Higher Gas Prices: The 2011 Season Outlook for Florida Amusement Parks

It’s back. That dreaded scourge to operating budgets throughout the industry.  The malcontent that refuses to recognize fiscal years or finalized budgets.  Three words that bring chills to the ears of many amusement executives: higher gas prices.

While some local parks do benefit from higher prices because vacationers generally end up staying closer to home to save gas costs, even local parks still suffer increased operating costs whenever energy prices rise.

One of the biggest problems caused by higher fuel costs is increased airline prices.  Even modern jets, which are designed to be more fuel efficient, are profligate consumers of fuel.  This especially hurts amusement facilities that rely on a heavy amount of guests arriving by plane or driving long distances to get there by car.  These “destination resorts” can face unique challenges because increases in plane tickets and fuel prices typically mean fewer people traveling by plane or making long drives.

Many large parks and resorts fall within this category with two of the most susceptible being the Universal Orlando Resort and the Walt Disney World Resort, both located in the Orlando area—one of the country’s most visited cities by plane.

Each of these resorts is similar in name but much different in operation than their sister resorts of Universal Hollywood and Disneyland in the Greater Los Angeles area.  In Los Angeles, both parks have some guests that arrive by plane but many more via short local drives.  This helps insulate against large attendance loses when energy, and thus travel, costs increase.

For their Orlando counterparts, this insulation does not exist to nearly the same degree.  While the Orlando area and its 2 million-plus population is one of the top 30 largest metro areas in the country, the local audience is still a small percentage of Universal Orlando and Walt Disney World’s overall attendance—especially their overnight attendance for which Disney in particular has a huge on-property hotel room investment that plays a major role in its business plan.

Another challenge to Orlando is that, even with a population of 2 million people, the number of theme parks, waterparks, resort hotel rooms and other amusement facilities is dramatically higher per capita than even the Los Angeles area.  The result is a dilution in the purchasing effect of local guests in Orlando because there are so many options but only so much time to visit these facilities even for just a day trip.  After all, in addition to Disney and Universal, Orlando area residents have to decide among other great entertainment options such SeaWorld, CoCo Key, the Orlando Science Museum and local sports teams such as the NBA Magic.

This is why The Large Park Report thinks that one resort to carefully follow in light of the continued increase in energy prices (not to mention the continuing economic malaise) can be found just down the interstate and, in fact, has its own sister resort right in the heart of Orlando.

The Interesting Opportunity for Busch Gardens Tampa

Taken alone, the immediate Tampa metro area is larger than the Orlando area by only several hundred thousand.  Add in the adjacent Sarasota metro area though (which many statisticians do) and the joint Tampa/Sarasota area leaps to roughly 4 million people.
This provides a large potential local and regional draw for the area’s only major theme park, Busch Gardens Tampa—an attendance base that, in Orlando, the area large parks have to split among themselves several ways.

Of course, this is not to say that Busch Gardens Tampa does not have any local entertainment competition.  In addition to Tampa’s own excellent set of museums, Busch faces the immediate challenge of having numerous beaches in the local area as compared to Orlando (where the closest beach is over 100 miles away).  Still though, Busch seems very cognizant of its place as a strong local and regional draw when you consider that the two park resort (including the Adventure Island waterpark) does not have any on-property lodging.  This is a vastly different business model than Disney World and Universal Orlando, which both have thousands of hotel rooms among them.

What makes Busch unique from many other local and regional parks in the United States though is that it invests in new attractions like a national destination resort rather than a local or regional facility typically does. Indeed, the park regularly pours millions into not just new rides and shows but also extensive employee training and “back of the house” operational opportunities.

The latest expansion is the highly anticipated Intamin-designed roller coaster that is the centerpiece of a new cheetah exhibit.  The Cheetah Hunt coaster is unique in that its design includes sharp turns and sudden bursts of speed meant to mimic the real-life movements of a cheetah.  Add in the actual cheetah exhibit (known as “Cheetah Run”) and this is the only new major attraction opening this summer among all of the large parks and resorts in Central Florida.

This impeccable timing has allowed Busch Gardens and Cheetah Hunt to slip nicely into this summer after last year’s debut of Universal Orlando’s Harry Potter-land and next year’s Disney’s Fantasyland expansion.  Busch certainly recognizes this and has gone all out in promoting the new attractions through a high-tech social media campaign along with a conventional media blitz.

All of this leads to an interesting question:  with its lack of hotel rooms and non-theme park infrastructure costs, could Busch Gardens Tampa actually be better situated than Universal Orlando and Disney World in a new economy where gas prices continue to increase?

At first glance, most theme park observers might balk at even considering such an idea.  That, however, would be premature when you consider the possibility that vacation travel might become an increasingly regional and local activity as oil prices and energy costs reach new heights.  Indeed, an increasing number of oil industry commentators and officials prescribe to a theory called Peak Oil which suggests that, while oil prices may occasionally dip, the permanent cost trend is decidedly upward as the overall available supply of petroleum is depleted.

Under this scenario, Busch Gardens Tampa presents an interesting model of a highly immersive and diverse theme park that could still thrive in such a situation.  The reason is really quite simple and it goes back to the lower overall infrastructure and operational costs that Busch Gardens Tampa has compared to the other Central Florida large theme parks.

For instance, if vacation travel becomes more localized and regionalized, the need for hotel rooms to house guests would likely diminish as the theme park experience becomes more of a day trip situation.  The same holds true for expansive auxiliary services like restaurants outside of the theme park and vast intra-resort transportation networks.

All of these—hotel rooms, internal transportation, and out-of-park dining and retail—are hallmarks of Disney World and to a lesser degree Universal Orlando.  And, most importantly, each represents a significant part of the resort’s operational budget and business plan.  If increased energy prices reduced air travel and other long distance vacationing, Disney and Universal would be faced with a huge lodging, dining and transportation infrastructure that Orlando’s local and regional visitors could not come close to filling on their own.

On the other hand, Busch Gardens Tampa does not have to worry about empty hotel rooms and resort restaurants or unused buses and monorails because it does not have any of those.  Thus, even though increased energy prices would still hurt its attendance, the vast majority of Busch Gardens Tampa guests are day guests anyway.  The small percentage of guests that do plan consecutive multi-day trips to the resort stay at non-Busch owned area hotels that, if they experienced reduced vacancy, would not be a direct drag on Busch Gardens’ bottom line.

This is not to say that Disney World or Universal Orlando is doomed nor is it to say that Busch Gardens will anytime soon become the king of the Central Florida theme park jungle.  However, of the theme parks that operate year-round in Florida, Busch Gardens Tampa does appear uniquely situated to deal with the reduced out of town travel that could come with a sustained increase in oil and energy costs when compared to Disney and Universal.

With Busch Gardens’ larger metro area population, reduced entertainment dollar competition, and reduced non-theme park infrastructure, the upcoming months and years could demonstrate that being smaller and nimbler is better.
Kind of like a cheetah.

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