Disney Will Build Upon Its Bedrock With Its New Park
On paper, it would seem that Disneyland is an inconsequential part of a giant corporation. The Anaheim park now accounts for a small share of Walt Disney Co.’s theme park business, which itself made up just a third of the company’s overall business.
But in many ways, Disneyland remains the bedrock of the $12-billion corporation. Disneyland is where it all started, and analysts say Burbank-based Disney has sound financial reasons to protect and build on its flagship enterprise with Wednesday’s announcement of a second theme park, Disney’s California Adventure.
For 41 years, Disneyland has been a sturdy, dependable source of revenue for the company, and it figures to be more important as Disney continues to expand into more risky ventures such as movie making.
More than 350 million people have passed through the gates of the Magic Kingdom, including a record 14.1 million last year.
Its influence on the company’s other main businesses--television, filmed entertainment and consumer products--is immeasurable. The park is a core element of Disney’s synergistic marketing; many of the same people who visit the park wear Disney clothes, subscribe to the Disney Channel and buy Disney videotapes.
“It all fits together, it’s all part of the same package,” said Harold Vogel, a Disney analyst at Cowen & Co. in New York. “They have to continue to grow [Disneyland] to keep market share and brand presence.”
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By adding a second theme park next to Disneyland and converting the area into a resort center with a new luxury hotel and retail esplanade, Disney hopes to establish a worldwide destination much like Disney World in Orlando, a place drawing more people of all ages and lengthening their stays--to several days instead of one or two at the most.
“The way to make serious money is to get people to come to your site and stay there for a long time and spend all their money on you,” said David Koenig, author of “Mouse Tales: A Behind the Ears Look at Disneyland.”
Koenig and other analysts don’t believe it’s possible for Disney to match the success they’ve had at Disney World, which drew more than twice the number of visitors than Disneyland last year.
Disney World is on 29,000 acres of land, compared with 330 acres of property Disney owns in Anaheim. Disney World operates three theme parks, and a fourth--Disney’s Animal Kingdom--is scheduled to open in 1998. Its Florida resort includes a number of hotels and villas, campgrounds, golf courses, conference centers and other recreational facilities. Its Pleasure Island area has half a dozen nightclubs and places to eat and drink for adults.
It’s no wonder, then, that out-of-town visitors to Orlando typically stay for five days, whereas Disneyland is generally a single-day trip.
“The lesson they learned in Orlando is that you try to sell seven days of experience as opposed to seven hours,” said Ray Braun, senior vice president at Economics Research Associates, a Los Angeles consultant to the amusement park industry.
Disney, of course, faces much more competition in Southern California than it does in central Florida. Disney can’t expect to keep visitors ensconced in Anaheim, not with the beaches, Hollywood and other attractions in the region beckoning.
Even so, with a second gate in the new California Adventure park and shopping and night-time entertainment, analysts say, Disney and its Anaheim hotels could be the “headquarters” of a visitor’s multiple-day trip to the Southland, whereas now people could stay anywhere in the region and come into Anaheim for a day at Disneyland.
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“We’ll see an increase in international guests,” predicted Jack B. Lindquist, Disneyland’s president from 1989 to 1993. Historically, about 40% of Disneyland’s visitors have come from outside of California, he said.
Lindquist doesn’t see the mix of visitors to Disneyland changing--75% adults, 25% children. But he says the addition of restaurants and other entertainment will keep conventioneers and other adults in Anaheim through the night--reflecting a resort area’s urban, edgier feel not unlike MCA’s CityWalk in Universal Studios that is aimed at attracting more than just families with children.
Lindquist, who started at Disneyland as marketing director when the park opened, has followed the corporation’s gradual shift to non-theme park entertainment, none more notable than last year’s multibillion-dollar merger with Capital Cities/ABC. And in recent years Disney’s theme park operations have lagged the revenue growth of its two other business segments.
But Lindquist believes Disneyland and its future are crucial to Disney because Southern California is home to the corporation and the region remains one of the world’s biggest tourism markets. Then there’s the Disneyland legacy.
“This is the park that Walt [Disney] built and the only one he ever saw,” Lindquist said. “This park has and will be a very critical part of Walt Disney Co.”
Harrison Price, a San Pedro-based consultant who has done work for Disney over the years, says he has long encouraged the company to expand in the Disneyland area.
“You keep expanding or you wither,” he said. “Look at Florida,” he added. “Florida started out with a big gate just like Disneyland. By adding additional gates and expansion, they’ve added another 25 million in attendance. It would be a mistake strategically not to do it.”
* A CALIFORNIA ADVENTURE
Disney unwraps plans for $1.4-billion Anaheim resort. A1
