Feasts and Famines : Anaheim Hotel Struggles With Varied Problems, Empty Rooms

It is the stuff of which hoteliers’ dreams are frayed. Disneyland is a duck’s waddle away. The Anaheim Convention Center is its back porch. Snazzy amenities and slick decor rank it among the world’s top convention hotels. But each night, nearly half the rooms in the $180-million, 1,600-room Anaheim Hilton sit empty.

Since it opened in May, the mammoth structure, which is the largest hotel in Southern California and one of the largest west of the Mississippi, has enjoyed the finest of feasts and endured the bleakest of famines.

“There are days when we are completely full--not a single room available--and others when we have 100 rooms occupied,” said Holger B. Gantz, manager of the sprawling, 14-story structure.

Occupancy rates at the Hilton have suffered from a combination of poor planning, bad luck and increased competition in the Anaheim area. The Hilton opened its doors without the usual cushion of pre-sold convention business. And the tourism drought that came with the Summer Olympics and worsened through the Disneyland strike seemed even bleaker in the face of a growing glut of new hotels within a 10-mile radius of Disneyland.

In the past two years, the Anaheim area has been swamped with more than 5,000 new hotel rooms. Guest rooms in the area are now believed to exceed 20,000. Just two weeks ago, another 440 rooms were added with the opening of the Hotel Meridien in Newport Beach. And yet another local Hilton, the 550-room Irvine Hilton, is now under construction. Much like the Anaheim Hilton, the Irvine Hilton will be managed, but not owned, by Hilton Corp.

Edward Shaw, an associate at the Los Angeles-based accounting firm of Laventhol & Howath, said the Anaheim Hilton has done a good job in keeping its rooms booked. “It takes a while when you have to fill up 1,600 rooms every night. The Hilton is going to be a very successful hotel,” said Shaw, whose company specializes in hotel consultation and is the auditor for the Anaheim Hilton.

Hilmar Rosenest, senior vice president of Hilton Corp., confirmed back in October that the Anaheim Hilton was having occupancy problems. “Big hotels don’t take off overnight,” he said at the time.

That is one reason that the Hilton Corp. has mostly taken to managing rather than building new hotels. Hilton Corp. has less than a 10% stake in the Anaheim Hilton, which is owned by a large developer, Los Angeles-based Sun Cal Properties Inc. “It’s good business,” said Robert P. Neapolitan, the hotel’s director of sales. Hilton gets a management fee. “Whether the hotel makes or loses money, Hilton (Corp.) makes money,” Neapolitan said.

In Anaheim, no one watches hotels more closely than William Snyder, president of the Anaheim Area Visitors and Convention Bureau. He is not entirely surprised by the Hilton’s struggles. “Any property of that size is bound to have early problems,” Snyder said.

So big and confusing is the Anaheim Hilton--with escalators, elevators and hallways winding along its 320,000-square-foot floors--that just as at big shopping malls, directories are posted to help guests figure out where they are.

Although the lobby is loaded with fine, native Southern Californian artwork, the hotel’s interior decorating is far from finished. In some hallways, about the only decoration is the maid’s cart. “When we opened,” Gantz said, “much of the furniture was still on ships.”

A Convention Magnet

Still, competitors generally regard the Hilton as the spark that eventually will set the local convention market ablaze. A record 1 million convention visitors are expected in Anaheim this year. Some groups would have bypassed Anaheim were it not for the Hilton. “I know of several conventions whose attendance here hinged on the Hilton being built,” Snyder said.

For all its problems, the Anaheim Hilton is one of the classiest convention hotels in the country. Construction of the Hilton shoved the Westin Bonaventure hotel in downtown Los Angeles, with its 1,474 rooms, into second place, in size, in Southern California. With 100,000 square feet of meeting space divided into nearly 60 rooms, a company could hold weekly conferences in the Anaheim Hilton for an entire year without twice convening in the same conference room.

A few weeks ago, the Anaheim Hilton’s management completely rewrote the hotel’s rate sheets. The bloated summer rates were scrapped in favor of modified year-round rates. The lowest-priced single room at the Hilton costs $68 a night, a surprising $17 less than the lowest-priced room at the nearby Marriott. New hotels, however, frequently cut rates to attract business.

Along the top floor of the Hilton are 140 suites with rates beginning at $200 a night. This concierge floor offers special guest services, such as free continental breakfast and evening snacks, guest closets stocked with bathrobes and even Trivial Pursuit games for guests too tired to make the trek to Disneyland.

The Anaheim Hilton’s $300,000 front desk computer is a state-of-the-art device. The hotel also has a $500,000 computerized guest room lock system that automatically changes room locks each time a guest checks out. Its fire alarm system, which can broadcast fire warnings into all guest rooms, cost another $430,000. Hotel housekeepers notify the front desk, by punching special codes into the computer via room telephones, when guest rooms are cleaned.

The hotel’s 1,300 employees swell the monthly payroll to more than $1 million. Three of those staff members work, exclusively, on polishing silverware.

Still, the hotel is not without its critics. “The Hilton has changed the entire complexion of this area,” said Joel Rothman, general manager of the 1,000-room Anaheim Marriott, which stands in the shadow of the Hilton. “Sometimes, when I look at it, I feel like I’m in the middle of Manhattan, looking across Lexington Avenue,” Rothman observed.

Hilton executives concede that improper planning has haunted the hotel from Day 1. The night before the Anaheim Hilton opened, seamstresses were on their knees in the lobby hand-sewing the carpet while the hotel’s general manager and other executives were running room-to-room hooking up the cable television sets.

It was a last-minute preparation for a major convention that had more than a year earlier booked virtually every room in the hotel. So successful was the convention, that before the Institute of Food Technologists checked out, it reserved 1,300 rooms at the Hilton for its 1990 convention.

But for days after the food technologists left, the Hilton went hungry.

The Hilton was built so quickly and on such short notice that salesmen did not have adequate advance time to sell rooms, Hilton executives said. Commonly, selling blocks of rooms to conventions often begins as early as four years before a major new hotel opens its doors. But the Hilton went from concept to reality in less than 24 months. “We made the blueprints while we were building,” manager Gantz said.

Learning from its early mistakes, the Anaheim Hilton now has a full-time conventions sales staff of 12 who travel the globe to hunt up new business, said Neapolitan, the sales director. Nearly 70% of the hotel’s business is convention related, he said. Some conventions at the Hilton are now booked beyond the year 2000, although most of the bookings are for conventions four and five years off.

The hotel was affected by hotel glut from its initial planning stages and was caught in a local hotel war that focused on the city’s approval of the Hilton and eventually added to the financial difficulties of its first developer.

Wrather Corp., owner of the Disneyland Hotel, filed a suit in 1982 aimed at blocking the Hilton’s construction, contending that the City of Anaheim didn’t follow proper procedures in approving the project. But Wrather dropped the suit when the Hilton’s developers, C-D Investment Co., agreed to purchase Wrather’s 485-room Inn at the Park and convert it into a Hilton. Ambitious plans were etched to connect the two hotels under Hilton management.

But C-D Investment ran into financial difficulties and sold both hotels to Sun Cal Properties, a subsidiary of Dallas-based Sunbelt Cos. The new owners quickly found themselves with too many rooms and not enough guests. Sun Cal retained the Hilton, but last October sold the Inn to a Los Angeles-based hotelier.