Orlando Sentinel: The sudden deterioration of the global economy in recent weeks is prompting fears of a slowdown at Orlando's big theme parks, which have been one of the few bright spots this year in an otherwise moribund local economy.Although Walt Disney World, Universal Orlando and SeaWorld Orlando have all reported promising trends during the first half of this year, analysts say they could face a much tougher slog this fall if falling stock markets and rising concerns about unsustainable government-debt loads in the U.S. and Europe undermine an already sluggish recovery from the 2007-09 recession.
“The ongoing weakness in U.S. employment could cause further softness in park demand and possibly more discounting," analysts at Goldman Sachs said this week as they cut their rating on shares of the Walt Disney Co. from "buy" to "neutral." The downgrade followed a quarterly earnings report from Disney that topped Wall Street estimates but which failed to soothe concerns about Disney's most economically sensitive businesses: theme parks and television advertising.
"A weaker economy could slow theme park traffic, which is a key risk in our opinion," Disney Co. analysts at Stifel, Nicolaus & Co. said in a separate research note.
"A weaker economy could slow theme park traffic, which is a key risk in our opinion," Disney Co. analysts at Stifel, Nicolaus & Co. said in a separate research note.
Theme-park executives say it is too early to tell whether the recent economic turmoil will deter consumers from traveling. Disney says visitors to its theme parks typically book about 14 weeks in advance.
Jim Atchison, president and chief executive officer of SeaWorld Parks & Entertainment, said Thursday that there have been some promising signs even amid the recent dour headlines. Atchison cited a report released Thursday that showed the number of people claiming jobless benefits fell slightly last week, and the fact that corporate earnings remain strong.
"I think the biggest drivers of the unrest really come down to political problems more so than economic problems," Atchison said. "The bigger problem would be if corporate earnings and jobless claims were awful; those are things that are harder to fix."
Atchison said he is still optimistic about the next six months, both for SeaWorld and the broader Central Florida tourism market, though he added he was "probably a bit more guarded today than I would have been a month ago."
Any slowdown at the area's theme parks would obviously be a blow to Orlando's economy. Already the region's dominant industry, the tourism sector has been among the few sources of growth in a weak jobs market.
Leisure-and-hospitality businesses in Metro Orlando added 11,500 jobs in June when compared with a year ago, far more than any other industry. The next strongest sector — professional and business services — added just 2,100 jobs in the same 12 months. The four-county metro area as a whole had a net gain of only 8,000 jobs.
Universal Orlando, reveling in record crowds and profits since opening the Wizarding World of Harry Potter in June 2010, has led the way locally. The two-park resort announced earlier this month that second-quarter attendance jumped 41 percent and in-park spending rose 15 percent. That followed a 68 percent attendance gain during the first three months of the year.
"We are still seeing significant interest in our destination," Universal spokesman Tom Schroder said. "We are obviously keeping close watch on the economy, but it's too soon to talk specifics."
SeaWorld Parks & Entertainment doesn't publicly report financial data, but Atchison said the company's 2011 attendance has experienced "high single-digit" percentage growth so far compared with the same period last year. He also said per-capita spending in the company's theme parks is up from a year ago.
"We're up over last year both at SeaWorld Orlando and as an enterprise as a whole," he said. He added that future reservations for SeaWorld's limited-admission park, Discovery Cove, remain "robust."
Attendance at Disney World appeared to shrink somewhat during Disney's most recent fiscal quarter, which ended July 2. Disney Co. no longer releases specific figures for the Orlando resort, but the company said combined attendance between Disney World and Disneyland in Anaheim, Calif., inched up 1 percent during the quarter from a comparable period last year — and that was with Disneyland achieving an attendance record for the period.
But Disney World, unlike Universal and SeaWorld, didn't suffer steep attendance drops in 2009 or 2010, as it was able to use price promotions to prop up attendance then. And Disney says it is now making progress weaning consumers from those discounts: Spending in its U.S. parks climbed 8 percent during the quarter, while spending in its hotels — the vast majority of which are in Orlando — leapt 14 percent.
U.S. hotel bookings for Disney's current fiscal quarter are running 2 percent behind last year's pace, though the rates Disney is charging are up by a mid-single-digit percentage.
Disney says the pace of those bookings has not slowed in recent weeks. But President and Chief Executive Officer Bob Iger said the company is prepared to resume discounting if the economy deteriorates sufficiently.
"So far, over the last few days, we really haven't seen that much of a change," Iger said Tuesday. "Now, we're currently selling a shoulder period mostly, which is the fall, where there is some discounting anyway. We'll take a look at holiday bookings as the year progresses."
Jim Atchison, president and chief executive officer of SeaWorld Parks & Entertainment, said Thursday that there have been some promising signs even amid the recent dour headlines. Atchison cited a report released Thursday that showed the number of people claiming jobless benefits fell slightly last week, and the fact that corporate earnings remain strong.
"I think the biggest drivers of the unrest really come down to political problems more so than economic problems," Atchison said. "The bigger problem would be if corporate earnings and jobless claims were awful; those are things that are harder to fix."
Atchison said he is still optimistic about the next six months, both for SeaWorld and the broader Central Florida tourism market, though he added he was "probably a bit more guarded today than I would have been a month ago."
Any slowdown at the area's theme parks would obviously be a blow to Orlando's economy. Already the region's dominant industry, the tourism sector has been among the few sources of growth in a weak jobs market.
Leisure-and-hospitality businesses in Metro Orlando added 11,500 jobs in June when compared with a year ago, far more than any other industry. The next strongest sector — professional and business services — added just 2,100 jobs in the same 12 months. The four-county metro area as a whole had a net gain of only 8,000 jobs.
Universal Orlando, reveling in record crowds and profits since opening the Wizarding World of Harry Potter in June 2010, has led the way locally. The two-park resort announced earlier this month that second-quarter attendance jumped 41 percent and in-park spending rose 15 percent. That followed a 68 percent attendance gain during the first three months of the year.
"We are still seeing significant interest in our destination," Universal spokesman Tom Schroder said. "We are obviously keeping close watch on the economy, but it's too soon to talk specifics."
SeaWorld Parks & Entertainment doesn't publicly report financial data, but Atchison said the company's 2011 attendance has experienced "high single-digit" percentage growth so far compared with the same period last year. He also said per-capita spending in the company's theme parks is up from a year ago.
"We're up over last year both at SeaWorld Orlando and as an enterprise as a whole," he said. He added that future reservations for SeaWorld's limited-admission park, Discovery Cove, remain "robust."
Attendance at Disney World appeared to shrink somewhat during Disney's most recent fiscal quarter, which ended July 2. Disney Co. no longer releases specific figures for the Orlando resort, but the company said combined attendance between Disney World and Disneyland in Anaheim, Calif., inched up 1 percent during the quarter from a comparable period last year — and that was with Disneyland achieving an attendance record for the period.
But Disney World, unlike Universal and SeaWorld, didn't suffer steep attendance drops in 2009 or 2010, as it was able to use price promotions to prop up attendance then. And Disney says it is now making progress weaning consumers from those discounts: Spending in its U.S. parks climbed 8 percent during the quarter, while spending in its hotels — the vast majority of which are in Orlando — leapt 14 percent.
U.S. hotel bookings for Disney's current fiscal quarter are running 2 percent behind last year's pace, though the rates Disney is charging are up by a mid-single-digit percentage.
Disney says the pace of those bookings has not slowed in recent weeks. But President and Chief Executive Officer Bob Iger said the company is prepared to resume discounting if the economy deteriorates sufficiently.
"So far, over the last few days, we really haven't seen that much of a change," Iger said Tuesday. "Now, we're currently selling a shoulder period mostly, which is the fall, where there is some discounting anyway. We'll take a look at holiday bookings as the year progresses."
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