Disney Scraps Plan to Build $250-Million Newport Resort

Bowing to competitive pressures within the rough-and-tumble time-share industry, Walt Disney Co. executives said Tuesday that they’ve scuttled plans to construct a $250-million time-share resort along Orange County’s Newport Coast.

Company spokesman Bill Warren said Disney has abandoned its vision for a 650-unit Mediterranean-style village near Newport Beach to concentrate on its four existing Disney’s Vacation Club resorts in Orlando and Vero Beach, Fla., and Hilton Head, S.C.

“We’ve had a lot of rapid growth in the last few years,” Warren said. “We just made a decision to focus on what we’ve got.”

Disney plans to unload the vacant 45-acre parcel for which it paid more than $24 million, and has been talking with several brokers about handling the sale, Warren said.

With its high-end products and low-pressure marketing techniques, Disney has been credited with improving the image of the time-share industry.

But industry watchers say Disney overpaid for the Newport Coast property and is having a tough time replicating the early success of its two time-share resorts in Orlando, where the company’s theme parks have provided instant marketing muscle and a steady stream of potential buyers.

“In Orlando, they had people coming to them . . . but it has been a tougher sell in Hilton Head and Vero Beach,” said David Matheson of the Criterion Group, an Atlanta-based advertising company that specializes in the time-share industry. “Pulling the plug in California isn’t a red flag. But they are going to have to take a couple of caution laps before they move forward.”

Announced with much fanfare in 1994 and anticipated to open this year, Disney’s first West Coast time-share resort was designed to mimic classic Italian architecture, including Venetian-style canals and a faux Roman aqueduct.

But construction was delayed by repeated design changes as Disney worked to make the project economically feasible.

Part of the challenge was the cost of the land. The company reportedly paid the Irvine Co. $24 million for the first 35 acres of the 70-acre project--a sum that some observers felt was too pricey for a time-share development. Disney purchased an additional 10 acres in 1994 and holds an option to buy an additional 25 acres from the Irvine Co..

“Disney would have had to ask a lot [for its time-share intervals] to justify that land cost,” said Brad Benson, director of marketing for the 142-unit Peacock Suites time-share resort in Anaheim. “If the costs are too prohibitive you just can’t do it.”

Newport Beach officials, who had been eyeing the time-share project as part of a proposed annexation effort, expressed regret at losing a major new development, particularly one bearing the vaunted Disney name.

“I’m extremely disappointed,” said Newport Beach Mayor Janice Debay. “We were looking forward to having an association with Disney and having this project become a part of Newport Beach. It was going to be a showplace.”

Real estate analysts said the scenic parcel is a natural for a resort development. Irvine Co. executives said at least one major hotel chain has expressed interest in the property.