Hotel Incentive Policy Attracts Another Luxury Hotel To Anaheim Resort Area

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Good Hope International will utilize the Hotel Incentive Policy passed by the Anaheim City Council majority (Kris Murray, Lucille Kring, Jordan Brandman) earlier this summer to build a 580-room luxury hotel across Harbor Boulevard from Disneyland on the site of the venerable Anaheim Plaza Hotel and Suites.

The 8.8 acres site will be scraped to make way for a four diamond property standing 78-feet tall, with 25,000 square feet of retail and 50,000 square feet of meeting space.

According to the OC Register:

While the luxury brand has not been announced, the proposed hotel would be built on 8.8 acres of land near Harbor Boulevard and Disney Way and open sometime in 2018, according to a development plan delivered Tuesday to Anaheim’s Planning Department.

It would cost more than $160 million to build the hotel, financed in large part by a 70 percent return on bed taxes collected there over 20 years under a relatively new economic incentive aimed at encouraging developers to build hotels that meet AAA’s guidelines for four-diamond ratings.

At the end of the agreement, the city would collect 100 percent of the bed taxes generated by the hotel.

“We believe the market is ready for another four-diamond hotel in Anaheim,” said Paul Sanford, asset manager for the Wincome Group, which also owns the Anabella Hotel in Anaheim and the Avenue of the Arts Hotel in Costa Mesa.

“We’re seeing higher-end conventioneers and higher-end leisure tourists with the expansions going on at the Convention Center and at Disneyland,” Sanford said. “We think it will contribute to the higher-spending demographics of people wanting to stay and spend in the area.”

But wait! We thought this policy would fail to attract four-diamond hotels to Anaheim? At least, that’s what the OC Register editorial page chortled back in June – several weeks before a deal was inked for to bring a luxury JW Marriott to the GardenWalk under the agreement on which the broader Hotel Incentive Policy is based.

Now, another four-diamond brand is being built under the incentive policy. It would seem to be working, and also vindicating the council majority’s decision to expand the Anaheim Convention Center.

14 comments

  1. That’s actually not what the Register said.

    No one claimed it wouldn’t work. Lots of people claimed it wasn’t necessary. Given that the investor building this hotel bought the property before the incentive vote was even proposed, it may have been planned all along.

    If you’re going to mock people expressing their opinion, using the word chortle, get their opinion right.

    Finally, this vindicates no one. The near term result of this build is a net loss in revenue for Anaheim. While I can see you’re eager to pat yourself on the back, sit down and do the math first. If this doesn’t pay out for twenty years and cuts funding from the general budget while Anaheim is still short on police officers, that’s a pretty stupid outcome.

    Of course, this is what we’ve come to expect from this blog: Lots of pontificating, lots of spin, and very little critical thought.

    • “It’s beginning to seem as if Anaheim can’t even give away $158 million in subsidies for construction of two four-star hotels near the Resort District’s GardenWalk mall…”

      That’s another way of saying it wouldn’t work.

      And speaking of “little critical thought,” that’s a good way to describe the “$158 million giveaway” mantra chanted endlessly by opponents of this policy, a deliberate attempt to mislead the public into thinking that was general fund revenue being diverted from other uses. One cannot giveaway something that doesn’t exist – but that reality hasn’t stopped opponents of the incentive policy from repeating that dishonest slogan over and over.

      “..it may have been planned all along.” Hhmmm: a hypothetical that is impossible to prove or disprove. Powerful. You rest your case.

      There has been talk of re-developing that property for literally years; it is always about to happen, and yet it hasn’t until the Hotel Incentive Policy was enacted.

      “Finally, this vindicates no one. The near term result of this build is a net loss in revenue for Anaheim.”

      And you know that….how?

      • That’s not another way of saying it won’t work.

        Not exactly sure why you want to talk about someone else’s slogan, but of course you can give away something that doesn’t exist. It’s called a futures contract. Your characterization of your dishonest opponents argument is both dishonest and factually incorrect.

        I wasnt making a case that the subsidy played no role in the redevelopment of the property, so I have no case to rest. Your motive to strawman my argument is curious.

        Finally, I know it’s a net loss in the short term because I can do math. Maybe less time spinning, more time thinking, sir.

        • Does “Reality” have a point? A policy he/she proposes as an alternative?

          Matt’s right: the Register editorial was “Ha ha, we told you so” jab. Saying no one is taking the city up on the subsidy is the same thing as saying the policy doesn’t work.

          Anaheim can act to remain a competitive, top-tier convention destination, or do nothing become a second-tier destination. The council majority chose to stay competitive. Tait voted to accept being second tier.

          Like it or not, Anaheim has a business model the city embraced half a century ago. It has worked. The GardenWalk Hotels and this new 4-Diamond hotel will always generate revenue for the City, even during the term of the assistance agreement. In the longer run, Anaheim will receive much more revenue via this policy than by whatever policy you’re advocating.

          By the way, what do you advocate we do instead, Reality?

          • My point is this policy isn’t worth celebrating.

            As an alternative, I’d suggest Anaheim’s elected officers put their fiduciary duties first. Issuing a blanket policy like this isn’t intelligent.

  2. This new hotel will generate double the revenue as a four star property than the existing hotel during the subsidy. What math are you using?

    • The basic kind.

      Assumptions: 300rm vs 580
      Rate: $125 vs $300 (that’s generous)
      Tax: 15%
      Precent kept: 80% vs 10%
      Occupancy: 65% vs 85% (also generous)
      Booked Days: 330 vs 350 (generous again)

      Using the above, that’s about $200,000 sucked out of the general fund for 20 years, or nearly $4,000,0000, or alternatively, two cops.

      That doesn’t include the loss to the general fund during the construction year, which is about another million.

      Assuming some more realistic numbers, Anaheim is looking at a $11,000,000 loss over twenty years, or five cops.

      I don’t know where you’re getting $13MM from below, but that’s ridiculous. Assuming $580 a night (no way) and 85% occupancy for 365 a year doesn’t even get to ten mil.

      In any case, this stupid policy will keep officers off the street for a generation. Enjoy.

      • Classic CATER view. Lets make up numbers so we sound smart and then rain all over the parade.

        There is a very disturbing element in Anaheim (although Cantor and Diamond aren’t from Anaheim) that loves making comments like these to undermine solid policy achievements. I can only imagine what they would say about the work done converting Anaheim from neon sign motels to what it is today. Thank goodness they weren’t around back then or where would we be now???

        • That doesn’t make any sense. Not sure what CATER has to do with this or the numbers above, that’s weird.

          If you have a problem with the assumptions I listed, let’s hear them, but torpedoing the claim by assaulting (someone else’s might I add) motive is intellectually dishonest.

          • I honestly have no idea who “Reality” is so CATER is not involved in this comment (although I would buy the lunch if Reality wanted to contact me) but it may surprise y’all to know that there are a whole lot of folks out there not associated with CATER who share the same views. It’s called common sense. The argument that the 4 star hotel generates more tax is based on the premise that the 4 star charges more than a 3 Star. But there is no requirement built into the agreement to charge the way higher than ADR rates in order to get the feasibility gap payment. One need only meet the criteria for construction of facilities, and frankly the description is a pretty low bar to meet, and frankly describes pretty much every branded hotel I have stayed at over the last few years. I would call ONE of my recent trips a 4 star, and the difference in Fairmont Gold has nothing to do with a wake up call or ice machines on every floor. Indeed, the agreement offers no flexibility to extend the definition of 4 star as time goes by. Once upon a time having running water in a room was upscale. When the Disneyland hotel was built, direct dial phones were 4 star. Today that standard is iPads in the rooms to manage lighting and window treatments. Gee, who didn’t consider adjusting that over time? My objection to the subsidy wasn’t for lack of vision in wanting Anaheim to develop higher end hotels. I was bugged that staff made such a mess of the agreement. It wasn’t Anaheim’s finest moment. Really, Anaheim offers the hospitality industry the advantage of 20 something million visitors per year, the lowest utility rates in the region, a very well trained workforce committed to the hospitality industry as a respectable profession, streamlined permitting, the list goes on. When the opening gambit is the admission that despite all of these advantages one cannot make a go of a hotel and needs to be bailed out by taxpayers from the get go, is this a company we will be proud of as a flagship for anaheims bid for world class destination status? Thanks, but I want to see us draw hotels with a corporate culture of pride and self reliance, not a welfare mentality. I have immense respect for the hospitality industry, and even more I love my community. This policy put both of those on the clearance rack, marked down to 70 percent off. We can do better.

            • When your economic development policy is to hope for the best and keep your fingers crossed that good companies come to town, despite the aggressive recruitment efforts of other cities, you end up with the neon motels of 1990’s Anaheim. This was the point I made above that seems to have been missed.

  3. And estimates are more than $13M long tern annually v. less than $1M today. Those are facts.

    • The rebate is based on new revenue generated. You can say the city won’t take 100 percent in but not that we are losing more than we have today. You can’t deduct from what we are not generating now. Your data is faulty on multiple levels and doesn’t account for increases in other revenue streams. I trust our city finance departnent and reject your ‘back of napkin’ attempt at math. This hotel will raise revenue and that’s good news for all city departments.

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