Its 'California Adventure' concept comes into question
By Russ Britt, CBS.MarketWatch.com
Last Update: 12:15 AM ET Nov. 25, 2002
ANAHEIM, Calif. (CBS.MW) -- Walt Disney Co. is betting small insects and a big building will help its troubled California Adventure theme park find a following nearly two years after it opened at a cost of $650 million.
The entertainment giant is trying new tactics to get its latest U.S. theme park out of the doldrums that have kept attendance to less than half its capacity, even on the busiest days. Among the new attractions are a playland based on the movie, "A Bug's Life," and its "Tower of Terror" ride used in one of Disney's Florida parks.
Turning things around, however, at California Adventure may be a tall order, and some experts say only a complete overhaul would be the answer.
Although Disney (DIS: news, chart, profile) won't disclose official numbers, California Adventure's attendance is projected by outsiders to be at least 5 to 10 percent below last year's figures. Traffic at the adjacent Disneyland Park is expected to be flat or higher.
Internal Disney documents obtained by CBS.MarketWatch.com show that earlier this year, California Adventure was well off its 2001 numbers, and far below the park's 38,000-person capacity.
"I think they're going to have to reinvent the concept," said Dennis Spiegel, a theme park consultant. "When you miss the concept, you've got to do more than add little fillers to the gaps."
Disney's newest theme park is raising eyebrows like no other in the company's history. While the company has had problems before at its parks in Paris and Florida, this is the first time a venue's general concept has been questioned.
Insiders have nicknamed the new Anaheim location "Disney's Corporate Adventure," and the joke going around company circles is that it made more money as a parking lot for the adjacent Disneyland Park.
Cynthia Harris, Disneyland's president, insists California Adventure's business and theme are sound. Citing company surveys that show favorable reaction from patrons, Harris says the West Coast's second-most visited theme park.
"It's a brand new product. We've only been open a short time," she said. "The guest satisfaction ratings are probably higher than most new parks we have."
'Westcot' was planned
The park is a kind a spoof of the Golden State -- with a Disney touch. But it's quite a departure from the images usually conjured by the company's other, more popular parks.
While Disney's "Magic Kingdom" parks are chock full of rides, California Adventure was built with a much larger number of retail shops and restaurants and fewer conventional amusement park attractions.
Instead of thrills, chills and spills, patrons were shown how tortillas and wine are made, what it's like to be a Disney cartoonist and offered lunch served by, well, someone who looks like their favorite soap star.
Although cartooning seemed to catch on, the Soap Opera Bistro closed, and the winery, once operated by Robert Mondavi, is in the hands of another operator. The tortilla factory still stands but draws only modest interest.
At one point, Disney had planned that the California Adventure site would be home to a "Westcot" facility, based on its popular "Epcot Center" in Orlando, Fla. That fell by the wayside, however, as budgets for the new park were trimmed.
Sticking with concept
Disney seems to be sticking with the California concept. The company plans to tweak it with some attractions designed to address recent barbs.
Last month came "A Bug's Land," a menagerie of rides for the toddler and post-toddler set. It is a response to criticism that the park doesn't have enough attractions for small children.
External estimates say "A Bug's Land" has helped with attendance somewhat in recent weekends. "It is a hit with the crowd that we're trying to appeal to," said Disneyland's Harris. "We are incredibly enthused about our attendance at both parks."
"Tower of Terror," due to open in 2004, is designed to address concerns the park is short of so-called "E-ticket" attractions that draw large numbers of visitors.
There also will be a live production of "Aladdin" similar to its Broadway versions of "Beauty and the Beast" and "The Lion King" in a new theater. The company is planning to bring in Broadway-caliber talent to star in and produce the show in a new theater where the Soap Opera Bistro stood.
But analysts wonder how Disney could be pleased with attendance, given the lower numbers. They add the price of admission remains too high. Patrons pay the same $45 they would to get into the much-larger Disneyland. A one-day pass for both parks costs $69.
Growing pains
To be sure, California Adventure has gone through the growing pains associated with many of Disney's parks. But some observers say it's worse this time.
One of them is John Cora, Disney's former vice president in charge of resort development, who was responsible for putting in many of the attractions at the new park. He left the company shortly after it opened in February 2001, and now is a theme park consultant based in Oceanside, Calif. Cora says he had an amicable parting with Disney.
Cora says Disney's highest priority in developing the park was to keep costs down.
"That was the bottom line," he said, adding he differed with management over how much and where to spend money on the park.
California Adventure, the adjacent Grand Californian hotel and the Downtown Disney shopping district cost a total $1.4 billion. The park itself cost an estimated $650 million. By contrast, the new DisneySea park in Tokyo -- paid for by licensees -- went for roughly $3 billion.
Heavy retail
Cora says that the underlying problem is that to round out the park, California Adventure had to put in an inordinately large number of high-end restaurants, stores, and other retail outlets. Patrons balked at the prospect of spending $45 to get in, and then spend more on goods and food.
That was the influence of former Disney parks chief Paul Pressler coming through, Cora says. Pressler had extensive training in the retail sector and left Disney to become chief executive of Gap Inc. (GPS: news, chart, profile) in September.
"Part of the problem is Paul came from retail. He thought retail and still thinks retail," Cora said. "We spent enough money overbuilding retail and food (operations) to add three or four more major attractions to the park."
Some of those facilities are closed or have been replaced. Along with the Soap Opera Bistro and Mondavi winery, Wolfgang Puck operated a restaurant in the heart of the park for a time but eventually left. Disney is operating another restaurant there now.
Cora, however, supports the park's theme.
"I think it's a good theme. It's what you do with that theme," he said.
The projections for lower attendance come despite the fact the park was in existence only 11 months last year. Consultant Spiegel says the park should have built up enough of a clientele between then and now to boost the numbers.
"Your second year, you should get the slide from your first year and an increase (in traffic)," he said.
Disney records show that that earlier this year, the fall in traffic was steep. For the week of March 17, attendance was 28 percent below that of the same week in 2001. Other weeks in mid-April, early May and late May show that attendance was off anywhere between 15 and 27 percent from the prior year's levels.
During those weeks, weekday attendance averaged 8,772 and weekend attendance averaged 14,959. It is believed that attendance ticked up recently via the introduction of "A Bug's Land," but still will leave the overall numbers down for the year.
Mostly local
A general downturn in tourism often is blamed for much of Disney's theme park woes, especially at its Florida facilities, which rely heavily on airline traffic for business. The woeful state of the economy figures into the equation, plus a lingering fear over airline travel.
But half the business at Disney's California parks comes from people in the local region. Moreover, Disneyland's attendance never slipped more than 7 percent during those time periods, according to internal reports. For two of those weeks, Disneyland's attendance was down less than 1 percent.
A visit to both parks on the Columbus Day holiday showed that traffic was much higher at Disneyland than at California Adventure.
Line waits at Disneyland ranged from 20 minutes for Star Tours on up to one hour for the Haunted Mansion and Splash Mountain.
At the same time -- around 5 p.m. the lines were 5 to 10 minutes for every California Adventure attraction except "Soarin' Over California," a simulated hang-glider ride. That wait was 45 minutes.
Underlying problems
To get California Adventure numbers up, Disney will have to acknowledge the theme needs to be reworked, experts say. Much of its business is local, and there are few park visitors who want an education on their own state, analysts say.
"In order to turn this around, they have to turn their back on the concept," said Jim Hill, a longtime Disney observer who operates a Web site devoted to company news. He says there are a number of proposals under consideration to add new attractions at the park, all of which will result in the California theme getting shunted aside.
"Everything that's on the table is stuff that's fun to ride. It has nothing to do with the California theme," Hill said.
Hill believes Disney is negotiating with computer animation specialist Pixar (PIXR: news, chart, profile) on devoting pieces of the park to themes from such joint Disney-Pixar film ventures as "Toy Story" and "Monsters Inc."
Disneyland's Harris confirmed that the company is negotiating with Pixar's John Lasseter on several attractions.
Another possibility is an "Ursula Spinner," based on the evil squid from "Little Mermaid," Hill says. Disney executives, he adds, are revisiting all the ideas submitted for the park before it was built to see if there are any possibilities for changes.
Russ Britt is the Los Angeles Bureau Chief for CBS.MarketWatch.com.
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