Venue to Watch: DISNEYLAND
Sandi Cain
Last spring, all tourism eyes were turned toward Disneyland in the hopes that the new California Adventure amusement park would increase Orange County’s visitor numbers, even with a softening economy.
If Disneyland was the county’s best hope for a visitor uptick before Sept. 11, you can bet that scrutiny of the Mouse will be even more intent in 2002.
In 2001, California Adventure opened to mixed reviews and lighter-than-expected crowds that never reached the saturation point. Downtown Disney was a hit from the start, but some real estate watchers privately worried that its specialty retailers might have a hard time in a weaker economy.
And that was before September.
Since that time, amusement parks across the country have seen a downturn that is expected to reduce visitor counts by 10% to 12% through the better part of 2002.
Overall attendance at the Disneyland Resort is up because of the new park, though it is likely year-end figures will fall far short of the 20 million optimistically projected by some industry watchers early in 2001. In 2000, Disneyland had 13.9 million visitors, according to data from Amusement Business. For the first 10 months of 2001, Knott’s Berry Farm was down 3% from the 2000 level of 3.7 million visitors.
Like other tourism entities in the post-September economy, Disney marketeers have turned their efforts to the local drive-in market to bolster visitor numbers. Promotions offering reduced rates to locals, military rates, meetings and party packages have proliferated since September and are likely to continue into 2002. More attractions, like a Twilight Zone Tower of Terror, are planned sooner rather than later for California Adventure. And the Disney folks will continue to tweak the mix until it improves.
California Adventure may never reach the lofty goals set forth a year ago, but Disney’s track record at other parks suggests it will succeed.
Still, Disney’s ability to get the tourism tap flowing may hinge on other factors, too.
Walt Disney Co. is under the gun on all fronts,television, movies, consumer products and theme parks,something it has only rarely faced during Chief Executive Michael Eisner’s tenure.
Adding to the intrigue is the recent merger of Vivendi Universal and USA Networks that puts Barry Diller,a one-time colleague and longtime competitor of Eisner’s,at the helm of Vivendi Universal Entertainment.
That could mean increasing competitive pressure on Disney to concentrate on media holdings instead of its theme parks. Plans for a third park in Anaheim,once expected to open its first phase in 2003,were pushed back in the wake of the tourism downturn.
Disney faces other competitive pressures, too. Knott’s Berry Farm last week announced the addition of a new hypercoaster, the Xcelerator, slated to open by summer,the type of ride that some Disney critics say California Adventure needs more of. New rides drive attendance up at any park, and this 205-foot, 82 mph thriller should give Knott’s a lift in 2002.
One wild card in the equation is that Orange County might benefit from the public’s ongoing reluctance to take to the skies. In-state travelers make up about 84% of California’s total visitor count, and a hefty chunk of Disneyland’s attendance comes from the drive-in market. Knott’s, too, relies heavily on the local market.
,Sandi Cain
Person to Watch: PAUL MAKARECHI
When Newport Beach-based Capital Pacific Holdings last February spun off its commercial division to form Makar Properties LLC, it catapulted 27-year-old Paul Makarechian into the Orange County development spotlight.
The privately held company’s $240 million St. Regis Monarch Beach resort in Dana Point,the first portion of $500 million in real estate assets it has under development,opened on time and on budget in 2001. But St. Regis opened just a few weeks before Sept. 11 and never had time to ramp up to expectations before the downturn.
Since then, the St. Regis,along with the entire resort sector,has retooled its marketing efforts to boost its occupancy.
But that doesn’t mean that Makar is putting other projects on hold.
“It’s made us look at the marketplace more closely to understand our customers and identify potential market swings,” Makarechian said.
Makarechian said the company plans to proceed with its mixed-use projects in both Huntington Beach and La Jolla, both of which include a hotel component.
The company focuses on the acquisition of sites in growing markets,what he calls “complex” projects.
“We don’t have many cookie-cutter projects,” he said.
Nevertheless, with two other coastal resorts under construction in Orange County, the performance of the St. Regis in the coming year could foretell the future strength of the resort market.
Another challenge facing Makar is the residential market. The company has high-end residential projects in Palos Verdes and Dana Point as well as Austin, Texas, and a golf course development in Santa Barbara. Should the recession linger, the margin between the value of the properties and the investment dollars could shrink, creating financial challenges.
Makarechian said he is confident.
“Our assets are strong,” he said. “The challenges keeps you focused.”
,Sandi Cain
