New Hotels Proposed For Disneyland Resort Area
New Hotels Coming to Disney Area
By SARAH TULLY
The Orange County Register
12/24/2007
Anaheim Developers are proposing new hotels for the area around Disneyland following fears that the shaky economy and political turmoil were driving builders away from the tourist zone.
At least 10 plans are in the works to add more than 2,700 rooms in new hotels, timeshares, villas and expanded lodges. Those include Disney-brand hotels, boutique-style settings and family-friendly suites. Anaheim now has more than 20,000 rooms.
The hotel proposals are coming at a time when occupancy rates are high, the tourism and convention markets are booming and new attractions are planned in the resort area. Disney recently announced a $1.2-billion expansion its California Adventure theme park and the nearby Anaheim GardenWalk outdoor mall is due to fully open in May.
"I think the whole hospitality market in Anaheim is on the brink of another big lurch forward as far as quantity and quality," said Bill Stone, who is heading the GardenWalk project where two hotels and one timeshare are slated.
Hotel developers also appear to be returning to Anaheim after shying away from the political debate over whether residential housing should be allowed in the Disney area. Some property owners had hoped to capitalize on the residential market that has since lagged. Some developers have turned to Garden Grove down the street where they receive more incentives.
Garden Grove, which has seen great success with its first wave of hotels in the resort area, now is struggling to draw more big names further south on Harbor Boulevard. Ryan Industries, a developer that had an exclusive negotiating agreement to build a Starwood-brand Westin Hotel on Harbor, pulled out of a Garden Grove project earlier this month, Economic Development Director Chet Yoshizaki said.
At the same time, another developer turned in plans this month to build two Starwood-brand hotels in Anaheim closer to Disneyland where the Jolly Roger Inn now sits. Tarsadia Hotels is proposing a Westin-brand Element and an Aloft -- a boutique-style hotel. Both are new concepts that will debut in Anaheim.
Market shift
The flurry of proposals indicate that the market has changed since a 2005 city-commissioned report found that new hotels would not be needed for 24 to 55 years in some parts of the Anaheim Resort, a 2.2-square-mile area designated for tourism surrounding Disneyland. That argument was used by developer SunCal to persuade the City Council to support plans for a 1,500-home complex in the resort, which Disney vehemently opposed.
Since SunCal's deal has soured, a hotel-retail developer has entered into an agreement to buy the property.
GardenWalk also turned away three or four companies that wanted to build in the mall after it entered into negotiations with Disney to run two hotels.
"Markets change, and very, very quickly, and we're not quite sure what happens here. But it only bodes well for the resort," said Sheri Vander Dussen, the city planning director.
The hotels will also serve the city well: The bulk of the Anaheim tax revenue was generated by hotels – about $80 million in 2006-07. Part of the money also goes toward paying off $510 million in bonds from improvements in the Anaheim Resort.
Tourism demand
Room costs and occupancy rates are at the highest that Charles Ahlers, president of the Anaheim/Orange County Visitor & Convention Bureau, can remember.
The average room cost this year was projected to top out at $105.98 a night – $25 more than five years ago.
Occupancy rates are expected this year to reach 74.6 percent – 10 percent higher than 2002. Anything above 60 or 65 percent is generally profitable, Ahlers said.
"I think a lot of people are looking at developing right now because the hotel and tourism (market) is so strong," said Alan Reay, president of Atlas Hospitality Group, Irvine-based hotel consultants. "The economics make sense to build in today's market."
Hotel plans
Ahlers said hotel developers are responding to the needs of theme-park guests and conventioneers who want more business-oriented and boutique hotels. Garden Grove also is working on a negotiating agreement with a Sheraton developer to build another Sheraton next to the hotel that's now under construction.
Developer Phillip Schwartze said he is trying to take advantage of a location near the resort in the Platinum Triangle, where new office and residential buildings are going up in a downtown-like setting. He envisions business travelers heading both to the convention center and new offices staying at his location.
"I think Anaheim has always had a very strong market for hotels," Schwartze said. "You've just got to find just the right piece."
Kiran Patel, president of DKN Hotels, already owns two Disney-area hotels, so he has seen first hand that families want more suite space when they travel to theme parks. He is proposing a new Marriott brand on the site of the closed-down Cattleman's Wharf restaurant on Ball Road.
"It's just that Anaheim is becoming a hot spot for development," Ahlers said. "The synergy is good. The more mass we create; it lifts everything else in the area. It's conceivable that Anaheim will be a new business center for Orange County."
