Travel Industry

The Walt Disney Co. has a neat plan for giving its stores an extreme makeover – turn each store into an interactive  mini-theme park. And for this job, they hired someone who knows a thing or two about running stores which interact with shoppers - Steve Jobs, assisted by Apple’s retailing hotshots.

The Disney Store

Other than this, the big news is that Disney is planning to build a flagship store from scratch in Times Square.

Disney’s existing 340 stores, which offer a simple retail experience choc-a-bloc full of Disney gear, will shift to a more interactive high-tech experience with a focus on making a visit to a Disney Store a recreational outing - like a visit to a theme park.

And to hammer home the point, the Disney Stores are being rebranded – possibly as ‘Imagination Park,’ and will have theaters showing Disney film clips, where kids can take part in karoake contests and chat live with Disney Channel stars via satellite.

And the interactive experience aims to meld the Disney magic with modern technology to wow little shoppers and keep them coming back for more. Hidden chips will trigger a sci-fi like experience. So if you walk past a magic mirror with a princess tiara, Cinderalla might pop up and start talking to you.

And who better to do all this than Steve Jobs and Apple, who have so successfully turned retail shopping at an Apple Store into an addictive past-time. Besides, Steve Jobs is also on the Disney Board. Jobs’ key message to Disney execs, apparently, was to dream big.

And they are dreaming big. Each store’s top-to-bottom makeover is expected to cost $1 million, and the entire project is expected to stretch over the next 5 years.

But at the end of the day – it’s a blockbuster. This is Disneyland and Disney World put together coming to the corner street in your city, and kids won’t be able to stay away. Every day will be a trip to a Disney Park.

To make it even more of a money-spinner, they’re planning to put in touch-screen kiosks where parents can book Disney Cruises while the kids are enjoying themselves.

The first Imagination Parks will be unveiled in May 2010 in Southern California, Long Island and Madrid.

Photo by David Masters

The Blackstone Group (NYSE: BX), a private equity group which already has a big footprint in the travel sector, is forking out $2.7 billion to buy Anheuser-Busch InBev’s 10 theme parks – including the three Seaworld parks, two Busch Garden parks and five others.

Seaworld Orlando

Blackstone Capital Partners - one of Blackstone’s buyout funds, is paying $2.3 billion in cash to buy Busch Entertainment, out of which $1 billion is equity invested by Blackstone and the rest comes from lenders including Bank of America, Deutsche Bank, Goldman Sachs and Barclays.

On the face of it, such a large percentage (37%) of equity investment looks to be part of the ‘new normal’ for Wall Street, where excessive leveraging is no longer acceptable as before. But it also points to the confidence Blackstone has for it’s plan to dominate the theme park sector.

Blackstone already owns half of the Universal Orlando theme parks - for which it paid over $2 billion in 2000. Blackstone also owns Merlin Entertainment, which gives it ownership of the Legoland theme parks, along with other assets like  the London Eye ferris wheel and Madame Tussauds.

Merlin Entertainment is the world’s second biggest operator of attractions – Disney being the biggest one. Busch Entertainment Corp. is the second largest theme park operator in the United States with 25 million annual visitors, again second only to the Walt Disney Co.

Considering the $1 billion equity investment for the AB-InBev deal, and the fact that Blackstone now has an interest in all major Florida theme parks except for Disney, and also taking into account Legoland’s plans for a new theme park in Florida, it certainly looks like Blackstone is aiming for more than just cleaning up the balance sheets of the AB-InBev parks and then flipping them for a neat profit.

This acquisition looks more like part of a wider design to consolidate Blackstone’s theme park holdings and build a theme park empire to rival the sway that Disney holds over both Florida and California.

Disney World is about to get some serious competition as Florida’s premier theme park, as Florida may soon be home to the second Legoland theme park in the US.

Legoland Model Builder

Merlin Entertainment Group Inc., the company that designs Legoland, is said to be doing research on building an entire new theme park in central Florida.

The latest round of chatter was triggered by Screamscape, which reported that one of it’s readers was asked to participate in a survey where the questions “were all about building Legoland Florida, which would be based on the basic design and layout of the Legoland California park, and feature about 50 different rides and attractions.”

The location mentioned for the park was in Winter Haven near Cypress Gardens, about an hour’s drive south of Disney. Some mainstream news organizations followed up on the chatter, and a local NBC affiliate WESH TV got confirmation from a Legoland Spokesperson that Merlin Entertainment was indeed looking into a theme park in central Florida.

And now a few other locations are also being bandied about now, including near Old Town in Kissimee and another spot on the grounds of a failed amusement park, Splendid China, which is located just a few minutes off Disney.

Legoland California

Legoland has three parks in Europe and only one theme park in the US, in Carlsbad, California, just off San Diego, where it charges $63 for an adult ticket and $53 for children.

They’re trying to change the focus of Legoland California from a theme park for day-trips into an attraction where visitors can stay overnight. And to this end, they recently got permission from Carlsbad’s planning commission to build a 250 room Lego-themed hotel within the grounds.

Stands to reason that if they go ahead with the plans for Legoland Florida, it will be the full package – with a Legoland theme park and a hotel and other resort facilities.

That pits them in direct competition with Disney World, and has the potential to trigger some big changes in Orlando’s theme park landscape, including possibly a major price war which would likely spread out to include the companies’ parks in California.

Walt Disney Co. (NYSE:DIS) is all set to release it’s first quarter earnings results. Analysts expect Disney to post a profit of 51 cents a share on revenues of $10.1 billion. Disney’s annual 2008 earnings were $2.27 per share, with a net income of $4.4 billion on revenues of $37.8 billion. 

In the 4th quarter 2008, the company had reported earnings of $0.43 per share on revenues of $9.4 billion. This did not meet the expectations of $0.49 per share estimated by analysts.

We’ll know soon enough whether Disney manages to make good with it’s Q1 earnings, but based on  warnings during the 2008 Q4 earnings call, and their recent activity in the past 10 days or so, it doesn’t sound encouraging.

(Update Feb 3, 2009 - Walt Disney Co reported a quarterly net income of $845 million, or 45 cents a share, a 32 percent decline from $1.25 billion, or 63 cents a share, a year earlier. Revenue fell 8 percent, to $9.6 billion. “We faced a challenging first quarter with many of our businesses impacted to various degrees by the economic downturn,” said Robert A. Iger, Disney’s president and CEO. “We are forcefully confronting current circumstance while investing in the great creativity, brands and assets that are Disney’s strengths and keys to its long-term success.”)

Novermber last, explaining the 4% Q4 drop in operating revenue from Disney’s parks, Chief Executive Robert Iger warned analysts that the bad state of the economy could continue to dampen consumer spending well into 2009.

And in late January, in a likely bid to cushion the impact of a tough Q1 earnings report, the company offered voluntary buyout packages to around 600 execs at its theme park and resort divisions. The executives have been given until Feb 6 to accept the offers. If Disney does not get enough volunteers, they plan to implement involuntary layoffs with lesser severance packages than that offered in the buyout.

Secondly, they’re removing 400 jobs from the ABC TV Division by letting go 200 people and not filling 200 positions. They’re also planning some reorganization, with ABC Entertainment and ABC Studios to be operated as a coordinated business unit entitled ABC Entertainment Group. Earlier, Disney’s ESPN had announced a reduction of 200 jobs and a salary freeze for senior executives.

And in what is beginning to look like a trend among the big theme park operators, Disney is also starting to focus more on expanding it’s footprint in Asia, with revived plans to set up a long planned Disney theme park in Shanghai.

All of these are almost surely preemptive moves meant to placate investors worried about dismal earnings. In addition to an expected continuing slump in bookings and ticket sales at its two theme parks and resorts, analysts also predict steep drops in Disney’s DVD sales from the movie studios and loss of ad revenue from Disney’s regional ‘owned-and-operated’ TV stations.

Walt Disney Co.’s Q2 earnings are expected to be even lower, with analysts estimating profit per share of $0.47 on revenues of $8.4 billion.