Orange County Register
03/16/17

Three More Hotel Projects Planned in Anaheim’s Resort Area Around Disneyland
By Joseph Pimentel

http://www.ocregister.com/articles/anaheim-746764-hotel-hotels.html

With a “Star Wars” land under construction at nearby Disneyland and the Anaheim Convention Center expansion nearly complete, Bobby Bhagat decided now was the time to redevelop his aging Arena Inn & Suites.

“It was an eyesore to the city. It was rundown,” said Bhagat, who purchased the 2.06 acres property at Harbor Boulevard and Katella Avenue in 2007. “The previous owner owned it for 30 years, made no upgrades. … My whole plan when I bought it was to redevelop it, but the recession hit so my plan hit a snag. But things have gotten better.”

Bhagat, 37, president of the Arena Group, struck a deal with Prospera Hotels, the developer of the resort district’s Hyatt Place, Homewood Suites and Hyatt House, for a 178-room, five-story Hampton Inn & Suites to replace his motel at 100 W. Katella Ave. The property will feature a modern contemporary design and a second-level pool deck, meeting rooms and a fitness center.

“Prospera is a long-term owner and operator at the Anaheim Resort, and we are helping to bring about a new generation of hotels for the millions of visitors who come here each year,” Ajesh Patel, president and CEO of Prospera, said in a statement. “We are very excited to partner with Arena Group, who shares that same vision.”

The Planning Commission approved the project in February, one of three hotel projects the commission has given thumbs up to in as many months.

In January, the commission approved Element by Westin, a 174-room boutique hotel on Alro Way at the former site of the Bergstroms Childrens Store and a city fire station. In March, the commission gave the go-ahead for the public to have access to a rooftop bar called “Fifth” at the Grand Legacy Hotel across the street from Disneyland.

In the past four years, 18 hotels have opened – including five last year – in the 1,100-acre resort area. One existing hotel is expanding. Four more are slated that would be considered four-diamond, luxury properties.

The 75 or so hotels in the resort district generated $163 million in revenue for the city, of which $70 million went straight to the city’s general fund.

The hotel demand is being fed by a record number of people visiting Anaheim – home of Disneyland, the largest convention center on the west coast, the Angels and the Anaheim Ducks. A preliminary report by Visit Anaheim, the city’s tourism marketing arm, reported more than 23 million visitors visited Anaheim last year. It was the fourth year in a row, the city recorded growth.

Alan Reay, president of Irvine-based Atlas Hospitality Group, said he sees the new developments as part of a larger trend in Orange County to build around Disneyland and the Anaheim Convention Center. Reay said the developments are expanding beyond the resort, with hotels popping up in Santa Ana, Buena Park, and Garden Grove.

The first Great Wolf Lodge in California is marking is first year in Garden Grove.

“As long as they could provide a shuttle for people to go to Disneyland, they’ll compete with the existing supply,” Reay said. The older properties that have not upgraded will have the hardest time staying competitive, he said.

Reay is also cautious. The economy has improved, but he’s unsure of what it will look like in two or three years. There might be fewer international visitors flocking to Disneyland because of immigration restrictions, and he’s seen tourists in other parts of the United States look at traveling to London or other parts of Europe as a more affordable destination.

“What happens in the hotel industry is we always have a tendency to overbuild,” Reay said. “That’s something that lenders are aware of and we’ve already seen some lenders pull back on offering loans to developers.”

Bhagat, the Arena Inn owner, said he wanted to invest in his property because of the 81 percent hotel occupancy rate in the Anaheim and Garden Grove markets. There are a lot of hotels and rooms within two miles of the resort district, but despite the competition, he said there’s a lot of reasons to be optimistic about the area’s long-term outlook.

“Star Wars at Disneyland, the convention center expansion. I don’t see things slowing down anytime soon,” Bhagat said. “We’ve seen there’s a demand for people wanting to stay in newer buildings and hotels.”

The 110-room Arena Inn was built in 1975. The motel closed earlier this year and slated to be demolished next month.

“I’m excited. I’m anxious,” Bhagat said. “Prospera has a great track record in Anaheim. I’m hoping we could open by the NAMM convention in 2019.”