Is Disney Phoning It In?

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It's that time of year again. Regional amusement parks are dusting off their turnstiles, and the larger theme parks are hoping that new rides will win over thrill-seeking families this summer.

Despite the economic doldrums, most chains have invested in e-ticket attractions to make their parks more enticing this season.

  • Six Flags (OTC BB: SIXF.OB) just opened a Terminator-themed wooden coaster in California, and it gave a pair of steel coasters in other parks some high-tech "Bizarro" makeovers.
  • Universal Orlando -- a partnership between General Electric (NYSE: GE) and Blackstone Group (NYSE: BX) -- is weeks away from opening a cutting-edge coaster in Universal Studios Florida, and it's now just months away from dropping the chains at the hyped Harry Potter addition at its adjacent Islands of Adventure park.
  • Cedar Fair (NYSE: FUN) is adding coasters in three of its parks, including the $22 million Diamondback in Ohio's Kings Island.

So what's Mickey Mouse pulling out of his hat to woo vacationers this summer? Not much. There have been a few stage shows added to Disney's (NYSE: DIS) Florida parks over the past year, but little else. Taking the year off from making any significant upgrades could be problematic, especially with Sea World Orlando and Universal Studios Florida set to debut some new marquee thrill rides.

Instead, Disney is responding by discounting resort stays, offering free birthday admissions, and … well, laying off staff. This isn't the response one would expect from the premium brand in theme parks, but if it can happen to Starbucks (Nasdaq: SBUX), why not Disney?

What makes this a bitter pill to swallow is that Disney has the capital and innovative spirit to do more. If Cedar Fair and Six Flags -- two smaller regional players juggling roughly $2 billion in debt apiece -- can add material attractions to their parks, why not Disney? In fact, Disney's most popular Florida theme park, The Magic Kingdom, will be without its iconic Space Mountain for the entire summer season. The most recent addition at its second-most-trafficked park, Epcot, is the modest "Great Piggy Bank Adventure," sponsored by T. Rowe Price (Nasdaq: TROW), in its Innoventions center.

This interactive exhibit helps families budget and prioritize their expenditures and long-term goals. Maybe Disney took its lessons to heart, but this is the wrong time to be thrifty. Parks that reside just a few exits away on I-4 are arming themselves with magnetic crowd pleasers this summer. Cracking the piggy bank open would have been a more creative approach than simply marking down resorts and admissions.

Hop on some of these other industry rides:

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Disney and Starbucks are recommendations of Motley Fool Stock Advisor and Motley Fool Inside Value. The Fool owns shares of Starbucks, too. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz enjoys taking his family on coaster treks over the summer. He owns units in Cedar Fair as well as shares in Disney and Six Flags. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy. 

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 01, 2009, at 6:42 PM, kellogg9 wrote:

    For my family i find e-ticket service very appealing and use it all the time not just for parks but for things like movies. It saves a lot of headache in lineups or phonecalls and you get to find out more details than could have been known any other way. I wish everything wuold do the same.

    Kelly

    http://www.stockcoupons.com/

  • Report this Comment On June 01, 2009, at 10:41 PM, epmccart wrote:

    I agree that if it has the capital to make expansions, it probably should, but I don't think the move to save up this summer will have a humongous impact on ticket sales - it's DISNEYLAND. Every kid in the US doesn't say they want to go to Universal Studios; no Superbowl winners say "I'm going to Six Flags!" (On this note, I think the "free birthday entry" idea is GREAT - tons of kids would see that as the ultimate birthday present - and it would be FREE).

    In fact, I think half the drive bringing adults - and of course, their kids with them - to Disneyland is that they want their children to experience Disneyland, as they, the parents, experienced it - in this light, adding an electromagnet to Splash Mountain would likely hurt "The Disney Experience". Case in point: a few years ago, I went to Disneyland with three friends from college - one friend and I had been when we were young, and the other two had never been (largely why we went). The two of us who'd been ended up LOVING it (mostly out of nostalgia); our two friends who'd never gone as kids found it overrated, and one said he'd rather go to Six Flags.

    Disney's not a park for teens looking for thrill rides: it's a family place, meaning who goes is largely dictated by the parents, who in many cases went there when they were younger. (Of course, I'm writing most of this based on Disneyland and Disneyworld - I do feel like constant additions to their other, more thrill-oriented parks is good, even a necessity).

  • Report this Comment On June 02, 2009, at 2:59 PM, jedited1 wrote:

    I agree somewhat with this article, especially in regards to Walt Disney World. BUT Disney Parks and Resorts has ALOT on it's plate right now. And their focus right now is DEFINITELY in the right place. Disney is focused on it's parks that have the lowest attendance (California Adventure and Hong Kong Disneyland) and are spending about $1 billion on each.

    Why spend millions or billions on the highest attended park in the world (Walt Disney World's Magic Kingdom) when your attendance is still VERY high (17 mil compared to the next highest non-Disney park Universal in Florida's 6.2 mil)?

    It makes more financial sense to spend money on your lower performing parks. Disneyland in California gets 14.7 million visitors while California Adventure (which is <100 yards away) only gets 5.5 million visitors.

    New attractions in Florida MAY bump their attendance numbers by 1 million or so (although in the past, it has made little to no difference), but a redo (or even new attractions) of California Adventure will increase it's attendance numbers significantly.

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