Disney Drops Plan to Move Workers to Florida, Closes Hotel

(Bloomberg) -- Walt Disney Co., embroiled in a high-profile fight with Florida Governor Ron DeSantis, is closing a luxury hotel at Walt Disney World and dropping plans to relocate 2,000 California employees to a new $864 million corporate campus it was building in the state.

Most Read from Bloomberg

The Star Wars: Galactic Starcruiser, a pet project of former Chief Executive Officer Bob Chapek, will shut down at the end of September, the company said Thursday. The property takes guests on a two-day imaginary cruise in a space ship. Prices started at $4,800 per couple. Its 100 rooms account for less than 1% of Disney’s capacity in Florida.

Read more: What It’s Like Spending Two Days Aboard Disney’s Star Wars-Themed Hotel

Disney didn’t mention the dispute with DeSantis specifically in either the hotel-closing announcement or the note to employees canceling the relocation plan. The Burbank, California-based company said only that conditions had changed since the staff move was announced almost two years ago.

“Given the considerable changes that have occurred since the announcement of this project, including new leadership and changing business conditions, we have decided not to move forward with construction of the campus,” Josh D’Amaro, the head of Disney’s parks, said in the note to staff.

But the backdrop is the increasingly acrimonious fight with the Republican governor and presumed 2024 presidential candidate. DeSantis signed legislation that took control of a board that oversees municipal services at Disney World after the company publicly opposed a state law limiting the discussion of gender issues in public schools.

The company has since sued, and CEO Bob Iger has accused officials of being anti-business and anti-free speech.

Disney has also raised doubts about whether it will proceed with plans to invest $17 billion in the state over the next decade and create 13,000 new jobs.

“I hope we’re able to do so,” D’Amaro said in his note.

A spokesman for the governor said it looked as if Disney had long since abandoned the project due to its own financial woes. The company is cutting $5.5 billion in costs and eliminating 7,000 jobs as part of an effort to reduce losses in its streaming business.

“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,” said Jeremy Redfern, deputy press secretary for DeSantis.

Donald Trump’s campaign moved quickly to criticize DeSantis, his expected top rival for the Republican presidential nomination.

“Ron DeSanctimonius gets caught in the mouse trap,” Trump said on Twitter, using the former president’s derisive nickname for the Florida governor.

Read More: Disney Will Outlast DeSantis in Florida, Orlando Mayor Says

Disney announced the new Florida corporate campus in Lake Nona in July 2021. The project was to be financed in part through a $578 million tax break from the state.

While Disney has received the necessary permits, no work has commenced. Employees who had already made the move will have the option of staying or moving back to California, the company said.

Shares of Disney rose 1.1% to $93.76 at the close in New York on Thursday. They are up 6.9% this year.

--With assistance from Felipe Marques and Mark Niquette.

(Updates with DeSantis response in ninth paragraph.)

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.