By Sandi Cain
Staff Reporter
Orange County Business Journal
| February 12, 2001 - The ballyhooed opening of
Walt Disney Co.�s new California Adventure theme park last week came on
the heels of two years of mishaps and bad news for the happiest place on
earth.
Since December 1998, Disneyland |
California Adventure
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has had to deal with a spate of accidents, disappointed visitors who were
turned away at the gate and the threat of rolling blackouts at its flagship
Anaheim park.
Even so, California Adventure opened last week without a hitch. Analysts
and industry observers predict the park will be a hit, and a coup for Disney
in its bid to get visitors to spend more time and money in Anaheim.
But amid the new park�s gala celebration are the outgrowths of Disney�s
success. Some visitors are grumbling about parking for the two parks, long
lines for premier rides and ticket prices. On top of that, about 500 preview
visitors were evacuated from a California Adventure ride on Feb. 3 after
smoke from an amplifier filled the attraction�s basement. None of
this is likely to hamper Disney, observers say, but they note that the
first three months of a park�s opening�and visitors� initial impressions�are
pivotal.
For most companies, negative publicity can be a big factor. Irvine-based
Taco Bell Corp. has had to battle fallout from a taco shell recall, while
Costa Mesa-based Emulex Corp. last year had to deal with a bogus press
release that sent its stock spiraling down for a short time. But
chalk it up to Disney magic, the power of the mouse or what have you, Disney
has been remarkably unaffected by bad news. �Does it hurt? Sure,�
said one Disney official about the negative publicity.
�Is it an obsession? No.�
Park attendance was up as much as 10% at Disneyland last year, and California
Adventure is drawing so much interest that the company stopped selling
season passes a week ago.
Disney even has a degree of insulation from the state�s power crunch:
Anaheim and Burbank, the primary cities where Disney operates, have
their own utility companies and a relatively steady supply of power.
But Disney has to walk a fine line between self-assurance and perceived
arrogance as media reports persist about children injured at the park or
disappointed tourists turned away at the gate.
| �The company cares greatly,� said David Koenig,
author of a series of books on Disneyland. �(But) they don�t want to scare
anyone away.� In October, the company paid a settlement estimated at around
$20 million to the family of a man killed at Disneyland on Christmas Eve
1998. Beyond that, the company doesn�t talk much about park accidents and
other events that could be perceived negatively.
�From the outside, they might not appear to care,� said Sarah Pickell,
former strategic marketing manager for California Adventure. �But they
have to answer to the fiduciary role and that goes back to stockholders.�
And theme parks are a bright spot for Disney shareholders these days. As
the media powerhouse wrestles with issues in its television and Internet
operations, Disneyland and the other parks are a cash cow. In the
company�s fiscal first quarter ended Dec. 31, theme parks posted a 9% increase
in sales to $1.7 billion. The segment�s operating income increased 6% to
$385 million, offset only by costs at California Adventure. Disney |
Paradise Pier:
expansion likely
California Adventure is barely open and already there
is talk of expansion. Timur Galen, senior vice president and general
manager of Walt Disney Imagineering, recently told an audience of local
executives that the park would grow onto an existing parking lot. Rhe hotel
district will be expanded, as well, and the Grand Californian Hotel-already
at 751 rooms-could see a 250-room addition, Galen said. �We believe
strongly this place will be able to continue to grow,� he said.
Barry Braverman, senior vice president and executive producer
of Walt Disney Imagineering who has overseen California Adventure�s development,
said specific park areas, such as Paradise Pier, could be expanded. And
the company may add new �lands� to the park�s mix. Thor Degelman,
a local theme park consultant, said as long as there is sufficient demand,
the park stands to grow. Degelman said he wouldn�t be surprised to see
that happen before the first phase of a proposed third Disney park is built
in Anaheim.
Walt Disney Co. announced plans for a �third gate� last
summer, with a projected first-phase opening in 2003.
Sandi Cain |
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officials attributed the gains to increased visitor spending and record
attendance at Disneyland and Florida�s Walt Disney World. As Disney
executives have their hands full with other parts of the company, analysts
expect theme parks to enjoy a strong year. The Parks and Resorts
division � which includes Disneyland and California Adventure as well as
the Anaheim Angels, Mighty Ducks and the company�s hotels�last year accounted
for 27% of the company�s revenue, behind Media Networks at 38%. Anaheim,
of course, is just one piece of Disney�s theme park pie. Wall Street, though
still optimistic about California Adventure, has indicated it will keep
a cautious eye on attendance, both at the new park and Disneyland, which
is expected to see an initial drop in attendance. Last year, Disneyland
drew about 14 million visitors.
While Disney has proved impervious to bad news at Disneyland, there
are other worries that could plague the company�s parks. A big one is the
nation�s economic slowdown, which-depending on its duration and severity-could
cut into theme park attendance after the initial rush. Paul Pressler,
chairman of Walt Disney Parks & Resorts, said last week that, even
if there is a slowdown, it won�t affect the parks in the long term.
�Vacations are one of the last things people give up,� he said. Jack
Kyser, chief economist for the Economic Development Corp. of Los Angeles,
agrees - at least for now. And even if the economy cools, Disney still
may be able to draw locals.
| �It�s new, it�s exciting and Disney does a masterful
job of promotion,� Kyser said. �If you are looking at a slowing economy,
you�re probably going to stick closer to home. People don�t recognize the
amount of tourist activity within California. Bay area people might want
to go someplace that has its own power company.�
January economic reports, due out later this month, might tell a different
story, Kyser said. The Japanese economy could create some worry if it continues
to soften, he said.
�Is this the best time to open a park?� Kyser said. �Maybe not the best,
but its newness will be an attraction. Downtown Disney is an added attraction-and
the Grand Californian is one of the best hotels I�ve seen.� A more immediate
concern for Disney is how visitors will perceive the new park � a critical
factor in first-year performance. The park is expected to draw about 7
million visitors in its first year, according to Disney executives.
�The first 90 days are critical,� said Thor Degelman, a local theme
park consultant and former Disney executive who worked on the opening of
other Disney parks.
Disney maintains it has learned from past theme park mistakes, down
to even small things like the new park�s more circular parade route compared
to Disneyland�s Main Street format that employees call a �logistical nightmare.�
But when Disneyland debuted a new parade last year, Disneyland officials
were visibly anxious for positive feedback, though it had been three years
since its �Light Magic� parade bombed with the public. And there still
are bad memories surrounding the launch of Euro Disney, now called Disneyland
Paris.
Degelman said the most critical aspects are word-of-mouth and in-park
spending-both of which could turn out to be dicey issues, given pre-opening
criticism of the new park�s smaller size and limited number of rides and
exhibits.
Disney Chief Executive Michael |
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Powering the Magic Kingdom
A few weeks ago, Walt Disney Co. Chief Executive Michael
Eisner was among several top executives to sign an open letter to state
officials urging a resolution to California�s power crisis.
A Disney spokesman said the company is doing its part
by cutting back on energy consumption. More conservation is in the works,
too, according to Disneyland spokesman Ray Gomez.
Measures include adjusting settings for air conditioning
and heating and turning off unneeded lights. Longer term, the company is
looking at replacing some of its older electric motors with more energy-efficient
ones. But Disney has so far been insulated from the worst effects
of the power crisis because its operations are based in Burbank and Anaheim-both
of which have their own utility companies.
Melanie Neeman, an Anaheim Public Utilities spokeswoman,
said Disney partners with the city-owned utility during stage 3 alerts
to minimize energy use. But even if rolling blackouts occur in the future�which
Anaheim would be subject to�the Disneyland Resort is one of several entities
that get special consideration. Others include the Convention Center, Arrowhead
Pond and Edison International Field. The consideration applies to venues
that hold 5,000 or more people, Neeman said.
Disneyland�s power rates are determined by a �long-term
contract tied to load growth to assist with their expansion,� Neeman said.
The pact dates back to the beginning of the company�s expansion plans,
she said. According to Neeman, other companies with growth plans
were offered the same deal, but if they declined at the time it�s too late
to get in now. Knott�s Berry Farm in neighboring Buena Park, hasn�t
been so lucky. Knott�s joined Southern California Edison�s interruptible
program, in which big power users received lower rates by agreeing to cut
their use of electricity during shortages or face stiff fines. The Public
Utilities Commission ended the interruptible program last month.
In January, Knott�s had to close some water rides on consecutive days to
avoid penalties.
Director of public relations Susan Tierney said the water
rides were chosen because water pumps are high users of energy, not because
those rides have less demand in cooler weather.
�People still want to ride the water rides, even in cold
weather,� she said. Tierney said all other power reductions by Knott�s
were in �back of the house� and administrative areas and that no further
cutbacks were anticipated.
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Eisner recently said he wasn�t worried about attendance, but was more concerned
about making sure the visitor experience is great-an experience that could
easily sour if guests find the park too crowded or too mundane.
There is widespread speculation that the new park, with about half the
capacity of Disneyland at around 30,000 visitors, will be overcrowded from
day one. Employees can�t use their passes at the new park until after Labor
Day, a practice also employed during the opening months at Animal Kingdom
in Orlando, Fla. And the company�s decision earlier this month to suspend
the sale of annual passes signals some worry about crowds. �The concern
is about letting everyone have a chance (to go to the park),� said Disney
spokesman Ray Gomez.
Pressler said last week the new park will close or close early-as is
done in Florida-if there is concern about overcrowding.
�We expect there to be pent-up demand in the first year,� he said.
Long lines are a certainty for the most popular rides, even with Disney�s
Fastpass placeholder system.
| Take Soarin� Over California - a faux hang-gliding
experience expected to be one of the marquee rides at the park. It is designed
to handle up to 1,700 riders per hour. But on some preview days, the wait
reached three hours. �Real capacity of rides is about 85% of the
maximum,� Degelman said.
Eisner said he isn�t worried about the park.
�There are a few movies I�m worried about,� he said at a press conference
last week, �but not California Adventure.�
And most observers still believe the park will be a positive for the
company.
Kevin Skislock, an entertainment analyst with Irvine-based Laguna Research
Partners, said Disneyland had to expand to compete because it didn�t have
enough space on its own to maintain the feel of a tourist destination.
�(Disneyland) had become almost a local entertainment center,� he said.
To overcome that, he said, Disney had to recreate the destination feel.
The hope, Skislock said, is to get people to spend more time and money
at both parks.
�You look at overall traffic and expenditures per patron,� he said.
�If that means you take a hit at (Disneyland), it will still be considered
a success.�
Other park-watchers believe California Adventure, with its appeal to
older visitors, will succeed as a complement to Disneyland rather than
more of the same-which is exactly what the Disney folks hope to achieve.
Scott Tanner, director of destination sales for Walt Disney Parks and Resorts,
called it the �fun and adventurous complement to Disneyland� in a recent
presentation to tourism officials.
And consultant Degelman said he believes the park is well done.
�It�s traditional with just enough off-the-wall touches,� he said.
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Mouse Under a Microscope
Disney�s California Adventure has something almost intangible
on its side�the seemingly magical marketing prowess of all things Mickey.
�(Disney) is still a very trusted name,� said Sarah Pickell, former strategic
marketing manager for California Adventure. �Working in sales or marketing,
it�s almost like you have it made. Slap Mickey Mouse on anything and you�re
done.�
That may be where Walt Disney Co. has an edge, but high
consumer regard comes at a price: big expectations.
There�s no question that Disney attracts a lot of scrutiny-from
consumers, the media and Wall Street.
Fan scrutiny is manifested on Internet message boards,
where minute changes at the park can generate days of commentary. The recent
addition of a McDonald�s to Disneyland Resort resulted in about a week�s
worth of dialogue on one site.
A critic, who suggested the addition �cheapened� Disneyland,
said, �We don�t see Disney every day, (like we do McDonald�s). We dream
of Disney; we make a left at McDonald�s.�
And industry insiders say parks in Southern California
are subject to closer scrutiny by the media than in other areas of the
country. �You don�t want anything to happen on a slow news day,�
said Jack Falfas, general manager of Knott�s Berry Farm, who was previously
general manager of Cedar Point in Sandusky, Ohio.
Close scrutiny has been applied to Disney�s California
Adventure, too, as it has taken shape.
Web sites and message boards critique everything from
the park�s budget, size and ticket price to the number of rides and sometimes
even their names. One site even posted pictures of the new park�s
restrooms. Last week, more than 300 pictures of California Adventure
were posted on one site-adding to a couple hundred already there. And Disney
fanatics have had a field day speculating on what the company�s third Anaheim
park will be.
Message boards have buzzed with what theme the first phase
of that park-expected to be a water park-should, or should not, take.
Whether it turns out to be �Little Mermaid,� �Winnie the Pooh,� or some
other theme, rest assured the decision will generate even more comment.
Sandi Cain |
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course, there are critics. Another ex-employee, who declined to be named,
called the park �cardboard� and �cheesy.�
�It used to be all about quality and the guest experience,� she said.
�But not any more.�
Pickell said there�s no question the Disney brand has lost some of its
luster amid a perception of excessive commercialization. But she
thinks the company will make the park work. And despite a series of negative
stories about casualties and problems at Disneyland, that�s not what people
take away, she said.
�(The company concern) has always been about exceeding people�s expectations,�
Pickell said. �Disney conjures up a good image of childhood memories and
wholesome family entertainment. As long as they can preserve that, people
will keep coming.�
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Sandi Cain is copy editor
and a staff reporter covering hospitality,tourism, travel and sports. Cain
holds bachelor�s and master�s degrees in education from Kent State University
in Ohio, where she majored in social studies. A former high school teacher,
she has written for niche-market sports publications in the U.S., England
and Australia and formerly worked in both the printing and high-tech industries.
A Cleveland, Ohio native, Cain hasbeen a resident of Laguna Beach since
the late �70s. She enjoys travel, gardening, reading and spoiling her three
cats. |
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