Disneyland Cancels Luxury Hotel Construction Plan
Disney has put construction of its new luxury hotel at Disneyland Resort on indefinite hold as Disney “reevaluates the economic viability of future hotel development in Anaheim.” This effectively cancels the resort expansion plans, which will likely be revisited and modified in the years to come. In any event, what you see pictured above will almost certainly never be built.
This comes after the Anaheim City Council advised Disney that the hotel no longer qualified for a $267-million tax break that the Anaheim City Council approved in 2016 for a 700-room hotel. Since that tax subsidy approval 2 years ago, Disneyland Resort moved the location by ~1,000 feet, and expanded the footprint of the luxury hotel to replace part of Downtown Disney.
In reality, the ‘change of address’ is Anaheim City Council’s way of denying a previously-approved tax break granted at a time when both the City Council and Anaheim’s residents were more amenable to Disney. The change in address is material here only to the extent that it offers a (potential) legal window for Anaheim to nix the tax subsidy. The hotel’s ultimate impact on Anaheim’s finances is unchanged. This is being driven by a change in Anaheim’s political circumstances, which is ultimately what is making all the difference.
As outlined in-depth in another LA Times piece, recent rises in crime and poverty plus the results of the last election have changed the local dynamic. Another election is around the corner this November, and there are 3 City Council seats plus the Mayor’s office up for grabs. (We are not sufficiently-invested in Anaheim politics to have any insight as to how this will play out, but we’d love to hear from those who are!)
Disney spent $1.22 million in the last Anaheim election–in an overall “losing” effort–and is likely to spend big once again to shift the dynamic back in its favor. The outcome of the November 2018 election is pivotal on the issue of what the “indefinite hold” means for Disneyland’s hotel project, among other stalled Disneyland Resort projects.
Even prior to the project being placed on indefinite hold, there were extremely credible rumors that the luxury resort would be delayed by at least a year due to a petroleum brownfield being discovered under part of the site.
Apparently, underground storage tanks for a gas station were filled with dirt rather than removed decades ago, and now laws dictate that environmental remediation occur prior to further development. The brownfield remediation process can be long and tedious, taking years in some cases.
This could play a role in Disney’s stand-off with the city. If the hotel is going to be delayed regardless due to site cleanup, it would make sense for Disney to dig in and fight the city over the tax break. Even without the subsidy, it seems unlikely that Disneyland wouldn’t build this hotel. On its face, the notion that its “economic viability” needs to be reassessed appears implausible.
Hotel occupancy in Anaheim has grown year after year, and Disneyland’s current hotels have no trouble filling up with rates that are often over $500/night. With Star Wars: Galaxy’s Edge around the corner and the expanded Anaheim Convention Center drawing business clientele with the expense accounts to book pricey rooms, there is unquestionably the demand for multiple luxury hotels in Anaheim.
However, Disney has already met with Garden Grove officials about potential hotel developments in that city–instead of Anaheim. Wincome Group, which is currently developing two luxury hotels in Anaheim, has also discussed development in Garden Grove. Both companies previously met with Garden Grove in the event that a living wage ballot initiative, raising wages to $18/hour by 2022, passes in November.
Somewhat ironically, that living wage initiative would not apply to Disneyland if the luxury hotel subsidy is denied. That ballot initiative is narrowly tailored to apply almost exclusively to those two companies, with verbiage that it applies to Anaheim Resort District businesses accepting city subsidies.
Although Disney has enjoyed favorable deals with Anaheim over the years, this luxury hotel subsidy is what would subject it to that living wage initiative. From that perspective, it would seem sensible for Disney to wait out this November’s election results before taking any action with regard to this luxury hotel project.
In addition to just flat-out not building the luxury hotel in Anaheim, it would seem Disney has a couple of viable solutions. The first would be reverting to the older plans, using the approved address. The second would be reworking the current plans so that the entrance is on the approved address. Either approach runs the risk of Anaheim finding another basis to deny the tax break. Again, waiting to see how things shake out in the November election is probably ideal.
If Disney doesn’t build this hotel in Anaheim, the city also misses out on the 15% Transient Occupancy Tax that would be generated by the hotel. Even with a large portion of this being retained by Disney (that’s the form of its tax break), this amounts of millions of dollars annually for Anaheim.
In past posts about the feud between Disney and Anaheim, it has been our general position that it behooves both parties to work together and find a middle ground. If anything, we’ve probably been a bit overly deferential to Anaheim, as Disneyland has historically received some sweetheart deals from the city.
That the two should reach a compromise remains our overarching position here, but we can’t help but think Anaheim is getting overzealous, and trying to overcompensate for decades of unfavorable deals all at once. Here, that’s manifesting itself in a very petty action, and one that is ultimately self-defeating if it removes Disneyland from the purview of the living wage initiative–or shifts development outside of the city limits.
While there’s undoubtedly a lot going on behind the scenes in Anaheim and Burbank, and this is a morass of political issues that go well beyond the public statements of each, that’s our taken based upon the information available. The end results of these disputes has already been bad for the community and for Disney, and that could get a lot worse if infrastructure needs aren’t addressed and the two don’t find a way to capitalize on the coming parks’ boom in mutually advantageous ways.
Ultimately, this stand-off between Anaheim and Disney is a lose-lose for all parties involved. It makes next to no sense for Disney (or Wincome…or anyone, for that matter) to build luxury hotels in Garden Grove while there are more desirable plots in Anaheim near the theme parks and Convention Center. And yet, that’s exactly what might happen if these companies view Anaheim as politically unstable or unreliable. The last couple of years this have involved a stubborn back and forth between the two with plenty of culpability on both sides, but we think things are pretty clear here. Anaheim is acting in bad faith by changing the terms of a deal after it has been materially agreed-upon, and that could have both short and long-term consequences–not just for Disney, but for the city, too.
If you’re preparing for a Disneyland trip, check out our other planning posts, including how to save money on Disneyland tickets, our Disney packing tips, tips for booking a hotel (off-site or on-site), where to dine, and a number of other things, check out our comprehensive Disneyland Vacation Planning Guide!
Your Thoughts
Who do you think is to blame here–Disney or Anaheim? Do you agree or disagree with our assessment of the dispute? Disappointed about the luxury hotel being put on indefinite hold, or relieved that perhaps that’ll send Disney back to the drawing board on the design? Any questions? Hearing your feedback–even when you disagree with us–is both interesting to us and helpful to other readers, so please share your thoughts below in the comments!
Good for Disney. Businesses and the hard working citizens should be pulling out of cities like Anaheim and setting up shop in pro business environments instead of being regulated and taxed to death by the progressive mentalities of the elected officials voted into office by folks that think that electing the same thing over and over will result in something other than the status quo.
Hmmm…. Go to the poorest countries on earth, and you will find no regulations at all – in Africa you can build a plastics factory next to a school – no problem. Go to Western Europe and you will see many regulations in effect. Who has the higher quality of life?
That’s a no brainer. The Continent without oppressive and corrupt dictatorships. In a Constitutional Republic, history has proven which path leads to prosperity and more opportunity for all citizens. The most financially challenges cities and states in this nation have been under progressive control for many decades. Electing the same thing over and over will not change that path.
Maybe Disney should pay its workers a decent wage before collecting millions in tax breaks. Many of its workers live at or below the poverty line. This whole country is “business-friendly.” Corporations control every facet of our government because they own nearly every elected official.
The timing of this by Anaheim was very, very shady.
I think you’re way off on this one. Disney brings in every tourist that comes into Anaheim. Anaheim then robs, I mean taxes, the tourists to the tune of something like 17% not including its share of sales taxes and utility taxes and all manner of other taxes. And if Anaheim had their way, they’d slap a entertainment tax on the tickets too. Disney kept the Angeles in Anaheim and is the only reason why the convention center, Honda Center, and other destinations even exist.
People seem to think that Disneyland is this huge money maker so much that Disney would invest there no matter what. So Disney shouldn’t be given any incentives, because, they would have spent the money anyways. Well, that’s simply not true. With several other worldwide destinations, it might just decide to invest and expand elsewhere instead.
Anaheim hasn’t gotten any rotten deals. If it weren’t for Disney, Anaheim would be worse off than Garden Grove, Westminster, and Santa Ana. And actually, all of those cities would be worse holes than they are now without Disney too.
The poverty and crime has nothing to do with Disney and everything to do with California’s progressive leanings which protects criminals and the homeless to the detriment of its own citizens.
Anaheim is acting foolishly and will lose a lot of money.
Neither Disney or Anaheim is to blame. If the anti business candidates win in the elections, then the consequence is likely to be that the hotel will be postponed indefinitely. I think Disney should spend the money elsewhere. The crime and homelessness is the local government’s responsibility to get a handle on. Personally, we’ll not be staying off site again when visiting Disneyland. The neighborhood has gotten too sketchy, just as our hometown of Seattle has.
That’s why I can’t see any Disney hotel going beyond the parks. Everything within a 20 min drive of DL is sketchy. I always tell my family…I will fly in at night, head straight to the parks and fly out at night. I can’t bear to see what SoCal has become (born and raised there).
Tom, I think you are being a bit too kind to Disney. As someone who lived on that coast during the Westcot/Port Disney battles and then the DCA opening fiasco and all that came, the city has been played by Disney far too often. Anaheim exists to service Disney, in Iger and Company’s mind. Yet, they take no responsibility for the homeless crisis and crime in the resort area.
This is largely posturing. I am sure you do realize that. I am not at all sure Disney ever planned to actually build that hotel on said property, at least when the wage issue was factored in. But I think you are right, Disney is waiting for the election with hopes it can get more bought politicians, just like some of us are waiting hoping it begins the start of the downfall of Trump and the corrupt traitors of the GOP.
BTW, how many billions did FOX cost? Don’t you think Disney could build that hotel on its own AND pay living wages?
This whole thing would be laughable if people weren’t being hurt. I am sure all those AMC, ESPN, Rainforest Café, Earl of Sandwich and Starbucks employees are laughing their behinds off.
Oh, isn’t it time for Disney to raise admission prices?
“…the city has been played by Disney far too often.”
I don’t dispute that for a second. If not played, outright bought. The problem, as I see it, is that the current mayor and council are trying to make up for decades of mistreatment in a manner of years, and at a time that is pivotal to the Anaheim Resort District.
Perhaps the 70/30 deal Anaheim struck with Disney and Wincome in 2016 was imbalanced, but it was not a bad deal. Even if 50/50 were more reasonable, I don’t think Disney took advantage of the city. Heck, this was a program Anaheim created, independent of Disney, because the city wanted to attract more luxury hotels.
If there’s posturing happening, it’s occurring by both Anaheim and Disney. Some boneheaded moves by Disney have soured public opinion on Disneyland among Anaheim residents, so now the current City Council has cast the company as a convenient villain. Some of that is most certainly deserved, but not all of it.
“This whole thing would be laughable if people weren’t being hurt. I am sure all those AMC, ESPN, Rainforest Café, Earl of Sandwich and Starbucks employees are laughing their behinds off.”
If it’s any consolation, I’m fairly confident most (if not all) of those employees were absorbed into other roles around the resort. It’s a tight labor market, which is part of why Disney is becoming more open to those $15.75/hour wages.
That’s crazy talk. The City hasn’t been played. They City only exists because of Disney. If it weren’t for Disney, Anaheim would be a greater cesspool than it already is. Disney themeparks, The Angels, the Honda Center, the Ducks, the convention center and all the hotels exist because of Disney.
How much more tax revenue does Disney need to bring in before Anaheim accepts responsibility for their own budget failures?
Poverty in Anaheim (and how Disney contributes to it) has long been an issue. That said, it does feel like the city is deliberately “making up” for past deals all at once between this and the problems getting the Eastern Gateway going. Throwing this deal out at this point does feel like “bad faith” on the part of the city. I hope a compromise is reached that allows the living wage ordinance to cover the new hotel.
They couldn’t have figured this out a couple months ago before they closed all the restaurants there. We probably would have done the rainforest cafe and earl sandwich if it was there. That was my only negative thought about the trip there. Oh well first world problem for a guy that likes getting his way
Those are closed for construction of a different hotel set to be complete before end of 2019.
Thanks Brent never been there so sometimes gets confusing. I’m a wdw lifer but ever since I was 11 I have wanted to go see how the other land lives. Finally at the age of 48 I am within 22 days of going really happy to say this is one of my bucket list things I can say I can cross off
No the DTD West end restaurants and AMC theater was were closed in preparation for the hotel project discussed in Tom’s post. There was only one Disney hotel in the works until it was just put on hold.
So the West end of Downtown Disney was killed off (except for a couple temp food trucks) for nothing unless this hotel project goes forward.
Between the a West end closures and the other closed shops closer to the Grand a Californian Downtown Disney is in a sad state right now.