The Orange County Register
08/29/15

Four-Diamond JW Marriott Proposed for Disneyland Area
By Art Marroquin

http://www.ocregister.com/articles/anaheim-680062-hotel-city.html

ANAHEIM – A developer has submitted plans to build a luxury hotel at the GardenWalk mall near Disneyland, becoming the first to take advantage of a hefty city subsidy that aims to entice more-affluent tourists to stay in Anaheim.

The JW Marriott Anaheim would rise 12 stories with 466 guest rooms, ballrooms and meeting rooms on a 2.8-acre dirt lot near Katella Avenue and Clementine Street, within walking distance of Disney’s theme parks and the Convention Center.

It would cost $150 million-plus to build the hotel, financed in large part by a 70 percent return on bed taxes collected there over 20 years. Opponents have challenged the deal in court.

Despite the ongoing legal battle, developer Bill O’Connell Sr. said that “the time was right to move ahead,” and an application was filed Wednesday with Anaheim’s Planning Department.

“With the JW Marriott, we are bringing a highly respected hotel brand that will do great things by creating jobs, boosting the hotel industry and attracting bigger and better conventions to Anaheim,” said O’Connell, head of O’Connell Hotels & Hospitality. He is developing the hotel with Prospera Hotels. “We look forward to moving ahead with this project, which will provide tremendous benefits to the city of Anaheim, its visitors and residents.”

The hotel would be the first JW Marriott in Orange County and the fifth in California. The luxury chain meets AAA’s stringent guidelines for four-diamond ratings.

It is unclear what JW Marriott Anaheim would charge for rooms, but the rates are expected to be high. For example, the prices listed a month from now at the JW Marriott Los Angeles L.A. Live range from $359 to $439 for a Saturday night.

Jessica Berkin, a JW Marriott spokeswoman, declined to comment.

For now, the Disneyland Hotel and Disney’s Grand Californian Hotel & Spa are the only hotels in Anaheim that meet AAA’s coveted four-diamond rating.

“This is going to be a high-end, luxury option for people who visit Anaheim but prefer to stay in the coastal areas to get that caliber of hotel,” said Alan X. Reay, president of Atlas Hospitality Group in Irvine, which provides research on the state’s hotel industry.

“I know that when I hear four-star hotel, I think of the higher-end places you see in Newport Beach or Costa Mesa, but not in Anaheim,” Reay said. “Anaheim’s three-star hotels and restaurants have typically catered to family travelers, so it’s going to be interesting to see how this hotel will capture the luxury market.”

In May 2013, the City Council awarded a $158 million room tax subsidy to help O’Connell build two luxury hotels at the struggling GardenWalk mall. He owns the land where the hotels would go.

O’Connell would receive a maximum $81.1 million subsidy for the JW Marriott, while the rest would go to a yet-announced, second four-diamond hotel.

O’Connell gets that funding by receiving 70 percent of the hotel’s bed taxes for up to 20 years. Another 20 percent would go to help cover massive improvements made to the resort area in 1996, with the remaining 10 percent going to the city.

“To have the JW Marriott choose Anaheim as its first location in Orange County shows a lot about their confidence in our city and the caliber of our economic initiatives,” Councilwoman Kris Murray said.

Despite objections from the mayor, a councilman, and a handful of community activists, the City Council voted 3-2 in June to adopt a policy offering the same deal to any other developer building a four-diamond hotel. Existing hoteliers wanting to overhaul their properties to meet the higher-quality standards would receive lesser subsidies.

Supporters say such deals generate additional revenue for the city, while opponents say they give away too much money to developers.

Mayor Tom Tait voted against the GardenWalk hotel deal in 2013, saying that room taxes generated by luxury hotels should pay for additional police officers, parks, road repairs and other city needs.

Hotel taxes are projected at $133 million through the current fiscal year, accounting for nearly half of Anaheim’s revenue.

“This would be a good thing if these GardenWalk hotels weren’t costing the people of Anaheim $158 million from the general fund because that money is needed to improve our neighborhoods, not to write checks for developers,” Tait said. “Offering this to additional developers will multiply the harm to our city.”

Shortly after the 2013 deal was struck, Orange County Communities Organized for Responsible Development filed a lawsuit alleging that four City Council members violated conflict-of-interest laws by accepting campaign contributions from O’Connell. An Orange County Superior Court judge dismissed the suit in May.

The community-labor alliance filed a appeal. John Woodhead, Anaheim’s community development director, estimated the litigation could delay construction of the JW Marriott for up to another year.

“I think the developer is confident enough to feel as though he can run through the process with the city so that he can break ground shortly after the litigation concludes,” Woodhead said. “He doesn’t want to wait any longer than he needs to.”

Even though the land was zoned for a hotel in 1997, city officials will review O’Connell’s proposal, with final consideration expected to go to the Anaheim Planning Commission by November.

At least two other developers have expressed interest in coming to Anaheim with luxury hotels, too.

“We’re establishing the viability of a product in this market, and all of the advantages that come with it,” Woodhead said.

The GardenWalk mall offers such restaurants as P.F. Chang’s, Bubba Gump Shrimp Co. and The Cheesecake Factory. Still, it has had difficulties retaining tenants since opening in 2008. After several ownership changes, there are numerous vacancies.

The UltraLuxe Cinemas shuttered earlier this month. House of Blues recently announced it would move from its longtime home at Downtown Disney and take that spot.

Jay Burress, head of Visit Anaheim, said the anticipated changes at GardenWalk, along with the Convention Center’s ongoing expansion and the recent announcement that a “Star Wars” themed land is coming to Disneyland, makes Anaheim’s resort area ripe for a major luxury resort.

“We’ve heard time and again from current and potential visitors that Anaheim needed a luxury hotel outside of Disneyland,” said Burress, whose agency promotes Orange County and books events at the Convention Center. “This news elevates the city of Anaheim to an entirely new level for all visitors.”