No Fifth Park at WDW?

[rodkenrich]

A recent article has disclosed some information as to why Disney's Animal Kingdom may be the last park built on the property.

 

[loriandmatt]

i personally would have no problem with this, if (and that is a big if) they do what this article proposes and spend their funds on the existing parks and resorts.

- lori

 

[ahhhhhhhhhhhhhhhh!]

Yeah, I have this awesome idea for a 5th park in my head and I wish there was a way to pitch it to Disney, but alas....there isn't. So in my head it will stay

 

[BostonRob]

The link isn't working because of bandwidth issues. Would you mind cutting and pasting and posting the article?

 

[pixiedust23]

i coudlnt get the article to work either! but i would very much like to read it!

 

[rodkenrich]

The link isn't working because of bandwidth issues. Would you mind cutting and pasting and posting the article?

The bandwidth has been restored.

 

[rodkenrich]

i coudlnt get the article to work either! but i would very much like to read it!

Access to the page has been restored, but I am currently working on relocating the article.

 

[pixiedust23]

maybe there is something wrong with me. i still cant get it to work!

 

[rodkenrich]

maybe there is something wrong with me. i still cant get it to work!

The link has been modified because I have exceeded my bandwidth allowance. Access has been granted.

 

[civileng68]

I agree with the article (just worked fine for me).

I dont want a 5th park. I think it's about time to start taking that money they would put in a new park and make the current parks more stunning. Think of what that money could do in the existing parks!

Also, as the article says, if they built a fifth park and tourism fell, Disney may not be able to afford to keep all of the parks in a bad economy.

I think it's time to work on what they've got and not worry about another park for at least 15 years.

 

[Greg K.]

...that at a certain point, the law of diminishing returns sets in. As things stand now, a family can enjoy a four or five day vacation (or, perhaps, longer) and see and do most of what they want in that time. Adding another park complicates matters immeasurably, and would arguably make a Disney vacation both more expensive and time-consuming.

I know a lot of families who budget (both in time and money) for JUST ONE TRIP -- and once they've "done Disney," that's it (unless they really get bitten by the bug and start looking for ways to go back every year...!)

And then there's this: the last big park they opened in the US -- Disney's California Adventure -- was a major disappointment, and not drawing the crowds the company expected.

Personally, the REAL drawback to another park is that it would eat up more land, and likely cause more traffic -- and there's too much already!

 

[Harmony]

Couldn't read the article. (link didn't work) However, I too, agree that what Disney has right now is enough. It's hard as it is, trying to do and see everything in a week. Can you imagine if they added another park? The money is best spent adding to the parks by bringing in bigger and better rides and shows. JMO

 

[BostonRob]

Here it is:



Walt Disney World is at a crossroads.

Faced with an aging U.S. population, more sophisticated children and increasing competition for leisure dollars, the crown jewel of Disney's worldwide theme-park empire has set out on a new path.

The Walt Disney Co.'s once-successful growth strategy -- build, and they will come -- is no longer the road map for the future.

As the entertainment giant this week celebrates the 50th anniversary of Disneyland, the company is closing a chapter on its U.S. building boom.

Squeezed by rising costs and Wall Street pressures, the Burbank, Calif.-based business is looking for different, more economical ways to grow and focusing on overseas locations for its next parks.

The change means Animal Kingdom, which Disney opened in 1998, may be the last major park built by the company in Central Florida. There are no current plans to add another.

Instead, Disney is looking to take advantage of the more than $12 billion in capital that it has already plowed into former Florida swampland.

Disney's goal: Make more money through additional time-shares, targeted marketing campaigns, investments in the four existing parks and programs to entice tourists to stay longer and spend more. It's a plan that plays well among analysts, who say it makes business sense to reinvest in established parks rather than build anew.

"I think the premise is truly we are going to grow," said Al Weiss, Disney World president. "It's going to look very different. It's not going to be a big blip up when you build a theme park. It's going to be growth that is going to continue over a long period of time."

In Central Florida, a region long accustomed to park openings and robust tourism growth, the impact from Disney's strategy is hard to predict. But as other sectors play a larger role in the regional economy, the result may be greater diversification in the region, a goal of many area leaders.

Consider:

As Disney pursues its next phase of development, the rate of growth in the region's tourism sector could slow to a more steady pace. While visitation is at record levels -- nearly 51 million tourists are expected to come to Central Florida this year, a 5.9 percent increase from last year -- the pace is not as brisk as it sometimes was in the past decade, when increases hovered around 10 percent.

Central Florida will feel the effects of Disney's growth strategies. Though Disney World is still the area's largest employer with 57,000 employees, its share of the metro Orlando work force has mostly been dropping since 1998, when Animal Kingdom opened. And Disney's roster of about 38,000 full-timers today is less than the 40,000 or more it had during the late 1990s. As tourism jobs grow at a slower rate, the region's economic makeup could change, which some see as positive.

Rajeev Dhawan, an economist with Georgia State University, said Central Florida could benefit from an easing of tourism's growth rate.

"It's a blessing in disguise," said Dhawan, whose forecasting center studies economies throughout the nation. "There is short-term pain if you look for other industries to grow, but it pays off in the long run. The hoteliers may not like that and others [in the hospitality industry] may not like that. But it is true. "

Business strategy

Decades of experience as the nation's leading theme-park operator may no longer be enough to ensure a successful future for Disney as the landscape shifts. The industry has matured in the past 50 years and the challenges are greater:

Disney has to be more creative to draw increasing numbers of visitors. Its core audience -- young children -- is shrinking as a share of the overall population. The percentage of U.S. children younger than 14 has decreased from about 28 percent in 1970 -- just a year before the Magic Kingdom opened -- to about 20 percent today. As a result, Disney has already taken steps to appeal to adults in its parks and through other activities, such as spas and golf. Aside from the demographic challenge, increasingly sophisticated children aren't as easily entertained as before, putting pressure on Disney to make a theme-park vacation ever more exciting.

Disney's theme parks and resorts worldwide brought in more than $7.7 billion last year. But as good as it sounds -- with Disney World tickets at a high of $59.75 and a record number of hotel rooms for more than $100 a night -- it's getting harder to make a profit. Costs are up, competition for leisure dollars is intensifying and consumers are opting for bargain vacations. Yet Disney -- with its stock price closing at $26.40 Friday, off about 12 percent from the year's high -- is under increasing pressure from Wall Street and investors to boost profits.

Tourism still dominates Central Florida's economy -- industry estimates put it as high as 40 percent of the area's gross regional product -- and Disney remains the strongest player. But there are signs of a shift.

Like Disney, Universal Orlando executives say they have no current plans to add another major park to their two-park complex. SeaWorld would not comment.

Visitation to Central Florida is at record levels, but the pace of growth has cooled somewhat since the 1990s. Attendance at Disney World is up, according to industry estimates, but it's still short of the peak of 2000.

"I don't think we're going to see that kind of unbelievable growth that we saw in the 1990s," said Bill Peeper, president of the Orlando/Orange County Convention & Visitors Bureau. "That's not sustainable for any product. We were seeing double-digit growth. . . . It's unreasonable to think that could continue."

During the next six years, the state's employment agency estimates the largest percentage of new jobs created in the region will be in the health-care and computer fields. Among the top 15 categories, only one tourism-related job makes the cut -- hotel and resort desk clerks.

In raw numbers, tourism occupations continue to create more jobs. But even in raw numbers, other occupations are making up ground, closing the gap and in some cases projected to exceed tourism.

Weiss, who chairs the Metro Orlando Economic Development Commission, sees opportunity for both tourism and other industries to grow robustly.

"You have to go down parallel paths. . . . You have to go down both paths as hard and heavy as we can," said Weiss, who is the second Disney executive to chair the commission. Former Disney executive Dick Nunis was chairman in 1992 and '93.

Orange County Mayor Rich Crotty says the appointment of Weiss as chairman of the not-for-profit public-private organization that promotes industries in Central Florida "shouldn't be lost on anybody."

"That's a signal we're pulling together as a community," he said.

Disney last year released an economic-impact study that showed the company accounts for more than 8 percent of the area's gross regional product, based on 2003 numbers. The study, for which Disney paid Orlando economist Hank Fishkind $25,000, used a multiplier that added in the economic effect of companies doing business with Disney, and companies that benefit from Disney's presence. When that factor is stripped out, Disney accounts for about 5 percent of the region's economy.

Local economists say they cannot independently verify Fishkind's estimates, but they don't discount them.

How the numbers compare with those of previous years cannot be determined. Fishkind and Disney declined to make his earlier impact studies available to the Sentinel, contending that they were not comparable. But Fishkind said that he is certain that Disney's impact, or size relative to the rest of the local economy, peaked some years ago, possibly in the mid- to late 1990s.

A revenue giant

Although Disney does not break out financial performance for Disney World, the Sentinel analyzed the company's public financial documents, tax figures and analysts' reports to estimate the Orlando property's revenue.

The overall Disney company's theme-park and resort division brought in more than $7.7 billion last year, and Disney World's parks and hotels easily account for 60 percent or more of the division's revenue, a Sentinel analysis shows.

With more than $4 billion a year in revenue, the Orlando operation alone would equal a Fortune 500 company based on 2003 revenue, bigger than Orlando-based Hughes Supply Inc. and about the size of Starbucks Corp. that year.

Wall Street analysts have long said that Disney World represents a majority of the division's revenue, and an even higher share of the profit.

But the Sentinel's analysis relied on tax receipts to get a more definitive total for sales and cross-checked it with everything from the company's payroll and benefits to gate-admission estimates and hotel revenue based on tourist taxes. The analysis shows that Disney World likely sends more than $700 million a year to the Burbank headquarters in operating profit.

Some or all of the numbers were reviewed independently by former Disney executives, certified public accounts who specialize in corporate reporting, county tax auditors, university professors and Wall Street analysts who follow Disney.

Although the parks in Orlando have long been a cash cow for the company -- $4 billion would represent 13 percent of the total company's revenue in fiscal 2004 -- the division's operating profit margin has been flat or falling for years. That means costs have been rising faster than the revenue coming in from park admission, hotels and other sources.

Operating profit margin -- or pre-tax profit divided by revenue -- is one key measure of how efficiently dollars are converted to profit.

While the picture has brightened in recent months, the division's pre-tax profit in fiscal 2004 was the second lowest for the U.S. parks since 1996.

Disney executives say business will grow -- indeed it must to meet the company's financial goals. But the type of growth, they concede, will be different.

"I think there's a big misnomer about, well, if you don't add a park or you don't add attractions you're not going to grow," Weiss said. Local officials have a stake in Disney's success.

"We need to continue to capitalize on the growth," Crotty said. "All of these things [Disney is doing] are moving in the right direction, and we need to remain the No. 1 tourist destination. Not building another theme park doesn't change that."

Celebrating past, future

Like the Disney Co.'s other parks and its cruise line, the Orlando properties will take part this week in the launch of Disney's 50th-anniversary celebration of Disneyland, the company's founding park.

The 18-month celebration will be as much a nod to the company's future as it will be a showcase of the California park's past.

Hong Kong Disneyland, for instance, will open its gates in September -- a sign of the company's emerging strategy to tap into the growth of Asia and its large child populations.

At Disney World, Animal Kingdom will add a completely new thrill ride next year, Expedition Everest, which will whisk riders through the harrowing snow-capped peaks of Mount Everest.

However, far more typical of the company's plan is what is happening at Epcot and Disney-MGM Studios. Each of those parks is getting a new attraction, but the simulator ride and high-speed stunt show are imports from other Disney parks.

By recycling existing rides or tweaking time-tested concepts, the company saves big bucks on everything from research and development to construction.

"I think it's a strategy that can work," said Jack Samuels, a professor at Montclair State University in New Jersey, who writes extensively on the amusement and theme-park industry, including Disney.

"If you can continue milking your cow and not have to invest more in grass and milk pumps, you're going to make more money."

Disney slashed capital spending for the theme-park division by half in 2002 and cut it again in 2003. While the number has rebounded slightly, top Disney executives vow to limit spending below the lofty $1 billion level that the division enjoyed in earlier years.

But some analysts have quietly questioned how much more Disney's theme-park division can contribute in cost cutting and profit growth. The U.S. economy is now in its fourth year of recovery from the relatively shallow 2001 recession, and any slowing could weaken consumer confidence and stall the tourism rebound.

With high fixed costs, analysts say, the theme-park division is more susceptible to profit pressures than the movie studios, TV networks and other Disney units when the economy falters.

Disney is also vulnerable to factors ranging from the cost of travel to hurricanes and the fear of another terrorist attack.

That's why Wall Street analysts through the years have been happy to see the overall company diversify -- reducing its reliance on the theme-park division -- to buffer against cyclical downturns.

Analyst Paul Kim of New York-based Traditional Asiel Securities gives credit to the company and outgoing Chief Executive Michael Eisner for "doing a good job cutting costs and increasing profits over the past 18 months" -- a period that saw the company fight off a takeover bid from cable giant Comcast Corp.

But Kim said that newly appointed CEO Robert Iger faces a challenge "to continue that momentum."

'Nontraditional' approach

At Disney World, Weiss won't reveal what Disney has planned for its 47-square-mile compound. But he says the company's future success will rely, in part, on "nontraditional growth vehicles," such as new marketing strategies and programs to get people to stay longer, spend more and keep coming back.

Disney also is banking on more visitors from abroad, but that's far from certain. International tourists, particularly those from Europe and Latin America, still haven't rebounded to their plentiful numbers before the 2001 terrorist attacks.

"It's still a weak area at Walt Disney World," said Dennis McAlpine, an independent analyst who follows Disney. "A lot of it is just out of their control, beyond what they can do."

Right now, Disney is having more success in targeting group travelers. Launched more than a year ago in response to the trend of multi-household travel, Magical Gatherings offers perks such as fireworks cruises, special dinners and other park activities exclusively for groups of more than eight.

The promotion has attracted extended families, reunions and other groups who need large, connecting rooms. Disney says it has reaped a 25 percent increase in household travel through Magical Gatherings.

Beyond targeted marketing, Disney is looking to its other businesses to drive more visitors to the parks. As out-of-town sports teams and school groups use the fields and facilities at Disney's Wide World of Sports, the company is trying to persuade them to spend time in the parks and stay in Disney hotels.

Children remain a core audience for Disney, but capturing their attention is increasingly difficult. Youngsters are maturing faster and their entertainment options dwarf those of earlier generations.

A key goal to Disney's long-term growth is encouraging visitors to keep coming back. By expanding its time-share business, the company aims to lock people in to years of Disney vacations.

In December, it changed its pricing structure to attract more people and prompt guests to extend visits.

Disney executives acknowledge that for some people, its theme parks had become an unaffordable vacation. The one-day admission price in Orlando has risen twice as fast as the average price of goods and services -- 106 percent -- from $29 in 1989 to $59.75 today.

The new plan, which encourages longer stays by making them comparatively cheaper, is the most sweeping change to Disney's pricing structure.

Disney's Weiss says the company is relying on its creativity and marketing prowess to drive its growth.

"I think that is something we've not lost focus on or lost sight of," he said, "because we know it's not only important for Walt Disney World and the Walt Disney Company, it's important for the Central Florida community to have tourism be as robust as it can."

Jerry W. Jackson can be reached at jwjackson@orlandosentinel.com or 407-420-5721; Debbie Salamone can be reached at 407-420-5456 or dsalamone@orlandosentinel.com; Sean Mussenden can be reached at smussenden@orlandosentinel.com

 

[DanceRC28]

I agree with a lot of what has been said. The 4 parks that Disney has are wonderful and instead of adding a fifth, they should revamp some of the older attractions. We all love Disney, we wouldn't be on this board otherwise, but even something as wonderful as Disney could be even more wonderful with some updates.

Renee

 

[cheerdancer11]

I think there is plenty of room for new rides in existing parks so they should just do that instead, and revamp some older ones. Especially in AK there is so much room it has a lot of potential with Expedition Everest coming in it will definitely draw more crowds.

 

[Lillian513]

i think they should update tommorowland to match today's tech. and what we might have in the future. they should also consider redoing older rides and put new ones and a new park. it would boost the number of people who come, and also promoteknow i would want to go to see new things. or they could update little souveniors.

 

[minniemouse101]

I also would like them to concentrate on the parks they have. It is better to have 4 great parks then to have 5 ok ones.

 

[reedycreek]

wow this is such great news! now they can finally focus on what they have now and improve and build on it. i think AK was not great anyway, i would have rather they spent that money improving the current infrastructure and imagineering.

 

[DISNEY4FUN]

I agree that a fifth park isn't needed at the moment. It's impossible to see it all now. I always thought that AK wasn't finished yet. I assume there is a lot of work still to be done in AK.

 

[DISUNC]

Thanks for that info rodkenrich!

On another thread on this board (cant find it right now), someone said that they had a discussion with a Imagineer. The Imagineer said the same thing, just added that WDW will expand on its Hotels & DVC!

So Maybe the POP Century will FINALLY be finished?????