Updated: Anaheim Luxury Hotel Projects Get Green Light

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Although Anaheim, California, is the center of Orange County tourism—with top attractions and a first-class convention center— it has surprisingly few luxury hotels. That will be changing, as four new luxury hotel projects in Anaheim have gotten the green light. These include Orange County’s first JW Marriott, which will be built adjacent to the Anaheim GardenWalk ; an upscale property across the street from Disney California Adventure that will replace The Anaheim Plaza Hotel & Suites; a luxury hotel next to Anaheim Convention Center that will replace the Anabella Hotel; and a new AAA Four Diamond resort built by Disney.

“Luxury hotels are critical to Anaheim’s continued success,” asserts Jay Burress, president and chief executive officer of Visit Anaheim, who wants to see more AAA Four Diamond-quality lodging in the city. He notes that Anaheim, which hosts nearly 25 million visitors per year, has far fewer luxury hotels than other major tourist destinations.

“The Orlando area, home to Walt Disney World, has more than 30 Four Diamond hotels. San Francisco has 20, while Los Angeles, San Diego and Las Vegas have 13 each. Phoenix, with no coastline or famous theme park, has seven,” he says.

A Need for More High-End Hotels

Currently the only two Four Diamond hotels in Anaheim are both Disney properties—Grand Californian Hotel & Spa and Disneyland Hotel. According to Burress, both are usually booked months in advance.

“If you’re here to visit the Disneyland Resort, attend a convention or catch an Angels or Ducks game, odds are you’ll have to go to another city to find upscale accommodations,” Burress stated in a July 10 opinion piece in the Orange County Register. “As a city that relies on a thriving visitor industry to provide vital resident services, Anaheim cannot afford to see its hotel market lag as game-changing expansions play out at Disneyland and the Anaheim Convention Center.”

He notes that more than $2 billion is being invested to expand the convention center and bring Star Wars-themed lands to Disneyland—moves that will attract millions of new visitors to the city.

“The changes are the most significant since the late-1990s expansion that turned the Anaheim resort district into a world-class destination,” Burress says, adding, “Part of providing a magical experience in our destination is also providing a variety of accommodation choices that meet a visitor’s specific needs. Adding additional luxury hotels is the best way to ensure those visitors also stay in Anaheim and uphold the important role hotels play in supporting services for residents.”

Four Luxury Hotels on the Drawing Board

1. The first JW Marriott in Orange County will be built adjacent to the Anaheim GardenWalk. The 12-story property will have 466 guest rooms. The projected opening will be in 2018.
2. The City of Anaheim has given a developer approval to build a $225 million, 630-room business/convention hotel on 6.8 acres of land next to Anaheim Convention Center. The luxury property will replace the Anabella Hotel, which will be demolished.
3. The Anaheim Plaza Hotel & Suites, located across the street from Disney California Adventure, will also be demolished and developed into a luxury hotel. The $208 million, 580-room property will have 25,600 sq. ft. of retail space and 50,000 sq. ft. of meeting space.
4. Finally, a July 12 decision by the Anaheim City Council gave Disneyland Resort permission to proceed forward on a new 700-guest room luxury hotel next to Disneyland theme park. The AAA Four Diamond property will feature two pools, a fitness center and a kid’s play area. A rooftop restaurant will offer alfresco dining and views of the nightly fireworks display over Sleeping Beauty Castle. Construction will start in 2018, with a slated opening in 2021.

Controversial Kickback

Although the Anaheim City Council approved the Disney hotel proposal in a 3-1 vote, there was some controversy over the fact that Disney will receive an estimated $267 million in city tax room rebates over the next two decades as part of the deal. Bloomberg.com reports that the deal will return to Disney 70 percent of the city’s transient occupancy tax generated by the hotel, which is 15 percent of room charges.

It is projected that the new property will have an assessed value of $411 million, and the hotel will generate $750 million in new revenue to the city over 40 years. Rates at the as-of-yet unnamed hotel are expected to run about $450 per night.

The new Disney property will be located on what is currently a parking lot. According to bloomberg.com, the parking lot site currently generates $40,000 annually in property taxes. Under the new deal, over the course of four decades Anaheim will collect $11.8 million in property taxes and $7.2 million in sales taxes from the project.

Mayor Didn’t Like Deal

Anaheim Mayor Tom Tait spoke out against the deal. “We need to stop gifting tax dollars to luxury hotel developers,” he wrote in an opinion piece published July 10 in the Orange County Register. “The policy of handing out hundreds of millions of taxpayer dollars to subsidize luxury hotel development must end. The people of Anaheim need that money to provide essential city services.”

Tait was adamant that luxury hotel developers should not get a better deal than local entrepreneurs with smaller properties, and that the city should keep all the collected tax. “If you operate a hotel in Anaheim, you collect a tax paid by the guest. The city should keep that for all hotels. It shouldn’t matter if your hotel is large or small, luxurious or basic,” he wrote.

In addition to the lost taxes, Tait is concerned that the deal shows preference to Disney, the city’s largest employer. “I want to see our city be a good partner by setting fair and equitable conditions that allow everyone’s business—from a hot dog cart to a hotel—to compete and prosper,” he wrote.

Tait believes Disney would still have gone forward with its project, even without the rebate. He told LA Times columnist Michael Hilzik, “If Disney is going to build the hotel anyway, this incentive is more like a gift.” Yet Disneyland spokeswoman Lisa Haines told Hilzik, “The proposal we are bringing before the city council will not be built without this incentive.”

Tait, who has served as mayor of Anaheim since 2010, has a history of opposing moves that benefit Disney. Last year, he opposed an agreement that put a 30-year moratorium on ticket taxes at Disneyland in exchange for the company making $1 billion in new theme park investments through 2024.