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Disney’s relationship with the city of Anaheim has always been a unique love/hate type of situation.
Just over a year ago, the Walt Disney Company had a tense relationship with Anaheim. Some elected city officials suggested they regretted corporate subsidies or breaks from future taxes. In October 2018, Disney canceled a luxury hotel project that was in the planning process after the city of Anaheim pulled back a tax rebate that reportedly would have saved Disney more than $250 million.
Now, with the opening of Star Wars: Galaxy’s Edge, the two are putting aside their differences to work together to capitalize on the tourism and create a smoother experience for guests.
Many surrounding cities struggle to generate new and maintain current revenue sources but Anaheim doesn’t have that problem. Surprising enough, even with Disney’s headquarters located in the nearby city of Burbank, that municipality struggles financially.
Galaxy’s Edge comes with a hefty price tag estimated to be just over $1 billion and that bill is being paid by The Walt Disney Company.
Anaheim is expecting and already seeing a boost in the tourism and hotel taxes that generate hundreds of millions of dollars of revenue for the city each year. Anaheim’s annual budget is $330 million, Galaxy’s Edge is expected to boost that significantly with several sources citing expectations of over $14 billion to bolster the regions’ economy over the next several decades.
The revenue generated from the tourism and hotel tax pumped in mainly by guests visiting the happiest place on earth make up over half of the city’s general operating budget which includes paying for public safety, community programs and road repairs for the area.
Many hotels in not only Anaheim but surrounding areas are sold out for the first few weeks of the Galaxy Edge’s opening on May 31 although soft openings, castmember previews and media events are already taking place.
Although Disney has remained mum regarding projections for Galaxy’s Edge on both coasts, Anaheim has openly discussed with excited anticipation, the expectation that Galaxy’s Edge will significantly boost tourism and the economy.
In 2012, when Cars Land opened, the Anaheim and surrounding areas local economy’s soared mainly due to the hotel and tourism tax. In the first year alone, Anaheim saw a $12.5 million boost to hotel tax revenue.
Disneyland is also the largest employer , with about 30,000 employees, is the biggest employer in Orange County — a Southern California area with about 3.2 million people. The company expects an increase of 1,400 employees as a direct result of its investment in Galaxy’s Edge, which includes several attractions with interactive features.
“Disneyland is like having a rich uncle who lives right down the road,” said Steve Jones, mayor of the neighboring City of Garden Grove. “Twenty-four million visitors pass through the Anaheim resort area each year creating externalities that benefit our city enormously.”
In a statement to CNBC, a Disney spokesperson said. “Disneyland Resort has historically had a very strong relationship with the City of Anaheim, where we have been part of the community for more than six decades. We are looking forward to opening Star Wars: Galaxy’s Edge, our largest park expansion yet, and to our mutual success as our investment drives continued visitation to the area and significant incremental revenue to Anaheim’s general fund.”
Anaheim still continues to have challenges like other cities with costs of public-safety personnel, pensions and more and the presence of Disneyland and the consistent tourism and especially the addition of the most anticipated theme park expansion in memory helps to fund those and other crucial and auxiliary programs. The tourism taxes have provided a steady source of revenue for the city as visitor traffic to Anaheim has increased more than 30% since 2013.
With the addition and anticipation of Galaxy’s Edge, Anaheim will see a positive increase in revenue that will be put toward those crucial programs. It is impossible to say that the presence of the massive company doesn’t provide a multitude of jobs and a massive percentage of revenue. With all the shortcomings that may come with having Disney in your backyard, it does bring a nice pay day.
The way that California’s tax system is structured means that city governments don’t have a lot of authority over their own local tax rates so tourism taxes are seen as especially helpful in those areas.
“The best thing about these tourism taxes is that they’re not being paid by your local residents,” said Chris Hoene, executive director of the California Budget & Policy Center, a public policy research group.
In addition to Disney, Anaheim recently completed a brand new convention center and the $245 million Westin Anaheim Resort. Anaheim is constantly reinventing itself, as is Disney, which will keep fans coming back and always keep things interesting.
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