Hotelier Sees County as Magic Kingdom for Tourism : MICHAEL A. BULLIS : Q & A

Michael A. Bullis heads a $70-million company, earns at least $175,000 a year and picks up trash.

An overpaid garbologist? Hardly.

Bullis is vice president and general manager of Disneyland Hotel in Anaheim. The job involves overseeing 1,600 employees, working 60 hours a week and being responsible for everything from operations, marketing and finance to sometimes stooping to pick up litter on the hotel grounds.

Bullis, 40, has probably spent more of his life in hotels than he has at home. He got his start in the hotel business at the age of 8, when he started sweeping up and making beds at his grandmother’s Azalea Motel in Pensacola, Fla.

He joined the 1,200-room Disneyland Hotel in 1982, when occupancy was in the low 70% range and expected to drop. All that has changed. During the first nine months of last year, the hotel had an average occupancy rate of 89.7%, considered impressive by industry standards.

The hotel was purchased from Wrather Corp. by the Walt Disney Co. in January and is soon to undergo a multimillion-dollar expansion. Bullis is expected to head the hotel at least through 1990 under a four-year employment agreement that was signed in January, 1987.

He also is president of the California Hotel and Motel Assn. and outgoing chairman of the Anaheim Area Visitor and Convention Bureau.

In an interview last week with Times staff writer Mary Ann Galante, Bullis discussed Southern California tourism, the hotel industry and the Disneyland Hotel. Q: Orange County tourism has been increasing at a 3% to 5% rate per year and could hit an estimated 36 million people this year. Why are more visitors coming to the county?

A: For two reasons. There are a lot more hotels that are striving to be successful. They’re all out there pitching and selling, trying to bring more business into the county. . . . In the basic commercial and business market, Orange County is becoming known as a destination in itself for business and conventions.

Secondly, in terms of tourism, the (amusement parks) themselves are really promoting heavily and spending big money inside the parks.

When you have the attractions themselves spending more money than they have before and the hotels and the conventions more widely focused on Orange County than they have ever been in the past, the combination is bringing more people here.

And that is generally interpreted as being very good for the hotel industry.

Q: What are Orange County’s primary tourism attractions?

A: Disneyland and Knott’s Berry Farm. You might even be able to say Newport Beach. Outside the community, but certainly affecting us, are the Queen Mary, (Sea World) in San Diego and Universal Studios.

Q: Assuming that there is increased attendance at our amusement parks, won’t that bring an even worse traffic problem--particularly in Orange County?

A: The No. 1 concern . . . is the traffic. . . . I don’t think Orange County has really accepted the responsibility that it’s going to have to do something with that. And I think Orange County--both its residents and government--is going to have to really face that issue. And I think that we’ve started to.

Anaheim has really been looking very hard at how to solve some of these problems. It is going to inhibit growth for the attractions, the hotels and the business community in general.

Q: Is the solution to build more freeways?

A: I think you’ve got to build more freeways. I think you need to build a toll road. I think you need to build a mass transportation (system).

In places like Anaheim and Los Angeles, I think you need to start looking at how to effectively take the roads that you have now and either build them up or out for additional roads. You’ve got to do all those things.

Hypothetically--and I am speaking hypothetically--let’s say that Disney was going to (build) a second gate, (a second major attraction in Anaheim). That would bring in another 10 million or 12 million people. It would double the size of attendance now. Or (it would) make the same people stay that much longer, with the same kind of impact.

You really have to go through the investigation stage--with the government, dealing with the roads, dealing with everything else--before you could really (build) the second gate in Anaheim. I would think that nobody is going to let (Disney) build a second gate until that happens.

If that’s the case, you’re not going to see a second gate in here for five to 10 years. And I absolutely believe that if the government got behind it, (it) could increase the freeways and the road systems and solve many of the problems in the next 10 years.

Q: Some economists have predicted that the falling dollar will cut both ways. The theory is that domestic travel will increase because people will be less inclined to travel abroad, where their money won’t be worth as much. At the same time, some economists say more travelers will visit from overseas because they can get more for their money here.

How do you think the falling value of the dollar has and will impact tourism?

A: Just like it has in the past. We’ve seen tourism very strong--particularly in the last year--in terms of the Pacific Rim countries coming into California.

Southern California is probably the No. 2 destination for visitors from Japan, Hong Kong, Singapore, Australia. The No. 1 destination is Hawaii for Japan.

Q: What about domestic travelers?

A: As the economy changes and it is too expensive to go overseas for middle America . . . I think you’ll see the state tourism programs becoming more effective, apparently because of people staying within California. Or (you’ll see Americans) coming to places like Southern California, rather than spending their money overseas where their dollars don’t go nearly as far.

Q: What do you see Orange County doing to promote tourism in the future?

A: First of all, I think that you’re going to see much heavier promotion of Orange County attractions.

Disney has already announced Splash Mountain, a new major attraction for the park. Knott’s Berry Farm has talked about the money it is spending to redo the park. I think they’re going to put big money behind their advertising.

And the hotels are going to get much more aggressive and hopefully much more creative in the kind of promotions and marketing that they do.

Q: Let’s talk a bit about the hotel business. Do hotels make more on rooms or their bars and restaurants?

A: There’s no question that a hotel is profitable because of its room business. We did $26 million here last year in food and beverage business. If I ran empty here (in room occupancy) and I did three times the amount of food and beverage business, we wouldn’t be profitable.

And if dining is (doing poorly) but the hotel is running a good occupancy with a good average rate, you’re successful.

As a rule of thumb, if your occupancy . . . is over 70%, a hotel is going to be successful. If it’s under 70%, then a hotel may have a negative cash flow after debt service. So that 70% is a kind of guideline. There’s no mention of food and beverage business in that.

Q: Right now, though, it’s certainly a tough market for the hotel business in Orange County.

A: It’s getting better. . . . There has been very little new building going on in 1987. It was pretty well completed in 1986. . . . With no new significant hotels under construction, hotels will have some kind of two-year period for the reprieve, to start building their own occupancies and bringing their cash flow on a more positive level. Hopefully, (that will) stabilize a lot of those hotels that might have been shaky in the past.

Q: When will the demand for hotel rooms in Orange County catch up with our supply?

A: Anaheim (hotels) in general are running at a 68%-69% occupancy rate. Orange County as a whole has been running 63%. As tourism and the business community continue to grow in Orange County, those occupancies will increase. I think that in Anaheim, for instance, the occupancies will start to exceed the 70% mark. When you start getting into 70% occupancies, people start wanting to build more hotels.

Q: Is it a cycle?

A: It’s a never-ending cycle. It always has been. As people overbuilt back in the 1940s after the war and there were too many hotel rooms, occupancy started to drop . . . and then building stopped. . . . Then the new hotels started to open up--Holiday Inns, for example, on the freeways. Then everybody began building on the freeways--Howard Johnson, Ramada and God knows who else.

Now you see the cycle in Orange County where there are too many hotels and the tax laws have changed. Hotels are going to stop building for awhile. Occupancy is going to build up. The reason for building hotels is because they can operate successfully. As you start getting developers and offshore money coming into the area, you’re going to see the cycle start to change again gradually.

Over the next two to three years, people are going to get more interested, as occupancy rates increase, in building in Orange County again.

I would imagine, with normal trends . . . that you’ll start seeing people consider Orange County--particularly the Anaheim area--for building new hotels starting in 1989.

Q: How much of Orange County’s hotel business is business travelers and convention business, as opposed to tourism trade?

A: In the Disneyland area, I would say that probably 40% to 50% is tourist-oriented. And the rest is business or convention oriented. . . . In the John Wayne Airport area, I would guess . . . maybe 20% or 30% tourism.

Q: Are hotels doing anything to accommodate foreign tourists, such as providing foreign foods or staff members fluent in other languages?

A: We certainly have. . . . The Disneyland Hotel makes sure that we have a list of everybody who’s on the property who speaks a foreign language, so that if someone comes into the hotel they can be dealt with. We specifically deal with the Pacific Rim to make sure that they’re greeted and that we have somebody with them that talks Japanese.

We have a telephone system . . . that you can dial and get basic information on the hotel in various languages.

We have items on our menus. . . . In certain restaurants, for instance . . . we have a traditional Japanese breakfast.

The New Otani in Los Angeles is directly designed for (foreign visitors). The Emerald Hotel (in Anaheim) has a Japanese restaurant just to be able to deal with the Japanese market.

So whether it’s specifically designed items on the menu, signs in the hotel or the marketing strategy of making sure that you have a restaurant that caters to a specific market, I think you’re going to find more and more of that as we become more international in Orange County and L.A.

Q: With some industries in a downturn--the oil industry, for example--has there been an impact on the hotel industry here?

A: I think there has been, particularly in southern Orange County. It’s had a very negative impact, as a matter of fact. . . . We’ve seen that happen to a number of companies, and I think that’s gone on the last couple of years.

I don’t think we get a lot of that business in the Anaheim area. Our business occupancy is much less compared to the other types of business that we do.

Q: Disneyland executives have said that the Disneyland Hotel will be upgraded. In December, the hotel was downgraded from a Four Diamond to a Three Diamond rating by the American Automobile Assn. What happened?

A: During the last five or six years, the Disneyland Hotel became a Four Star and a Four Diamond Hotel. (The Four Star award is in the Mobil Travel Guide.) It won all the major service and recognition awards in our industry.

Mobil looks at the entire ambiance of the property in terms of the overall guest experience. But the AAA has gotten into a specific comparison of hotels’ physical assets, as compared to other hotels. So we are being compared to new hotels.

It could be that our bathroom is done in 1960s decor. Even though it’s nice looking, it doesn’t have marble on the counters--as opposed to, say, what the Hilton has.

There’s a difference in the ratings.

Q: What changes do you see coming to the Disneyland Hotel under the new ownership?

A: Disney has tremendous plans for Southern California. They’re going to put millions of dollars into this hotel. In my opinion, they will not only take some of the areas that needed some work and redo those, but I think they will ultimately transform this hotel . . . and refurbish the entire property.

And I think the company is going to put big money into the park with new attractions over the next couple of years. It’s going to be exciting. And the presence of Disney in Anaheim, in Orange County, in Southern California, is going to be felt like it’s never been felt before.

Q: What would you change about tourism promotion here in Orange County?

A: I would expand it, if I could.

Orange County has so much to offer to anybody--whether it’s a resident, a businessman or a visiting tourist. . . . You’ve got the desert, the beach, the mountains. You’ve got everything you want all year round here. How many places do you get this, anywhere else in the country?

So in terms of tourism, I would like to make sure that the more we have to offer--that’s controlled, that’s manageable--the better off we’re going to be.