Theme Parks Ride Through Hard Times

By TED JACKOVICS The Tampa Tribune

Published: Oct 9, 2007

TAMPA - Florida's major theme parks see growth ahead, despite continued dismal economic news about the U.S. housing market and the decline of the dollar.

Or, as Bob Iger, president and chief executive of The Walt Disney Co., recently put it at an investment conference in New York: "There is something still almost sacred about a family vacation. Some people will keep the family vacation and not replace a faulty refrigerator, and that's an interesting phenomena that runs through all of the economic unrest that I guess we're seeing.

"Not to say that we're not vulnerable to substantial economic downturn, but so far so good."

So good, indeed. Theme park executives predict 2007 will turn out well financially for top attractions in Florida and elsewhere.

That assessment is based on financial data released through June and anecdotal comments from industry executives on theme park performance since then, pending the release of this summer's quarterly financial reports in the next few weeks.

"At least from where we're sitting, it looks like the estimation of how exposed our theme park business is to the economic cycle is probably a bit high," said Tom Staggs, senior executive vice president and chief financial offer for The Walt Disney Co., at the Merrill Lynch Media Fall Preview last month in New York.

"It's overestimated. In each instance where we've seen a downturn, where we've seen a recession, if it's impacted attendance, attendance has tended to come back … and it gets right back on the growth projection that it had been on before," Staggs said.

The major theme parks do not disclose detailed attendance figures or financial performance for individual attractions, which leaves performance appraisals to what's disclosed in company financial reports and annual trade journal estimates.

However, the most recent U.S. Securities and Exchange Commission filings show theme park revenue and profits are rising.

• Disney, which operates four theme parks, two water parks and 16 resorts in Florida among its worldwide holdings, reported third-quarter parks and resorts income of $621 million on $2.9 billion revenue for the period ended June 30, compared with $549 million in income on $2.7 billion revenue for the year-ago period.

Iger said in September that Disney could post record theme park and resort attendance for the fiscal year that closed Sept. 30.

• Anheuser-Busch Cos. Inc., which operates Busch Gardens and Adventure Island in Tampa and SeaWorld and Discovery Cove in Orlando, reported $70.6 million in entertainment division income for the second quarter ended June 30 on $400.6 million revenue compared with $67.3 million in income on $369.4 million in revenue for the second quarter in 2006.

"We book our Central Florida theme parks as destinations and we are not seeing any decline in tourism," said Dan Brown, executive vice president and general manager of Busch Gardens Tampa Bay.

• Universal City Development Partners Co., which operates Universal Studios, Islands of Adventure and the Wet 'n Wild water attraction in Orlando in addition to its other U.S. attractions, reported $36.3 million in theme park income on $260.6 million in revenue for the second quarter ended July 1compared with $27.5 million income on $249.7 revenue for the year-ago period.

Universal said attendance at its two Orlando theme parks declined 2.5 percent for the quarter, but profit was up because the average visitor spent more on concessions than a year ago.

Not All News Is Gloomy

What impact do the domestic and international economies have on theme park attendance and financial performance?

Not all of today's financial news is gloomy. The stock market has hit record highs this year and employment remains reasonably strong.

The last downturn in Disney theme park performance occurred after the Sept. 11 terrorist attacks, Staggs told Merrill Lynch analysts.

"That's a downturn that was driven over a specific issue that related to travel and tourism. And there was an economic downturn that went with it, so that exasperated the effect of that particular downturn," Staggs said.

Historically, if consumer confidence went in either direction - up or down - for three consecutive months, the effect of the upturn or downturn would show up a quarter later in attendance figures, Staggs said.

"I don't remember the last time it went the same direction three months in a row, so it's a little bit difficult for me to say that connection still exists."

Iger, speaking at the Goldman Sachs Communacopia XVI Conference in New York, said booking trends for the first two fiscal quarters of 2008, October through March, were ahead of 2007 bookings.

New Attractions To Come

Theme park executives say the growth is due in part to continued improvements in attractions, such as this year's upgrade to Busch Gardens' SheiKra.

Busch Gardens Tampa Bay intends to open a new four-acre attraction called Jungala next spring, while Disney has announced plans to expand its accommodations and shopping areas in Florida and California.

"We've tapped in to new demographic groups, and focused very much on new geographic areas," Iger said. "We've also done really well at applying science to revenue growth.

"We've done great things … not just from tickets and from hotel reservations, but we're now moving that science into food and beverage and merchandise to grow revenue."

Reporter Ted Jackovics can be reached at tjackovics@tampatrib.com or (813) 259-7817.