JAMES E. HARMON, DAVID H. SCHMITT and STEPHEN J. CLARK : Fun as Serious Business : Tustin Partners Travel World for New Ideas to Amuse

James E. Harmon, David H. Schmitt and Stephen J. Clark travel the world dreaming up new theme parks and other entertainment complexes.

Partners in the firm of Management Resources in Tustin, the three have worked on projects as diverse as Lusolandia, a theme park in Portugal that would re-create the Middle Ages, to Steeplechase Park, which would renovate New York’s Coney Island to return it to its glory days as an amusement park.

The company provides consulting services for the leisure industry, particularly theme parks and expositions. Though Management Resources has drawn up elaborate sketches for some clients, financing for major projects has been so tight that few new ones are being built.

The company is also planning a floral and garden show in Columbus, Ohio, marking the 500th anniversary of Christopher Columbus’ landing in America, and the conceptual design of a major casino resort in Lorain, Ohio. It is also helping to plan the 1992 World Exposition in Seville, Spain, and the 1995 World’s Fair to be held in Budapest and Vienna.

The partners all learned the amusement business trade during careers at the Walt Disney Co. They left in 1980 to establish Management Resources, drawing on their collective experience. Today, they operate from modest offices in Tustin and have a branch office in Florida. But with projects all over the world, they often spend more time in airplanes than in their offices, where the walls are adorned with artists’ renderings of their projects.

In a recent interview with Times staff writer Chris Woodyard, Harmon and Schmitt discussed trends in the leisure industry. Clark was traveling on the day of the interview.

Q. What is the state of the theme park? Can we expect new ones?

A. Harmon: As far as theme parks, our sense is that you are not going to see too many more, if any, (in the U.S.) because of the massive capital investment that is required. What we’re excited about is the application of show and entertainment products that would be typically seen in (theme parks) being applied to other locations. We’re doing a lot of work with shopping center owners and developers in incorporating show product and entertainment product in regional and super-regional malls, which is a growing trend for the future.

Schmitt: The growth of the theme park industry will be in Asia and Europe. We’re working on one park in Portugal. In the Asian countries, I would venture to say there’s probably six to 10 in the planning or development stage. This market is saturated with $100-million-plus products.

Q. So the international market is untapped territory?

ASchmitt: That’s fair to say. I think a lot of entrepreneurs and developers have come over here, used Disney as their primary example, have seen what Tokyo Disneyland has done and view it as a great business opportunity.

Q. Do you expect an international shakeout of theme parks in a few years?

A. Schmitt: This business is like any other. It requires good management, good conceptual development in the planning stage and good implementation. So, there is going to be a shakeout of the successes and failures of the business, and that is good.

Harmon: We have thought a lot about that. If you look at Europe or Asia and compare them to North America, you could say the market is 10 to 20 years ahead in this country. When some new operators develop parks in these less mature markets, sometimes they do not pay enough attention to proper planning and operation. They think that all you have to do is open the doors and people will flock to it. It’s not that way.

Q. What about the mature American theme park? What are the challenges for older parks such as Disneyland or Knott’s Berry Farm? How do they keep these parks fresh and attractive to visitors?

A. Harmon: Keeping the product fresh . . . is the key to any mature business in that you have to go through the reinvestment strategy. And then good service, good management, fair value for your dollar.

Q. How can theme parks get employees to treat visitors with courtesy and keep up a high level of service?

A. Schmitt: I think it’s a combination of things. Oftentimes, (theme park) owners and operators will say, “Young people today don’t have the work ethic or the values to look at a job with the same intensity as they did 10 years ago.” We don’t necessarily believe that. It’s a different ballgame today. I think Disney has demonstrated year after year that if the organization is committed to a philosophy of good service and backs that up with internal programs and funding then you can retain a high level of service. Disney has created such high expectations among the consumer. They have the best bricks and mortar in the industry. But they put equal emphasis on the human factor in their organization, and I think that’s what makes them successful.

Harmon: We have to look at why people go to theme parks. At our company, we view service as an absolute key ingredient to success. You can have the greatest attractions in the world, but if the guests don’t have a good time, they won’t come back. We believe service . . . is very, very important.

Q. How do you keep a park fresh without massive capital investment?

AHarmon: In our business, we talk about that kind of reinvestment as “soft costs.” We view them as special events, the use of entertainment in which you are creating reasons for people to come back that don’t necessarily relate to a hard attraction. That has always been a strategic marketing tool as the cost of building new attractions rises.

Q. Are those “soft costs” you talk about more important than ever as the economy slows down and businesses reduce their spending?

A. Schmitt: I think they are. Special anniversaries, special events, they will be the marketing attraction for that next year.

Harmon: It’s becoming increasingly difficult for an owner or operator to justify putting $20 million to $40 million into a new attraction and make it economically viable.

Q. Are the capital reinvestment costs of amusement parks so high because of the popularity of high-priced thrill rides?

A. Harmon: There are two ways to look at it. Disney takes a thrill ride like a Big Thunder, Space Mountain or the Matterhorn. The ride system itself--the sleds and track--is just one element. The facade, backdrop and the “preshow” of that whole experience is just incredible. In some other parks--those we call “iron ride parks”--the operators go to major manufacturers, primarily in Europe, and buy attractions and rides like major roller coasters. On those, you see the entire ride and all the supporting structure. Disney doesn’t do it that way. Disney tries to maintain the theme and ambience of the environment even though it costs tens and tens of millions of dollars more. It pays well in excess of the cost of the specific ride itself.

Harmon: The theme park is becoming a bigger reinvestment because you do a bigger, more sophisticated roller coaster. You are trying to outdo yourself every year and it is more expensive.

Q. Do you think the “iron rides” will continue to be king of the parks?

A. Schmitt: I think in certain markets, the thrill ride has been very successful. If you look at the Six Flags Corp. organization; they have done a very good job of utilizing the iron-park mentality. Part of that question has to be answered with: “What is the ambience that management is trying to create?” They are all very sensitive to where the market is going, age- and demographic-wise, and so it’s a difficult question to answer.

Harmon: It is a question of what segment of the market a park wants to go after. Back to your question of whether they will add more rides every year, that thinking is more pronounced here in Southern California because you have such a competitive environment. You’ve got everything from Magic Mountain to Knott’s Berry Farm to Disney. Other attractions vie for leisure time.

Q. Consequently, are theme parks having to aim more at attracting different groups of patrons. Is there a lot more segmentation of the market than there used to be?

A. Schmitt: In the broadest sense, I think they all are geared towards the traditional family market, and I don’t know how you define family today as opposed to 20 years ago.

One thing that has been talked about a lot in the last five or six years in this industry has been the participatory kinds of experiences, where you have a different experience every time. There is a resurgence of miniature golf. There are more activities that are hands-on, where you can create your own experience. You are not buckled in and you don’t do the same thing.

Q. Where does this experiential trend come from? Is it left over from the video game craze?

A. Harmon: I think that’s part of it. I think that people truly like as much realism in an experience as they can get, feeling like they are actually flying a plane or are in a spaceship. I think you will see more parks putting in heavy capital dollars to build a facility and put a show into it. But that show will have the ability to change the experience or change the show without having to construct a new building.

You’ll see more of what we call motion-based simulators. Disney introduced the Star Tours attraction several years ago, which created a sensation of space travel through film and the actual movement of your chair. What this allows Disney to do is create an experience that will run for a year or two or whatever. Then, by changing the program in the film, you can have a brand-new show without heavy capital infusion. The filmmakers and manufacturers of the simulators are teaming up and looking at new applications. I think you’ll see a lot more of that, not only here, but overseas as well.

Q. How much of a role have computers played in rides, particularly with these motion simulators?

A. Schmitt: The use of computerization has been around a long time with a number of these attractions.

A. Harmon: In fact, the initial technology came from military and airline applications.

Q. Where do you think the continued application of this technology will lead over the next few years?

A. Harmon: Actually flying to the moon (laughs). We spend a lot of time in our industry visiting people who design and build audio-animatronic figures and who produce film for simulators. It is unbelievable how much research and development money is being spent in our industry to develop new products. It’s not always a totally new product, but a new application of existing technology. And where that leads to when we go to a park in the future, I don’t know. But there are going to continue to be some exciting things out there.

Schmitt: I think our industry is begging for the next generation of new product and, as Jim said, there is a lot of research going on. It’s an area we’re concerned about.

Q. Besides motion simulators, what other trends will we see in the rides of the future?

A. Harmon: I think you will see more and more attempts to create an experience for the guest in which they experience something that appeals to all their senses--sight, sound, movement, smell, touch. There was a product that was previewed at Expo ’86 (in Vancouver, Canada). They used everything from film to slides, etc. They even released various scents in the theater.

Q. Do you see some technologies on the wane? Is there a loss of interest in some other types of things?

A. Schmitt: I think there is a decline in the simple use of audio-animatronics. I don’t think the market is going in that direction any more. Audio-animatronics, which Disney created I don’t know how many years ago, was really unique when it came out. It was really something to watch Mr. Lincoln stand up and talk. It’s still neat, but the uniqueness is on the wane. It’s a product that everyone has seen.

Harmon: Static exhibits force you as the guest to read a lot or work at being entertained. It’s easier for you to be entertained by sitting down in a seat and letting it happen; that is where people are gravitating. Museums and other institutions are trying to change their presentations. They are trying not to erode the learning while also trying to make it more entertaining. The museums are competing with theme parks, attractions, water parks or whatever for leisure-time dollars.

Q. It’s been said that places such as Las Vegas thrive in a troubled economy because people go there to forget their troubles. Is the same true of theme parks?

A. Harmon: I think it depends on what region of the country you are talking about. If you look at parks that are located in regions where the vast majority of their attendance is local--in Southern California, that’s definitely true--they’ll probably be less affected by a recession. Attractions or theme parks that are more dependent on tourists, as opposed to local business, will be much harder hit.

Q. What about new markets? Aren’t amusements in enclosed shopping malls a relatively new phenomenon?

A. Harmon: It began with the West Edmonton Mall in Alberta. It’s an enclosed theme park in a shopping mall.

Q. Is the concept spreading?

A. Harmon: Versions of it are. I think it is very difficult, depending on the market, to justify an investment of that magnitude and expect a decent return. Developers are creating family entertainment areas that distinguish their malls from the competition, generate more traffic and increase the length of time people spend at the mall.

One client of ours is opening such a mall in Clarksville, Ind., in late October. We think it is going to do extremely well. One that opened about two years ago in Cincinnati has done extremely well. We don’t think that part of the business has reached its potential. As developers get more comfortable with the financial results of these centers, they will be willing to stretch a little further.

Most of the product you see today in malls is pretty conventional stuff. You have a carousel, miniature golf, kiddie rides.

Q. Will this concept spread to the West, even though the weather is better here and people like to be outside?

A. Harmon: Yeah, I think it will pretty much be a national phenomenon.

Schmitt: I think it has application all over the company. It may be more enticing to developers to introduce that product in eastern or northeastern markets where you have more severe weather during the winter. But I think you will see it in the Southeast and on the West Coast as well.

Q. Does this represent the evolution of the mall into a destination resort?

A. Schmitt: Many of the larger retail centers today are becoming the modern town squares. You look at malls today, and they are a place to go for entertainment. We’ve seen the emergence of food courts. It’s a natural extension to take economically sized entertainment products and mix them into these larger regional centers because they really add to the experience of an afternoon at the mall. Mall developers are getting into it because they want their center to be unique. Theirs is a maturing business as well. There are a lot of malls out there now. Years ago, there were ice rinks and roller rinks. This is the next step: the mini-mini theme park.