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Disneyland's Ugly Siamese Twin

Disney (NYSE: DIS  ) has a traffic-flow problem. Every day, the entrance to its experimental Disney's California Adventure theme park competes just a few yards away from the turnstiles to its iconic Disneyland.

And loses.

Greeting just less than 6 million guests a year -- against the 15 million visitors who flock to Disney's original theme park -- California Adventure is drawing scarcely more than one guest for every three who choose Disneyland.

Now, one could argue that Disney shouldn't complain. The 21 million guests it accomodates between the two parks tops the 19.3 million visitors that regional player Cedar Fair (NYSE: FUN  ) welcomed to its 18-park chain last year.

And Disney doesn't feel as if it is competing against itself in the daily battle for guests that takes place in the open space between the two parks. A more attractive California Adventure will be incremental -- not cannibalistic -- to the number of guests heading to the resort.

Disney knows that it needs to spend money to make money at the fledgling park. This morning's Wall Street Journal details the family entertainment giant's plan to earmark $1.1 billion in capital improvements over the next five years -- more than it cost to build the park in the first place.

California dreaming
It's not the first time that Disney has attempted to improve the park through fiscal upgrades. It added a West Coast version of the popular Tower of Terror freefall attraction from Florida. It turned a poorly rated dark ride into a kid-friendly trek based on Pixar's Monsters, Inc. movie. It even added a popular nighttime parade in a last-ditch effort to get guests to stay at the park long enough to consume pricier dinners.

The upgrades have helped, but it's been like putting lipstick on a talking pig. The concept is a hard sell, no matter how Disney dolls it up.

No one wants to pay $66 to tour a fake tortilla factory or go on off-the-shelf carnival rides. If a family loves rides, they'll get a better selection of both kiddy and thrill rides a few minutes away at Cedar Fair's Knott's Berry Farm, or an hour away at Six Flags' (NYSE: SIX  ) Magic Mountain.

It's true that a single exceptionally thrilling or interesting "E-ticket" attraction can save a fledgling park. (I have been a vocal critic of Disney's Animal Kingdom in Florida for years, for instance, but my cynicism has faded now that the addition of Expedition Everest is keeping guests from running for the exits in the middle of the day.)

As it is now, a passholder can cherry-pick from the handful of attractions worth experiencing at California Adventure before bolting to the more complete Disneyland. A day guest would be hard-pressed to pay as much for California Adventure as a one-day ticket to Disneyland.

The obvious solution would be to lower the admission price to California Adventure, but that would devalue the park forever. Making it equal in perceived value to Disneyland is the ideal fix. Hopefully, Disney will get there over the next five years.

A whole new world
The new attractions certainly sound enticing. A Toy Story-themed ride opens next year, offering plenty of re-ride value in the form of a competitive laser-gun shooting-gallery attraction. Other major rides will be tied to The Little Mermaid and Cars.

The Cars Land attraction mentioned in this morning's Journal shouldn't surprise to shareholders who thumbed through last year's annual report. It featured concept art of a Radiator Springs racing attraction, a cross between a dual-track version of Epcot's Test Track in Florida and the popular Indiana Jones ride in Disneyland.

Leaning on recent animated hits, mostly from the Pixar camp, is a sharp move. Plenty of companies are competing for the family travel dollar. Great Wolf (Nasdaq: WOLF  ) continues to inch closer to Disney's geographical markets with its indoor waterpark resort expansion. Viacom's (NYSE: VIA  ) Nickelodeon is opening an indoor theme park in Minnesota next year. It is also teaming up with Marriott (NYSE: MAR  ) to open Nickelodeon Resorts around the country, with the first one opening an hour away from Disneyland come 2010.

So Disney can't afford to let a park that bears its name languish. Its reputation is at stake. Dollars are at stake, too. Occupancy rates at its Disneyland hotels have always run high, but having a one-two punch with two blockbuster parks will give Disney the luxury to inch its overnight rates higher. In a few years, California Adventure should have a remodeled, Disneyfied entrance and several "can't-miss" attractions. The battle at the turnstiles will no longer be between an inferior park and its more attractive sibling. It will be in the minds of guests, wondering which marquee park to visit today, before returning to hit the other tomorrow.

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