How Universal has helped Loews buck the trend in the hotel industry

October 31, 2017, 10:54 AM

If you really are an Insider, interested in the inner workings of the hospitality business, check out this interesting read from our friends over at Skift about Loews Hotels: Loews Hotels Is Taking a Contrarian Approach With Its Asset-Heavy Strategy.

Many theme park fans know Loews as the operator of the five (soon to be six, then eight) on-site hotels at the Universal Orlando Resort. In the piece, Loews execs talk about how their relationship with Universal has helped the company pursue its strategy of going upscale with premium facilities that can withstand disruption from AirBnB, consolidators and other tech-driven innovations in the industry.

The gist of it all is that as other hotel chains have turned to licensing and franchising to make money without actually having to build and maintain hotels, Loews has gone the opposite way, essentially trying to create unique attractions, if you will, with its properties - places people are willing to pay extra to stay because they deliver an experience unlike anything else in the industry.

What do you think? Despite all the talk of going upscale, I find it refreshing that Loews hotels in Orlando typically provide more value for the dollar when compared with the competition from Disney. Not saying that Disney doesn't have hotels that are as nice or even nicer, but that for $100 or $200 a night, I usually can get more with Loews at Universal than from comparably priced hotels on property at Disney.

Replies (10)

October 31, 2017, 11:08 AM

I stayed on a Lowes property only once however, it was far more economical and very well kept. I am priced out of most Disney properties and usually have to settle for the Disney moderate (with a discount), or economy resorts. If I am spending that much to stay at a deluxe resort, I am enjoying the resort and it's amenities.

Translation: I would feel guilty and wasteful about spending time in the parks if staying at a deluxe resort.

October 31, 2017, 11:58 AM

Amazing that Loews has 5 properties at Universal when Disney has 3 at Anaheim for a 2 park resort.

Loews doesn't have the same economics as Disney. Hotels isn't the primary business for Disney unlike Loews. That's why Disney charges more. Disney needs more money to support their failing ESPN and ABC media properties.

October 31, 2017, 12:43 PM

I think Universal Orlando is a unique situation, and by piggybacking on the successful complex, each individual Loews resort benefits. That is what makes them "disruptor proof".

We've stayed at both the Hard Rock and most recently at the Royal Pacific (club level), and think both are on par with the best hotels that Disney offers. However, being at nearly the same price point, Disney can't compete with the Loews deluxe resorts that offer unlimited Universal Express. The proximity to the parks and CityWalk also plays a role in the success of Loews' relationship with Universal.

I'd be interested to know the full scope of the relationship between Loews and Universal Orlando. Loews clearly operates, manages, and owns the hotels, but did they pay the full cost of designing and constructing them, and do they have to pay ongoing maintenance costs for the facilities or are some of those costs shared?

November 1, 2017, 8:11 PM

"Loews doesn't have the same economics as Disney. Hotels isn't the primary business for Disney unlike Loews. That's why Disney charges more. Disney needs more money to support their failing ESPN and ABC media properties."

Disney hotels have always been more expensive than Universal's, it has nothing to do with ESPN or ABC (both are making way more money than Loews BTW). Supply and should take a pricing course before making comments that are totally untrue.

Edited: November 1, 2017, 9:14 PM

The man: You didn’t say anything to prove your lame point. You should take a course on winning an argument. Revenues are not profit, otherwise known as income. Anyways, I said a true statement that Disney has different economics than Loews. What you again did not say is ESPN and ABC are a drag on Disney stock.

Interesting that you cite supply and demand. Disney benefits not from supply and demand, but it’s branding is even more a factor. So you’re a lame and lazy economist. Disney isn’t in the hotel business, it’s in the lifestyle business, which includes it’s failing ESPN and ABC properties. You know what beat ESPN? The premium it paid for NFL. The NFL no longer has the prestige it once commanded.

November 1, 2017, 11:53 PM

Disney hotels have always been more expensive than Universal hotels, that has absolutely nothing to do with ESPN or ABC. Even when Disney's Media Networks were doing extremely well(which wasn't that long ago) Disney's hotels were still more expensive then Universals. Anyone with common sense can see your "analysis" is totally ridiculous. Actually lets say ESPN were way more popular than it already is, the prices on property (especially at All Stars where the youth sports teams stay) would be even higher because there would be higher demand. Things aren't more expensive because a company struggles, things are more expensive because they can be. Look at Six Flags a company that struggles a lot, they basically give away season passes so that way more people come so they can sell more advertising (and Flash Pass).

Disney has a whole team of revenue management people who's job is to figure out how much people will pay for their hotels, at what time, and from what markets. Their dynamic pricing strategies for their hotels are basically the same as all other hotels.

How do I know this? Well for one it's common sense. And for two, Disney is the biggest employer in my area so there were several finance people from Disney in my MBA cohort...and their executives gave numerous presentations to my class (I went to UCF).

Edited: November 2, 2017, 7:09 AM

Give back the MBA for it is useless based on your common sense analysis. Just use common sense until it doesn’t work.

Anyways, I didn’t say ESPN and ABC influences Disney Hotel pricing. You made that up yourself. I said any profits must cover the deficiencies of the other failing divisions. Theme parks including hotels always serve this purpose at Disney.

“ESPN has to make up over $3 billion in lost revenue and increased fees”

When every other division increased profits in double digits and ESPN is flat, that’s why ESPN is a drag.

November 2, 2017, 9:28 AM

I agree with Robert -- I've always felt that I get more bang for my buck at a Universal onsite resort than one at Disney. And a more pleasant experience overall..... I've glad to see that the relationship is working out for Loews and that they are committed to continuing it.

November 2, 2017, 11:56 AM

I really enjoy Loews hotels, especially the ones on Universal property. Interested to hear what their next announcement will be, Wet & Wild Property?

November 3, 2017, 2:05 PM

They could put me in a wooden shack with a straw bed as long as they give me the Unlimited Express Pass. That thing has made it to where if I go to Orlando, I have to either only go to Universal or finish at Universal. The lines at Disney have gotten so out of hand that it diminishes our enjoyment substantially. I will say that I have been impressed with the customer service at the hotels with one exception- the restaurants have all been poorly run every single time we have been to one, but it has never affected our overall enjoyment. Surely, I do like the Disney deluxe resorts, but you used to be able to find a sale on them, and now they are quite ridiculous. With the old system, you could justify getting to the park early, riding a bunch, loading up on fast passes, then heading back for a swim or nap. Now, not so much. Although, I guess there are no lines at the pools.

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