Did you know that up until 1988 Disney didn’t
actually own the Disneyland Hotel, and that Disney’s plan to buy it ultimately lead
to the creation of Tokyo DisneySea? Strange path from A to Z, right? When Walt Disney built Disneyland, he put
everything on the line to make his dream a reality. At $17 million dollars, he had exhausted every
option, including putting up some of his own money, to pay for the project. As a result, he wasn’t able to afford to
build a hotel to go along with the theme park. So instead he turned to outside friends to
build and own one. He initially asked his friend and television
personality Art Linkletter, but fearing that Disneyland wouldn’t be successful, Linkletter
declined. As a second choice, Walt pitched the idea
to oil tycoon turned film producer, Jack Wrather. Beyond an oil company and real estate, Wrather
owned the rights to such classic shows as The Lone Ranger and Lassie. In return for building the hotel, Disney would
grant Wrather a 99 year exclusive license to build hotels in southern California using
the Disney name. Wrather jumped at the opportunity, and by
October of 1955, just three months after Disneyland opened to the public, The Disneyland Hotel
was open for business. Everything worked out pretty well, and in
1961 as an extension of the goodwill deal, Disney would lease the use of the Disneyland
Monorail at little cost to Wrather, with a new station being built so that guests of
the Disneyland Hotel could easily take the monorail to Disneyland. Over the following 30 years the hotel would
both grow and fade. Expanding to three main buildings, the hotel
eventually totaled at 1,174 rooms. However over time the quality of the hotel
itself slipped, and it began to appear a bit run down. Beyond that Wrather’s company, Wrather Corp,
fell into financial trouble. In the mid 1980s a company called Industrial
Equity, based in Hong Kong and run by a New Zealand raider named Ronald Brierly, purchased
28% of Wrather Corp and informed the SEC that they had intentions to buy at least half of
the company, which usually meant that the ultimate goal was a full takeover down the
line. Meanwhile Disney was anxious to regain their
name rights for hotels in the southern California region. They realized that even though they didn’t
own or operate The Disneyland Hotel, guests would associate the poor quality of the experience
with them. With a New Zealand corporate raider setting
his sights on the company however, they understood that any hostile takeover would only diminish
their chances of cutting a deal. So Disney executives Gary Wilson and Richard
Nanula were tasked with finding a solution. Instead of cutting off Industrial Equity,
Disney proposed that they buy Wrather Corp with Industrial Equity. With the agreement, Disney and Industrial
Equity would pay $152 million dollars for the rest of the company with Disney paying
$76 million of that to own half of it. Disney would own the Disneyland Hotel, regain
their name rights, get the 26 acres of land south of Disneyland, and also get 300 acres
worth of real estate in Long Beach California. Industrial Equity would get everything else including the real estate and the oil business. In order to get Wrather to bring down the price to that 152 million, Disney did a bit of strong arming. Remember how earlier I mentioned that Walt
leased the use of the monorail for The Disneyland Hotel for a low price to Wrather? Well that lease was about up for renewal,
and Disney used that to their advantage. Disney threatened to spike up the cost of
the renewal if Wrather tried to sell themselves to anyone besides Disney and Industrial Equity. The monorail was crucial to the hotel’s
value, and a spike in the lease would bring down the value of the hotel and as a result
the company as a whole. The tactic worked and in 1988, after the purchase
was complete, Disney owned the Disneyland Hotel for the first time. More importantly, they now had the rights
to use the Disney name in any future hotels they built in southern California, which would
ultimately come in handy when they’d later build Disney’s Grand Californian Hotel and
Spa and Disney’s Paradise Pier Hotel. Just a few months later after fully analyzing
the worth of the company, Disney went ahead and bought out Industrial Equity’s half
of the company for $85.2 million dollars. Disney would sell off the oil and gas properties
to offset the cost, and keep what they had originally aimed to acquire. They also committed to spending $35 million
dollars on upgrading and improving the hotel. As for the additional land in Long Beach,
Disney would eventually create plans for an area called Port Disney a few years later. It would include a shopping district, a cruise
ship port, and a seaside theme park called DisneySEA Ultimately the project would get cancelled. Beyond local resistance from Long Beach residents,
Disney was feeling the financial pressure of Euro Disney. On top of that with their sights set on a
second gate over at Disneyland, DisneySea took the backseat to plans for a west coast
EPCOT called WestCOT, a good topic for another video. However most good cancelled ideas at Disney
find life elsewhere, and years later the theme park idea would find a new home at Japan’s
2nd Disney theme park, Tokyo DisneySea which would open in 2001. The award winning park is enjoyed by over
13 million guests annually, so I guess in a weird way it was a good thing Walt Disney
didn’t own The Disneyland Hotel.