Will LEGOLAND Florida Hurt or Help Disney?

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Blackstone's (NYSE: BX  ) Merlin Entertainments Group didn't waste any time in making LEGOLAND Florida official. Just days after acquiring the now-closed Cypress Gardens attraction in Winter Haven -- Florida's original theme park -- the new owners are moving in with building blocks and LEGO bricks.

When the park opens in October 2011, LEGOLAND Florida will be even larger than its LEGOLAND California counterpart.

It's a gamble. Cypress Gardens has failed in different incarnations, and Winter Haven is roughly an hour's drive from the theme park hotbed of Orlando. However, there are also several reasons why it should succeed. Blackstone has hinted at spinning off Merlin as its own IPO, and if that materializes, failure won't be an option.

LEGOLAND Florida's arrival will be a mixed blessing for Disney (NYSE: DIS  ) . On the one hand, the new park should bring more tourists to central Florida. Travelers coming down to check out LEGOLAND Florida will likely make the time to stop by one of Disney's four theme parks.

Conversely, the downside to LEGOLAND Florida is that Disney-bound tourists will likely head on over to kick the tires of the new attraction. Disney has spent the past few years transforming its massive Florida resort into a self-contained destination. It shuttles airport arrivals right to its hotels, making car rentals unnecessary. It prices its length-of-stay passes aggressively, encouraging visitors to spend an entire week on site.

LEGOLAND Florida will change that, just as the new Harry Potter land opening at Islands of Adventure -- a park co-owned by Blackstone and General Electric (NYSE: GE  ) -- will draw crowds when it opens in a few months.

By the time that the peak summer travel season of 2012 comes around, folks may think twice before committing to weeklong stays at Disney World when they have so many other area attractions to conquer.

This can create a bigger blow at the Disney-owned resorts than the actual turnstiles. Folks may not want to pay a premium to stay on Disney property when they will be spending a lot of time exploring neighboring parks.

The hospitality industry lives and dies by it occupancy rates. The reason that you'll find hotels aggressively marking down their rates through (Nasdaq: PCLN  ) or promoting insane deals through Travelzoo's (Nasdaq: TZOO  ) Top 20 weekly emails is that even collecting a pittance for an overnight guest is better than that same room sitting vacant.

Disney's master plan has been to flesh out its themed hotels, keeping them filled with tourists paying premium rates.

One can always argue that Disney has already faced down the arrival -- and enhancements -- of several area parks. However, those parks have usually popped up several years apart. The Wizarding World of Harry Potter and LEGOLAND Florida are hitting central Florida in back-to-back years. Tourists who hit Orlando once every few years will have surprisingly long checklists of non-Disney things to do in two years.

Disney can no longer rest on its laurels, and its planned improvements may not be aggressive enough.

Do you think LEGOLAND Florida and the new Harry Potter attraction will help or hurt Disney? Share your thoughts in the comments box below.

Walt Disney is a Motley Fool Inside Value selection. Walt Disney and are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz enjoys taking his family on coaster treks over the summer. He owns shares in Disney. 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.  

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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 January 22, 2010, at 4:37 PM, Mitcheltree100 wrote:

    Cypress Gardens may have failed, but it took a long time. I remember visiting as a child in the early fifties, and again with my young niece in the mid eighties.

  • Report this Comment On January 06, 2011, at 5:13 AM, alisha66 wrote:

    The Legoland Florida will be open in late 2011 at the former Cypress Gardens theme park in the Winter Haven, about 40 miles from the Disney World.The new theme park, aimed at children, would be the fifth Legoland in the world and the largest yet, with 50 rides, shows and attractions.

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