Hotel Standing in Way of Disney Expansion Plans : Negotiations: The Pan Pacific could be a key part of the park’s projects, but its owners say the entertainment giant’s purchase offers are too low.
Rising 15 stories, the Pan Pacific Hotel stands outside Disneyland’s western gates, one of the few modern buildings on a street dotted with aging, low-slung motels known more for their catchy names than creature comforts.
Backed by a strong Japanese ownership group, the hotel competes on the same level as the neighboring Disneyland Hotel and for the same customers. And with Walt Disney Co. poised to soon announce a billion-dollar expansion of Disneyland, business is likely to get better.
The only problem is that the Pan Pacific also stands near the center of Disney’s expected expansion area. And thus far, Disney, which has a well-known penchant for controlling its developments and environs, has been unable to acquire the 501-room hotel. While the Burbank-based entertainment giant has been locking up deals with lucrative offers for smaller inns strung along the 1700 block of South West Street, Disney has been frustrated in negotiations to lasso the big hotel next to its theme park.
Disney’s interest in Pan Pacific has surfaced as news has emerged in the past two months that the company has acquired other real estate near Disneyland for expansion of the park and construction of parking garages and new hotels.
The disclosures have intensified land speculation in the area, as many landowners try to play their cards close to the vest. Some plan to hold out for the best price; others plan to hold on, hoping for a boom in business from a bigger and better Disneyland.
P.C. Chao, a local partner in the Pan Pacific’s ownership group, said that talks with Disney over acquisition of the 6-year-old hotel have been stalled for nearly three months. He said an offer in December from Disney to buy the land and hotel building was “much too low.”
Chao, who leases the 5-acre property to the hotel and is a limited partner in the Pan Pacific ownership group, said that agents working for Disney have offered less than $45 million for the property on several occasions.
He said the figure is less than it cost to build Pan Pacific in 1984. Chao, who also serves as a director for the Bank of Anaheim, estimated the ground alone to be worth between $8 million and $9 million.
Linda Adams, spokesman for Pan Pacific Hotels and Resorts, the Costa Mesa-based international hotel chain that owns the hotel, said there are no negotiations for purchase of the Anaheim facility.
“The hotel is not for sale and no one is soliciting any offers,” she said.
Disney officials have declined to comment on all aspects of the Anaheim expansion, including real estate transactions, until the company’s plan for the area is unveiled. The company’s announcement is expected within the next several weeks.
It is not known if Disney will change its plans if it cannot acquire the Pan Pacific, which sources said is situated within the proposed expansion area. The sources added that Disney’s plans call for a complete transformation of South West Street with several new hotels.
In previous meetings with Disney representatives, Chao said, there were indications that if Disney could acquire the Pan Pacific, it would continue to operate the hotel, possibly as a twin to the Disneyland Hotel complex. He said the representatives requested information on the Pan Pacific’s current operations.
“The hotel is only 6 years old,” Chao said. “It makes no sense to tear it down.” He said that while the offers made thus far are inadequate, the owners are open to further discussion. “There’s no problem if they pay more,” Chao said. “I won’t be surprised if they (Disney) come back again.”
Already, signs of Disney’s encroachment across South West Street are marked by vacant motels where entrances are blocked by florescent pylons and patrolled by private security guards. Former owners of properties on the block have confirmed that Disney, using surrogate buyers, was behind recent purchases of their motels.
One of the motel owners, who asked not to be named because of a confidentiality agreement with Disney, said he was leaving the area with mixed emotions after more than 13 years there. “My life has been part of Disneyland,” said the man, who pegged the selling price at between $2 million and $3 million. “I was sad to leave, but the price was right. At some point in your life, you have got to change course.”
Area landowners and developers say that additional properties surrounding Disneyland, some of them controlled by small innkeepers, have been tied up in confidential escrow agreements or are being sought for purchase by Disney.
One developer familiar with property transactions in the area said that those who have already agreed to sell their properties “have been walking away happy.”
“Most property owners know that if Disney doesn’t expand, the area is not going to get any better,” he said.
