at Disneyland which is home to just two parks. The longer the stay, the more the guests need food, drink or essentials and the greater they are inconvenienced.

If guests at Disneyland decide they want a McDonald’s
MCD
, Denny’s or an IHOP instead of paying top Dollar for the food in the parks they can walk to all three chains from the gates in a matter of minutes. However, at Disney World there are no independent shops or restaurants within walking distance of any of the parks.

The only independent outlets are in a themed entertainment district a good 10 minutes by car from any of the theme parks. The high-end outlets in it are carefully selected by Disney and tend to charge a premium on their competitors outside the resort. There’s no McDonald’s but there is a burger joint called D-Luxe Burger which charges nearly three times more than the Golden Arches with a Classic Cheeseburger (without fries) costing $10.99.

D-Luxe Burger at Walt Disney World costs nearly three times as much as McDonald’s

SCOTT WATT PHOTOGRAPHY

Two years ago, the US Cities Fund which owned the only independent shopping center (just) within walking distance of hotels on Disney’s property, sold the land so that it could be turned into an interstate expansion. It led to the loss of a Gooding’s 24-hour supermarket, a Fuddruckers, Taco Bell, TGI Fridays, Red Lobster and Firehouse Subs.

With no threat of competition, Disney’s shops and restaurants have no incentive to reduce their prices. This allows them to benefit from sky-high profit margins whilst Disney benefits as their prices don’t tempt people away from its own shops and restaurants in the parks. In contrast, the guests lose out, especially as many basic items simply aren’t sold on Disney property which forces people to pay for an Uber
UBER
or gas if they have a car.

Bearing this in mind, perhaps the smartest thing that DeSantis could do is sell the district’s land to hotel, shop and restaurant developers with specific instructions that they need to be positioned at a value price point.

A rival amusement park on the site would benefit Disney as it would attract more tourists to its parks. A jail would go too far in the opposite direction as it would put off too many travelers which is a risk DeSantis wouldn’t want to run given that their spending contributed to Disney World paying more than $780 million of state and local taxes in 2021.

However if DeSantis sold the district’s land to a mall developer it could be a win-win as it would give visitors to Disney World more choice and it would force Disney and its partners to be more competitive on pricing. In turn this would reduce Disney’s profit margins and spoil the fantasy theming of the resort to some degree, but not too much given the limited amount of land owned by the district.

Despite Walt’s reservations, having unthemed shops and restaurants on the perimeter of Disneyland hasn’t stopped it from being a blockbuster success. The same goes for its counterpart in Tokyo which is in a built-up area on the outskirts of the Japanese capital but is widely considered to be the world’s most exquisite Disney resort.

Building a mall or mid-market shops, hotels and restaurants at Disney World might not sound exciting but it would fill a need for guests. It would also generate fresh revenue so the state would benefit from the tax on that as well as the income from the sale of the land to the developers.

Crucially, these developments would force Disney to be more competitive on pricing which should drive up traffic to its own outlets. The average spend per person would be lower than it is now and that might not give Disney a happy ending as its current strategy is to reduce guest numbers and increase their spending. In itself, that would be a win for DeSantis.

As a Brit based outside the US, this author has no political affiliation in the dispute between DeSantis and Disney. The benefits of building independent outlets adjacent to Disney World are based on the experience of spending more than a year staying in hotels at Disney World over the past two decades attending press events and writing hundreds of articles about the resort.

More choice, and therefore more competition, would benefit the visitors and there is little doubt that Disney puts them first so surely it should do so even if it means compromising on the business model it has honed over the past five decades.

It remains to be seen if DeSantis will even proceed with developing the land, let alone sell it to independent operators. However, if he does, that might be the right time for the Mouse to stop roaring at the establishment and instead respond with a squeak.

Source: https://www.forbes.com/sites/carolinereid/2023/04/28/why-disney-world-visitors-could-be-the-biggest-winners-of-disneys-feud-with-desantis/