Disney Puts 4-Diamond Hotel On Indefinite Hold, Citing Hostile City Business Climate

According to media reports, Disney is putting its 4-Diamond hotel project on indefinite hold due to a hostile and volatile business climate in the Anaheim Resort.

The 700-room, $625 million luxury project, located next to Downtown Disney, would have been Disney’s fourth hotel in the Disneyland Resort and included a large parking structure (which is separate from the 5,500 space structure under construction). It would have created 5,050 construction jobs and 1,150 permanent jobs, the large majority of which will be full-time. The hotel was projected to generate $25 million in net incremental Transient Occupancy Tax revenues for the city during the first five years of operation, and more than $1 billion in TOT for the city’s general fund during the next 40 years.

In July 2016, the Anaheim City Council approved the project and its participation in the city’s Hotel Incentive Policy, which provided economic assistance in the form of a TOT tax rebate to qualifying 4-Diamond hotels. This economic assistance policy’s purpose was to attract 4-Diamond hotels to the Anaheim Resort, in order to enhances its competitive edge as a convention destination and also harvest greater TOT revenue in the long run.

Disney’s decision isn’t surprising. The company had already stated it was talking to adjacent Garden Grove about possible future hotel projects and other developments.

Businesses need predictability in order to invest in new projects and expand existing ones. In this case, you have a a mayor and mayor pro tem doing everything they can to undermine Disney’s project – in this case exploiting an eminently fixable technicality in order to score a political win by blowing up an agreement approved only two years ago by a duly-elected city council.

That is the epitome of arbitrary government.

Compounding the situation is the possibility of a another Disney critic – Ashleigh Aitken – becoming the next mayor. Add in the uncertainty of whether the next council majority will be pro- or anti-Resort and ask yourself why Disney would want to continue moving forward with the hotel project when it could invest that money elsewhere where the business environment is more stable and predictable, and local government supportive rather than hostile?

If the indefinite hold on the fourth hotel becomes a permanent cancellation, Disney can find other ways to invest the nearly billion dollars somewhere else and earn a return – but Anaheim will not only lose jobs, but its budget will take a hit in the form of losing an ocean of TOT revenue.

Sowing uncertainty and demonizing employers is a lousy strategy for encouraging economic development and job creation.  It frightens investors away, rather than attracting them. That’s just common sense at this point in history.

5 comments

  1. What media reports? Or is this fake news? Any confirmation? Cuz they certainly are working hard on the parking structure and the area. I am there nearly everyday and there has been no stopping the construction.

  2. Two different projects. The Parking Structure is desperately needed for Theme Park Parking. The new Star Wars area opens next year, and they need the spaces for all the additional guests that are expected to attend. The additional space that used to be backstage will allow the Fire Marshal to increase the amount of guests inside the park.

    Placing the Hotel project hold is easy. Just concrete the area and place short term items in the area until things improve in Disney’s eyes.

    So that is now three projects that have been place on hold pending potential legal action. The 2nd Garden Walk Hotel, the second Wincome Hotel at Harbor and Disney Way and the 4th Disneyland Hotel.

    So be prepared for major service cuts to Anaheim Residents, or a proposed sales tax hike like Santa Ana is doing. 1.5% increase is on the ballot.

  3. Hey I apologize. What I saw this morning verified the note from yesterday. Just when you think you are caught up. My wife worked at Rainforest and transferred in time to Jazz Kitchen. But what a waste. Now let’s see what Happens with Unite Here and the ballot initiative . Disney has a right to play tough and they just did. Again apologize and let’s see what happens next. WOW! Don’t you love living in Anaheim

  4. DO NOT VOTE FOR AL JABBAR, JUAN GABRIEL ALVAREZ OR JOSE MORENO.

    Jose Moreno is campaigning with them asking “Join us again next Saturday as we move #forwardtogether with Al Jabbar & Juan Gabriel Alvarez!.”

    THESE THREE ARE THOSE WE NEED TO VOTE OUT FIRST IN THIS UPCOMING ELECTION, THEY ARE TROUBLE FOR THE COUNCIL, SCHOOL DISTRICT AND OUR CITY.

    If they are with Jose on the “forward together” plan then we know where each stands and who they stand with.

    SO DO NOT VOTE FOR AL JABBAR, JUAN GABRIEL ALVAREZ OR JOSE MORENO – they have the same politics.

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