Despite Coronavirus Spikes, Disneyland And Orange County Hotels Brace For Reopening

Reeling from a coronavirus-catalyzed drop in tourism and business, hoteliers in Anaheim are closely watching the reopening of the Disneyland Resort and the visitors it may bring to the area.

“This is huge news,” Wincome Group CEO and Asset Manager Paul Sanford said to Bisnow an hour after Disneyland announced its reopening Wednesday. “We all know Disney is so necessary to Anaheim and Orange County. It is one of the main economic engines for the resort.”

The reopening announcement came a day before the stock market plunged more than 1,800 points on Thursday, after jittery investors were spooked by a sudden rise in coronavirus cases nationwide. While Walt Disney Co. stock might normally have seen a slight surge after the planned reopening of its original theme park, it instead saw its share price drop more than 5% throughout the day.

Still, Anaheim hoteliers are welcoming Disneyland's proposed reopening, desperate to start a stalled economic engine.

Disney officials said on Wednesday that barring any setbacks from state and local health officials, they plan to reopen the two Anaheim theme parks, Disneyland and Disney California Adventure, on July 17, Disneyland’s 65th anniversary.

Its outdoor retail strip, the Downtown Disney District, would reopen on July 9 and two of its hotels, Disney's Paradise Pier and Disney's Grand Californian Hotel & Spa, on July 23. Disney’s third hotel, the Disneyland Hotel, will open at a later date, Disney officials told Bisnow. 

Both theme parks would reopen with new health and safety measures and an attendance reservation system to limit capacity, Disney said. To avoid mass gatherings in the park, parades and nighttime shows will still be canceled.

The reopening of Disneyland could be a boon for Anaheim hotel owners, who have seen their hotel occupancy level drop nearly to zero in the past three months, and are now looking to jump on Disney's bandwagon to help them rebound from that collapse.

But city officials, who are also looking forward to the reopening, are cautious about possible new coronavirus cases. In the past two weeks, Orange County has seen 2,091 new cases and 62 deaths. Anaheim has the second-most coronavirus cases in the county, behind Santa Ana, with 1,482 cases as of June 11, according to the LA Times.

"We will continue to rely on the Orange County Health Care Agency for case tracking in our city," Anaheim city spokesman Mike Lyster said.

"We all need to brace for and accept that we will see new cases going forward, and that is largely from a continued increase in testing, which will detect more cases," he said. "That is not necessarily related to reopening. For reopening, we would look for a breakout of several cases at any location or industry as an indicator."

When asked how Disney will track coronavirus cases and limit its spread and protect visitors, a Disney spokeswoman referred Bisnow to a blog post by its chief medical officer, Dr. Pamela Hymel. Hymel wrote that Disney is implementing new physical distancing guidelines for its properties, and said it will screen guests, increase cleaning and sanitization, and train cast members.

"Given the constantly changing global health environment, these practices may evolve as we consider the latest guidance," Hymel wrote.

Disney officials in Anaheim said they plan to follow the health protocol set by their colleagues at other Disney theme parks that have opened. In Shanghai Disneyland, the first Disney theme park to reopen last month, workers checked visitor's temperature, were required to wear masks and rides sat half-empty to meet social distancing requirements. Walt Disney World is slated to reopen on June 22.

Anaheim is heavily reliant on the tourism industry. More than 24.2 million people visited the city last year, according to Visit Anaheim, the city's tourism arm. More than 5 million stayed at Anaheim hotels, and transient occupancy tax or bed tax is the largest contributor to the city's general fund budget. Disneyland is the city and Southern California's biggest economic driver, generating an $8.5B economic impact to Southern California, according to a Cal State Fullerton study.

Lyster said that for Anaheim hotels, Disneyland's reopening "is what many have been waiting for" to restart their business operations. "With state guidance, we expect to see many reopen in coming weeks," Lyster said.

More than 18.6 million people visited Disneyland and 9.8 million visited its sister park, Disney California Adventure, in 2018, according to the latest attendance figures, which were released by the Themed Entertainment Association, a trade group that supports the themed amusement park industry.

When the coronavirus pandemic hit in mid-March, Disneyland and the city’s convention center closed, forcing most of the 75 or so hotels in the Resort District and around it to either shut down or severely limit operations. According to STR, before the coronavirus shut down the state, hotels in the Anaheim and Santa Ana area were tracking at 79% occupancy, with a $163 average daily rate and $129 revenue per available room. In April, hotel occupancy dropped to 21%, $86 ADR and $18 RevPAR.

But with Disneyland traffic possibly back in the fold, hoteliers said they are hopeful of gradually reopening their doors and believe that Disney will be a safe place to visit.

"I have every confidence that the Disneyland Resort will reopen with appropriate precautions in place and in accordance with government guidelines to protect public health," Prospera Hotels President and CEO Ajesh Patel said. 

Atlas Hospitality Group President Alan Reay said he expects tourism to slowly come back to the area. Reay said the demand may be more gradual in Anaheim than in other coastal areas since Disney has stated it will limit the number of attendees to its theme parks.

Disney officials have also not disclosed how Disneyland’s new reservation system will work. In a blog post, the company said it will work with local health authorities on how to safely reopen.

“In other areas that have reopened, we are seeing a big uptick in hotel business, which owners are saying is due to pent-up demand, so I think we will see the same in Anaheim when Disneyland reopens,” Reay said. 

Sanford said in the past three months, the occupancy levels in two of his hotels, one in Anaheim and another in Costa Mesa, have dropped between 5% and 10%. But rather than closing, he said he decided to keep his hotels open to house first responders and keep his employees working. Weekends were better, with occupancy up 50% because he found that many frontline workers and first responders "needed a good weekend break."

But it still was not enough to stay in the black.

"We lost a lot of money, but we felt it was important to stay open for the community," Sanford said. "This was a long-term investment in our employees and the community."

With Disneyland reopening, Sanford said he now plans to bring back furloughed hotel staff.

"We’re dying to get everyone back to work at full-time hours," Sanford said.

Sanford said Disney reopening in July is a good time because unemployment benefits that many workers were collecting are set to expire that month. Sanford said he is hiring.

"We’ve been tracking what Disney has been doing with Shanghai Disneyland and then with Walt Disney World. We were hoping very much that Anaheim wasn’t too far behind," Sanford said. "Disney has been a great business partner. We were worried that we were going to lose a lot of our business to Florida. I think it was very strategic to reopen in July."

Patel of Prospera is hoping Disney will help bring back visitors to Anaheim. Prospera has seven hotels in Anaheim, including a brand-new four diamond JW Marriott resort, which completed construction earlier this year. The JW Marriott was slated to hold a grand opening on March 16, but the coronavirus and the closing of Disneyland held that off. Patel's other hotels have remained temporarily closed since the pandemic hit.

"Obviously, we're very excited about the news," Patel said. "Everyone looks at Disney as a beacon in California and especially in Southern California and the state's tourism industry."

Patel said he is looking at what Disney does with its new reservation system to track hotel demand patterns. Even before Disney announced its reopening, Patel began accepting reservations for the JW from July onward. But for his company and others, there is still a big question mark as to when they can fully reopen.

"There is still a lot of uncertainty around what the [Disneyland] opening process looks like and how the reservation system works," he said. "But right now, the analysis that we have to do is at what point can you open and generate enough money than staying closed. The moment that we feel we can operate the business on a level where our monthly cash burn is lower than staying closed, then we'll reopen the business."