Slumping Parks Try New Lures

Mission: Space, a $100-million ride being unveiled this week at Walt Disney Co.’s signature resort in Orlando, Fla., promises a one-of-a-kind astronaut experience that simulates a space shuttle mission to Mars.

Disney also hopes the attraction will help lift it out of an industrywide tourism slump, one that has hobbled the company’s overall earnings.

“We’re not sitting back and waiting for the water level to rise and raise the ship,” Jay Rasulo, the president of Walt Disney Parks and Resorts, said in a recent interview. “I don’t expect a giant rebound, and we’re not planning for that, but we are aggressively seizing the moment in any way we can.”

That’s the message Rasulo will convey Wednesday to Wall Street industry analysts, who have been invited to Florida to view the new ride and other offerings at Walt Disney World as part of an overview of the company’s theme park strategy.

The official launching of Mission -- which will involve Disney’s first-ever national television advertising campaign for a single attraction -- comes as Disney and others are investing millions in new attractions and marketing approaches in the hopes of spurring a recovery in a business that employs thousands of people in Southern California and Florida.

Although business has picked up this summer, major theme park resorts are still weathering the effects of what insiders have come to describe as the “perfect storm” -- an extraordinary confluence of an economic slowdown and lingering security concerns after the Sept. 11 terrorist attacks and the Iraq war, not to mention high gasoline prices.

Compounding the industry’s woes are three long-term trends that pose new challenges to those in the business, industry analysts and veteran executives say.

For one thing, the industry has shown signs of reaching a peak in the U.S. About 315 million people visit theme parks each year in the U.S. -- an average of more than one visit per person -- leaving little room for growth.

By contrast, only one in three Europeans visits a theme park each year.

The U.S. is “the most saturated theme park market in the world,” said Tim O’Brien, senior editor of Amusement Business, a trade publication.

“Now it’s going to start separating the men from the boys out there,” he added.

In addition, the industry faces increasing competition for entertainment dollars. On top of that are troubling demographic shifts on the horizon.

There are 80.5 million people in the 25-to-44-year-old segment, which represents a key demographic for the theme park industry. That group is expected to shrink by 2.4% over the next five years. During the same period, the 45-to-64-year-old category is projected to grow 14%.

“The [industry] growth rate is not going to be what it was in the past because the theme park market is shrinking in size,” said Jim Cammisa, publisher of Travel Industry Indicators, a Miami-based travel industry newsletter.

Some point the blame inward, saying the major operators have recently focused too much on the bottom line at the expense of investing in major new attractions year after year to keep visitors coming back.

“I don’t think the industry’s woes are 100% 9/11 and the economy,” said Ron Bension, former chairman and chief executive of the Universal Studios theme park group. “Fifty percent of it is self-inflicted wounds.”

Industry executives say they are moving decisively to stimulate business through major new attractions, heavy promotions and fresh marketing approaches.

The Mission: Space attraction, which informally opened in August at the Epcot theme park, is the centerpiece of several new initiatives.

Disney this week also launched another national TV advertising campaign to promote a service called Magical Gatherings that helps friends and families plan reunions and group vacations at Walt Disney World. Disney is expected to offer a similar service at Disneyland.

“Nobody really owns this market. We want to be the first,” said Linda Warren, executive vice president of marketing for Walt Disney World Resort.

Disney this week also will tout a new 3-D film, “Mickey’s PhilharMagic,” and the December opening of Pop Century Resort, a new hotel that will have 2,880 rooms in its first phase.

At California Adventure in Anaheim, which has struggled to meet its business projections, Disney is building the Twilight Zone Tower of Terror, a $75-million thrill ride that it hopes will attract new visitors.

“I don’t have a pessimistic view of the industry,” said Rasulo, who was recently appointed to head a panel that will advise U.S. Commerce Secretary Don Evans on ways to draw more foreign tourists to the country. “I think there are continued opportunities for those who are ready to evolve.”

Disney rival Universal Studios, owned by Vivendi Universal, also has been heavily squeezed by the industry downturn. It is similarly investing heavily in new rides and shows.

Those include Revenge of the Mummy, two $40-million rides scheduled to open at Universal Studios Florida in Orlando and Universal Studios Hollywood in spring 2004.

The money going into Revenge of the Mummy comes on top of more than $60 million that Universal has invested this year in attractions related to the animated hit movies “Shrek” and “Jimmy Neutron: Boy Genius.”

“We continue to push on staying relevant and fresh,” said Wyman Roberts, chief marketing officer of Universal Parks and Resorts. “This isn’t the time to take anything for granted.”

Roberts added, “I don’t get the sense that the market has gone stale ....It’s very difficult to say when we’ll be totally healthy again, but we like the way the country is moving.”

In Florida, Universal has stepped up its national advertising of Universal Orlando as a resort destination while promoting Universal Hollywood more heavily to local residents.

In contrast to the big destination resorts operated by Disney and Universal, smaller regional parks that rely on day tourists have fared far better.

Knott’s Berry Farm in Buena Park (owned by Cedar Fair) and the SeaWorld parks in Orlando and San Diego (owned by Anheuser-Busch Cos.) have gotten a bounce from a recent trend that has seen people take shorter vacations and stay closer to home.

“We see kind of a mixed bag,” said Fred Jacobs, spokesman for Busch Entertainment Corp., some of whose holdings have been squeezed. “We’ve done about as well as can be expected this year.”

SeaWorld San Diego also hopes to get a boost next year with the opening of a new roller coaster ride, Journey to Atlantis. Responding to demographic changes, Busch recently entered into a partnership with AARP to promote its theme parks.

Cammisa, the publisher of Travel Industry Indicators, applauds such moves. To stay competitive, theme parks must continue to adapt their products with more emphasis on amenities geared to an aging population, he says.

“When one’s core market is shrinking in size, changes in strategy are required.”