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 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 bigger distraction. 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 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 (see story, page 59).
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 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.”
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 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 was widespread speculation that the new park, with about half the capacity of Disneyland at around 30,000 visitors, would be overcrowded from day one. (Opening day crowds, however, were below expectations.) 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 ticket sales 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 a marquee ride 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.
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.
Of 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 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.” n
