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By Jason Garcia
Sentinel Staff Writer
October 9, 2009
For most of its 36-year existence, SeaWorld Orlando has been passed among owners a publisher and two breweries for whom theme parks were almost an afterthought.
But with this week's announcement that Busch Entertainment Corp. will be sold to the Blackstone Group, SeaWorld and the nine other Busch theme parks find themselves in the hands of an owner with deep experience in the tourism industry.
And that, say people both inside and outside Orlando-based BEC, is reason for optimism about the future of a company that owns the second-busiest chain of theme parks in the country and employs about 10,000 people in Central Florida alone.
"Blackstone pursued this investment because it's a high-quality operation and it's something they felt fit nicely as a growth opportunity," said BEC President Jim Atchison, who will remain the company's top executive after Blackstone completes its $2.7billion purchase from Anheuser-Busch InBev in a few months.
"We will continue to invest aggressively in our parks," he added. "That's something that Blackstone has committed to do."
One of the largest private-equity companies in the world, Blackstone's tentacles spread across dozens of industries. The businesses in its private-equity portfolio, which has $24billion in assets under management, range from manufacturers of semiconductors to Michaels arts-and-crafts stores.
Its presence in tourism is especially noteworthy.
Through the years, it has acquired stakes in companies such as Universal Orlando, Merlin Entertainments Group, Harrah's Entertainment, La Quinta and LXR Luxury Resorts & Hotels, a high-end hotel operator whose properties include nearly two dozen in Florida, such as the South Seas Island Resort on Captiva Island and The Reach Resort in Key West.
Two years ago, Blackstone bought lodging giant Hilton Hotels, which in recent weeks has opened a 497-room Waldorf Astoria and a 1,000-room Hilton, both by Walt Disney World, and a 1,400-room Hilton next to the Orange County Convention Center.
'Long-term investment'
Blackstone says it sees plenty of growth potential in Busch's 10 parks. An executive at the company said to expect capital spending to remain "consistent" with recent-year levels, during which BEC has added big-ticket attractions such as Manta at SeaWorld Orlando and Jungala at Busch Gardens Tampa Bay.
The executive, who did not want to be identified, said the Busch purchase "will be a reasonably long-term investment."
Theme-park analysts say they have little reason to doubt Blackstone. They say the company has already proven an adept steward with its earlier tourism investments and that the New York-based company is unlikely to damage the Busch parks, such as by imposing deep cuts on entertainment offerings in the name of savings.
Steve Baker, president of Baker Leisure Group, noted that Universal Orlando has continued to invest in new attractions in the years since Blackstone bought a 50percent stake in the resort in 2000 (the other half is owned by General Electric's NBC Universal unit).
In fact, Universal is in the midst of a $300 million expansion in which it has added The Simpsons Ride and Hollywood Rip Ride Rockit at Universal Studios Florida and will add The Wizarding World of Harry Potter at Islands of Adventure.
"Their track record in that business speaks for itself," Baker said. "I think Blackstone being heavily invested into tourism and parks, they know what they are getting into. They obviously have an affinity for it."
In some respects, Blackstone's arrival at Busch Entertainment has been smoothed ahead of time by executives at Belgium-based A-B InBev, who brought an aggressive cost-cutting culture to the theme parks during their short tenure as owner.
A-B InBev, for example, required "zero-based budgeting," which forced executives at all divisions to build their annual budgets from scratch and justify all spending anew.
The cuts that followed at BEC ranged from the highly visible decision to stop handing out free samples of beer though Busch officials say that cut was not prompted by cost savings to subtler changes, such as replacing brand-name mustard and mayonnaise packets with generic brands.
Price hikes expected
Industry watchers do expect some changes. David Miller, a media-and-entertainment analyst with Caris & Co., said he thinks that Blackstone will have BEC enact a quick round of price increases, as well as launch initiatives, such as more souvenir-photo sales, designed to get customers spending more money in the parks.
Miller also predicted Blackstone would begin to sell more advertising space in the parks.
"You have a diverse, captive audience, and why can't you advertise to that captive audience?" Miller said.
Finding new and expanding existing revenue sources is especially important now, as Blackstone's purchase involves BEC taking on about $1.3billion in debt.
Still, Brad Rex, a former Walt Disney Parks and Resorts executive who ran the division's strategic-planning group for six years, said he expects Blackstone will ultimately be richly rewarded for buying one of the industry's biggest and best-known collection of parks during an economic trough.
"Scope and leverage are huge advantages in the theme-park business, as Disney has discovered in their worldwide operations," Rex said. "By paying a good price and managing the parks with a coordinated strategy, Blackstone will reward their investors."
Sentinel Staff Writer
October 9, 2009
For most of its 36-year existence, SeaWorld Orlando has been passed among owners a publisher and two breweries for whom theme parks were almost an afterthought.
But with this week's announcement that Busch Entertainment Corp. will be sold to the Blackstone Group, SeaWorld and the nine other Busch theme parks find themselves in the hands of an owner with deep experience in the tourism industry.
And that, say people both inside and outside Orlando-based BEC, is reason for optimism about the future of a company that owns the second-busiest chain of theme parks in the country and employs about 10,000 people in Central Florida alone.
"Blackstone pursued this investment because it's a high-quality operation and it's something they felt fit nicely as a growth opportunity," said BEC President Jim Atchison, who will remain the company's top executive after Blackstone completes its $2.7billion purchase from Anheuser-Busch InBev in a few months.
"We will continue to invest aggressively in our parks," he added. "That's something that Blackstone has committed to do."
One of the largest private-equity companies in the world, Blackstone's tentacles spread across dozens of industries. The businesses in its private-equity portfolio, which has $24billion in assets under management, range from manufacturers of semiconductors to Michaels arts-and-crafts stores.
Its presence in tourism is especially noteworthy.
Through the years, it has acquired stakes in companies such as Universal Orlando, Merlin Entertainments Group, Harrah's Entertainment, La Quinta and LXR Luxury Resorts & Hotels, a high-end hotel operator whose properties include nearly two dozen in Florida, such as the South Seas Island Resort on Captiva Island and The Reach Resort in Key West.
Two years ago, Blackstone bought lodging giant Hilton Hotels, which in recent weeks has opened a 497-room Waldorf Astoria and a 1,000-room Hilton, both by Walt Disney World, and a 1,400-room Hilton next to the Orange County Convention Center.
'Long-term investment'
Blackstone says it sees plenty of growth potential in Busch's 10 parks. An executive at the company said to expect capital spending to remain "consistent" with recent-year levels, during which BEC has added big-ticket attractions such as Manta at SeaWorld Orlando and Jungala at Busch Gardens Tampa Bay.
The executive, who did not want to be identified, said the Busch purchase "will be a reasonably long-term investment."
Theme-park analysts say they have little reason to doubt Blackstone. They say the company has already proven an adept steward with its earlier tourism investments and that the New York-based company is unlikely to damage the Busch parks, such as by imposing deep cuts on entertainment offerings in the name of savings.
Steve Baker, president of Baker Leisure Group, noted that Universal Orlando has continued to invest in new attractions in the years since Blackstone bought a 50percent stake in the resort in 2000 (the other half is owned by General Electric's NBC Universal unit).
In fact, Universal is in the midst of a $300 million expansion in which it has added The Simpsons Ride and Hollywood Rip Ride Rockit at Universal Studios Florida and will add The Wizarding World of Harry Potter at Islands of Adventure.
"Their track record in that business speaks for itself," Baker said. "I think Blackstone being heavily invested into tourism and parks, they know what they are getting into. They obviously have an affinity for it."
In some respects, Blackstone's arrival at Busch Entertainment has been smoothed ahead of time by executives at Belgium-based A-B InBev, who brought an aggressive cost-cutting culture to the theme parks during their short tenure as owner.
A-B InBev, for example, required "zero-based budgeting," which forced executives at all divisions to build their annual budgets from scratch and justify all spending anew.
The cuts that followed at BEC ranged from the highly visible decision to stop handing out free samples of beer though Busch officials say that cut was not prompted by cost savings to subtler changes, such as replacing brand-name mustard and mayonnaise packets with generic brands.
Price hikes expected
Industry watchers do expect some changes. David Miller, a media-and-entertainment analyst with Caris & Co., said he thinks that Blackstone will have BEC enact a quick round of price increases, as well as launch initiatives, such as more souvenir-photo sales, designed to get customers spending more money in the parks.
Miller also predicted Blackstone would begin to sell more advertising space in the parks.
"You have a diverse, captive audience, and why can't you advertise to that captive audience?" Miller said.
Finding new and expanding existing revenue sources is especially important now, as Blackstone's purchase involves BEC taking on about $1.3billion in debt.
Still, Brad Rex, a former Walt Disney Parks and Resorts executive who ran the division's strategic-planning group for six years, said he expects Blackstone will ultimately be richly rewarded for buying one of the industry's biggest and best-known collection of parks during an economic trough.
"Scope and leverage are huge advantages in the theme-park business, as Disney has discovered in their worldwide operations," Rex said. "By paying a good price and managing the parks with a coordinated strategy, Blackstone will reward their investors."
