By JERRY HIRSCH

The Walt Disney Co. is moving to skim the cream off the top of the hotel market in Anaheim by building a luxury hotel that will rival other noteworthy Orange County properties including the Ritz-Carlton Laguna Niguel and the Four Seasons Hotel in Newport Beach. Disney’s Grand Californian Hotel, a 750-room property scheduled to open in early 2001, is part of the entertainment company’s $1.4 billion expansion in Anaheim. It will sit at the nexus of Disneyland, the California Adventure theme park now under construction on the former Disneyland parking lot, and Downtown Disney, a planned retail, dining and entertainment complex.

Bill O’Connell, co-owner of the Best Western Stovall Hotels, which operates four hotels in Anaheim, said he has no doubt that Disney will charge the highest rates in the Anaheim market at the Grand Californian. Standard rates for Disney’s Grand Floridian Hotel at Walt Disney World in Orlando, Fla., which targets the same market, start at $299 for the off-season and rise to $420 in the peak season. Rooms at the Disneyland Hotel and the Disneyland Pacific Hotel in Anaheim, by comparison, range from about $175 to $210.

"Disney is building an upscale property because it sees the need for it in Anaheim today," said O’Connell.

Much of the Anaheim market is designed for the budgets of convention-goers or middle-income families, O’Connell said. Virtually all of his 700 rooms go for $75 to $125 a night. "But Disney will have a very unique product. The hotel will be inside the theme park, so they can charge accordingly for their rooms," O’Connell said.

Tour operators believe the market exists for pricey rooms with a Disney label.

International tourists will pay for the "brand name and the amenities that you can only get at a Disney hotel. It gets down to the Mickey soaps and shampoos and the name value," said Vic Curameng of Pacifico Creative Services, a Los Angeles wholesaler to Japanese tour groups. "There is always a market for those high-priced rooms. One of the hot items right now is the Bellagio in Las Vegas, which is high-priced," Curameng said.

Disney will know how to market the hotel effectively, he added. Not everyone believes charging a premium for the Grand Californian is a slam-dunk.

"The lodging market in Anaheim, even with the Disney theme-park expansion and the infrastructure improvements, cannot exact rates in the $300 range," said Manny Sawhney, a hotel broker with Sperry Van Ness in Irvine. "Upwards of $200 would be a premium price. The Marriott, Hyatt and Hilton are all below $150.

"The top is just a very small percentage of the market coming to Anaheim," Sawhney said. "It’s risky to go into the market with that type of game plan."

And others believe it will cannibalize part of the market, especially the tour groups from Asia.

"They will be vying for the same leisure business that we get," said Patrick Hynes, spokesman for the Hilton Anaheim, Orange County’s largest hotel.

Japanese tour groups make up the Hilton’s largest piece of the vacation business, using a nightly average of 50 of the hotel’s 1,576 rooms.

FROM THE ORANGE COUNTY REGISTER:

May 5, 1999

The article quoted on this page is copyright © 1999 by The Orange County Register.

It is reproduced on this site by kind permission of the author.