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Tuesday, Jul 16, 2024

Disneyland Preps for the Future

DisneylandForward plan could double Anaheim's tax revenue, officials say

Disneyland Resort in Anaheim is making headway on plans for a large-scale hospitality expansion dubbed DisneylandForward, about two years after it was first announced.

Things are much brighter for the city of Anaheim’s tourism industry since those plans were first revealed in March 2021. Then, the ongoing closure of Disney’s theme parks and other shuttered hospitality uses in the city slashed Anaheim’s transient occupancy tax (TOT) revenue to around $30 million, the lowest figure since the city started tracking figures in 1999.

Now, the city has surpassed its pre-pandemic hospitality metrics on all fronts, with TOT revenue expected to reach a new all-time high of $184.4 million this year.

An optimistic team of Disney leaders, joined by local businesses and community members, celebrated those new metrics during an OC Forum event last week held at Disney’s Grand Californian Hotel & Spa.

The DisneylandForward expansion, which could add new theme parks, hotels, dining and parking within the 500-acre resort owned by Burbank-based Walt Disney Co. (NYSE: DIS) over the next several decades, has the potential to more than double the city of Anaheim’s annual tax revenue from pre-pandemic levels, according to an economic impact report commissioned by Disneyland and shared during the OC Forum event.

CSUF Projections

Anil Puri, director of CSUF’s Woods Center for Economic Analysis and Forecasting, pointed to the citywide and statewide financial benefits of a Disneyland Resort expansion, noting a $1 billion investment could result in $15 million in annual taxes for the city of Anaheim, and an additional $1 million for the rest of the county.

A larger expansion in which Disneyland Resort is developed to its full entitlements could result in annual tax revenue of $244 million for the city, more than twice the city’s tax revenue in 2019.

“We hope this will be helpful to the decision makers as they go about analyzing and thinking about what to do next,” Puri said.

Galaxy’s Edge, the Star Wars-themed land that opened in 2019 at Disneyland, counted a development cost around $1 billion; Disneyland’s goal for the large-scale expansion would cost multiples of that figure, according to Disneyland Resort President Ken Potrock.

“DisneylandForward sets the stage for significant and multi-decade investment for the future,” Potrock said. “This is the next generation of the Disneyland Resort.”

Disneyland is Orange County’s largest employer with about 34,000 employees, as well as the main driver for OC’s vital tourism industry.

New Approvals

The resort—which currently includes two theme parks, three hotels, a shopping district and parking—has current entitlements in place that allows the addition of new attractions, hotels, retail and parking on land already owned by Walt Disney Co.

However, those approvals—created in the 1990s with the last major expansion—limited the types of uses allowed in each resort district, thus limiting the park’s physical expansion.

It’s not clear how much the company is looking to spend on the long-term expansion, but it said it would not seek any public funds to help finance the project.

The company also notes that it isn’t seeking additional square footage or hotel rooms beyond what is currently approved and allowed, and is instead looking to work with the city and community to update its existing approvals “to allow for integrated development to be located and built throughout Disney properties.”

“There is plenty of space to build on,” Joe Haupt, CEO and president of Irvine-based Spectrum Development Group, said last week at the event. Haupt’s firm, which specializes in hospitality developments, has been tapped by Disneyland to help with the proposals for the real estate expansion.

The company is one of several outside organizations helping Disneyland in its public outreach efforts that have been ongoing over the past two years, with the goal of better understanding community concerns and opinions.

Disneyland said it is looking to mitigate such concerns, such as traffic and noise, as it moves forward with the city process.

Planned Parcels

Disney’s development goals are reminiscent of the company’s first expansion in the 1990s, when it gained approvals to add its second theme park, California Adventure; and a hotel and a shopping district, now known as Downtown Disney.

As part of that expansion, the city approved long-term development rights that set up districts within Disneyland Resort, and restricted the types of commercial uses allowed in each district.

Those approvals also set up entitlements for Disney, allowing the company to build up to 6.5 million square feet for the two theme parks, 5,600 hotel rooms, 300,000 square feet of retail space, 34,300 parking spaces, and 350,000 square feet for the planned Downtown Disney shopping district.

Disney has yet to near build-out for any of these uses, meeting less than half of its allowed theme park space, about 40% of its hotel space and two-thirds of its retail space for both inside and outside of the theme park gates.

Next Steps

Disneyland is currently working on an environmental impact report for DisneylandForward, though the exact uses to be included as part of the expansion have yet to be specified.

It will first head through a public process culminating with a city council hearing scheduled for the end of 2024 to win approvals to build other uses on land it owns in the direct vicinity of the two theme parks.

The parcels being eyed for redevelopment largely include three parking lots and other land totaling about 100 acres. By comparison, Galaxy’s Edge spans 14 acres.

A theme park expansion on the west side of the property could replace the Downtown Disney and Lilo & Stich parking lots—and join a parcel that currently holds the Disneyland Hotel and Paradise Pier Hotel—while the Toy Story lot on the east side of the property could make way for a mixed-use expansion that would add theme park attractions, hotels, retail and dining.

A third parcel located east of the two theme parks is expected to make way for a new parking structure.

Inspired Lands

The expansion may not add a third theme park—or third gate, as has been in discussions for some time—but is likely to add new lands, including rides and attractions combined with shopping and hotels, as an integrated extension of both Disneyland and California Adventure.

“We’d love to build something new—maybe themed areas that integrate with lodging,” Rachel Alde, vice president of global development for Disney Parks, said during the event.

Alde played a key role in Disney’s effort to win approvals for Shanghai Disney Resort.

Alde referenced projects currently under construction in other Disney parks—Shanghai is building an urban-themed land based on the 2016 animation “Zootopia” and a 30-acre expansion at Tokyo Disneysea will feature castles and attractions from films “Frozen” and “Tangled”—as ideas for these integrated areas if land-use approvals are updated.

“What we’d love to do is respond to that consumer affinity,” she added.
Between 1999 and 2006, the county saw hotel revenue nearly double as a result of Disney’s first large-scale expansion, when it developed California Adventure.

Several years later, the opening of Cars Land at California Adventure in 2012 helped contribute to a 14% boost in hotel revenue that year.

“There is a very strong correlation between each time we make a significant investment in the theme park and revenue,” Haupt said. “It adds in-capacity, adds people who stay longer, and all the things that go with it.”

$2B in Current Projects

Plans for DisneylandForward come amid an already busy development pipeline for Disneyland Resort, with approximately $2 billion in developments underway throughout the two Anaheim theme parks and Downtown Disney shopping district.

Current projects expected to be completed this year include hotel renovations to the resort’s 481-key Paradise Pier Hotel, which will be rethemed to the Pixar Place Hotel by this winter, and the addition of a 344-room tower dubbed the Villas at Disneyland Hotel set to open in September.

Disneyland Resort President Ken Potrock noted that the villas’ additional occupancy is expected to generate around $6 million in incremental tourism tax revenue for the city.

Bookings opened up earlier this month, and Potrock pointed to a “record-setting” response from customers.

More than a dozen new dining and retail spots are in the works at the Downtown Disney shopping district with openings set for the next 18 months, according to Potrock.

New restaurants Paseo and Centrico have already begun construction while work on the upcoming Porto’s Bakery and Din Tai Fung locations has yet to start.

Inside the theme parks, California Adventure’s Pacific Wharf, a waterfront boardwalk-theme stretch of land, will be remodeled into San Fransokyo, the modern city in Disney’s 2014 animated feature film “Big Hero 6.”

A new attraction is also slated for the park’s Avengers Campus sector featuring a storyline revolving around a variant version of Marvel villain Thanos.

Across the way, Disneyland’s conversion of the Splash Mountain log ride into Tiana’s Bayou Adventure is set to finish by late 2024, with a rethemed restaurant called Tiana’s Palace also in tow.

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