A New Park Theme: Glut

By Bernard Baumohl

Welcome to Troubleland. Orlando, the mecca of mega theme parks, may have too much of a great thing. With seven large parks on the ground and more on the way, industry analysts are issuing dire warnings: "Orlando is now a zero-sum game," says Curt Alexander, an analyst with Media Group Research. "There will be bloodletting of biblical proportions." The theme-park glut promises bargains for consumers but a brutal shakeout that could pound the earnings of park owners Disney, Seagram (Universal) and Anheuser-Busch (Busch Gardens, Sea World).

Disney alone has built at least one park every decade since the Magic Kingdom appeared in 1971. Last year the company not only opened the gates to Animal Kingdom (reported cost: $800 million) but also launched the Disney Magic ($350 million), its first cruise ship in Florida. A second ship, the Disney Wonder, is on its way. Analysts see so little economic rationale for these expenditures that they've begun to label the ships "Tragic" and "Blunder." Disney's stock price has been taking on water. Yet the company still has enough land in central Florida to add three more parks. Indeed, there are rumors that a sports-themed park (Disney owns ESPN and several pro teams) is on the drawing board.

Determined to loosen Disney's choke hold on area tourism, Seagram's Universal division bought an additional 1,900 acres in the area late last year. That's enough for two more parks. Anheuser-Busch's Sea World, the third big player in central Florida, is adding a splashy new park in which visitors will be able to swim with the residents. That interactive attraction is scheduled to open next year.

The can-you-top-this? mentality has not only raised the ante for thrill rides but also driven up the cost of construction. "It's like an arms race going on in the entertainment industry," says Alexander. Finding workers to operate the parks is another headache. Disney, Universal and Sea World have had to raise their starting hourly pay to more than $6 an hour (the federal minimum is $5.15) to attract and retain employees.

This building boom is happening just when consumer demand for theme parks is softening. Attendance at the three older Disney parks dropped about 10% last year, according to Amusement Business, a trade magazine. The number of visitors at Universal Studios Florida and Sea World was flat in 1998, at 8.9 million and 4.9 million, respectively. The economic slump overseas slashed tourism to Orlando. But experts wonder whether the whole theme-park business is maturing, as the children of U.S. baby boomers get older and hence reduce the number of repeat trips. "I just don't think it makes a lot of sense to build more theme parks in Orlando," says Alan Gould, a media analyst with Gerard Klauer Mattison. "They've reached the saturation point, and profits are going to come down."

So will prices. The typical family spends about five days and more than $1,000 in Orlando's parks. It's nearly impossible to see everything. As a result, every park is feverishly baiting tourists away from rivals. If you've ever had to spend an ungodly amount of money to wait two hours for a six-minute ride, this may be your chance to get even.

--By Bernard Baumohl