Florida fails to learn Disney's lesson about investing in brand equity

May 3, 2017, 10:30 AM · Here's a life lesson for anyone who's crushing it in the business world. Just because you're on top doesn't mean you can afford to stop doing the stuff that got you there.

The Disney theme parks learned that hard way in the late 1990s and early 2000s, when it decided that it could take a cheaper approach to developing its theme parks. Rather than creating immersive attractions and thoroughly decorated lands, such as those it built decades earlier for Disneyland and Epcot, Disney built California Adventure and Walt Disney Studios in Paris with lightly modified off-the-shelf rides and an overall design that put the focus more on retail than crafting a unique visitor experience. In its established parks, Disney eliminated lead cast members, cheapened costuming standards, replaced restaurant operations with cheaper outdoor vending, and deferred maintenance on both ride systems and decor.

Later, in an effort to hold down costs, Walt Disney Imagineering adopted an Integrated Project Delivery development process that minimized design change expenses at the cost of slowing project development to a crawl when compared with the lightning speed that competitor Universal was able to build new attractions using a more traditional bid process.

Eventually, in the late 2000s, as customer complaints soared, per-guest spending stalled and Universal secured the theme park rights to the Harry Potter franchise — which would allow Universal to start narrowing Disney's attendance lead in the industry — Disney began to wake up. But that meant spending billions of dollars to remake California Adventure, Hong Kong Disneyland, an Walt Disney Studios Paris, plus green-lighting ambitious — and expensive — new lands based on Avatar and Star Wars.

Disney bet that its brand equity was strong enough that it could afford to stop investing in that brand and still maintain its lead over the competition. And Disney could... for a while. But, inevitably, market leaders that do not invest in maintaining and expanding their leads will lose them to competitors who are not afraid to spend to advance.

Disney's board forced a change in leadership, from Michael Eisner to Bob Iger, which then led to changes in management and philosophy within the Disney Parks and Resorts division of the company. Disney learned, and has had to spend billions to catch up with the vital brand-equity investments that it ultimately just deferred.

The State of Florida is now poised to make the same mistake that Disney made in the 1990s. The Legislature is considering a massive cut in its funding for Visit Florida, the state's official tourism commission.

Why does that matter? Doesn't Disney, Universal, and every other major destination in the state spend millions of dollars promoting themselves to potential visitors around America and the world? Why should Florida taxpayers contribute anything toward helping those private companies?

Because it's a damned good investment for Florida taxpayers, that's why. Tourism is the state's biggest industry, generating billions of dollars of tax revenue that helps allow the state to remain one of the few that do not levy an income tax to its residents. A recent external audit of Visit Florida found "an extremely sound operation with a robust accounting system and mature internal control structure."

Visit Florida does more than just run ad campaigns promoting the state as a tourist destination. It's a PR agency that brings journalists to the state and works to provide information and sources to travel writers around the world, generating countless newspaper, magazine, television, radio, and online stories about the state and its attractions. It analyzes trends and the efficacy of campaigns, helping attractions in the state to optimize their own promotional efforts. A 2015 Florida Office of Economic and Demographic Research study reported that every dollar the state spends on Visit Florida returns $3.20 in tax revenue to the state. That's an amazing deal for taxpayers.

Remember, every ad slot that Visit Florida buys, every story that it places about the state, is one that rival destinations don't get. As such, Visit Florida plays a defensive role that supports and expands the effectiveness of individual destinations' promotional efforts. If the Legislature cuts tens of millions of dollars from Visit Florida's budget, that will make countless ad slots and stories available to Florida's competitors, including other U.S. states as well as international destinations such as Mexico, Spain, and Dubai. Those destinations want a piece of Florida's market share. They need the additional media attention that Visit Florida's campaigns now help keep away from them.

So why on Earth is the Florida Legislature wanting to cut Visit Florida? For someone who was a political science major in college and who worked professional as a newspaper editorial writer for several years, I try very hard to keep politics off Theme Park Insider. (At least explicitly.) But allow me to point out that many people who are talking about fiscal responsibility when it comes to Visit Florida never seem to have a problem with that when it comes to approving sweetheart deals for real estate developers or investment bankers. And that some of the people opposing Visit Florida might find it to their political advantage if fewer "outsiders" visited, relocated to, and became registered voters in the state. Or maybe they're just punitive jerks who want to get a "win" by denying Florida Governor Rick Scott something he wants.

I don't know. And I don't care. It doesn't matter "why" — just that the Florida Legislature is thinking about throwing away one of its best investments.

Florida owns amazing brand equity as a tourist destination. But that value wasn't given. It wasn't found. It was bought and earned. Brand equity is not a commodity. It is consumable. If Florida wants to continue to own that brand equity, it must continue to buy and earn it. If the state won't do that, no one in Florida ought to be surprised a few years down the line if the value of the state's tourism dominance begins to slip.

Replies (15)

May 3, 2017 at 11:16 AM · I have to disagree here Robert. I think publicly funded PR agencies for in-state tourism are dinosaurs. Certainly, if these initiatives can be funded solely by "tourist" taxes (like airport, hotel, rental car, and amusement taxes), then it's not so bad. Also, if a portion of state corporate taxes were to fund tourism initiatives, that would also be acceptable. However, in most states, those tourist taxes are funneled to stadiums, airport expansions, roads, and schools, while commercial taxes are typically used to fund infrastructure, public transportation, and public safety.

I think the "Visit Florida" brand is not as prestigious as you might think. The state gets far more attention for its national and international events that don't need additional "Visit Florida" advertising. College football bowl games (including this year's Playoff Championship Game), MLB Spring Training, Wrestlemania, NASCAR, conventions up the wazoo, and more, all have built in visit Florida ads without the state PR firm having to spend a dime. Also, strategic businesses located in Florida (like Disney, Universal, Legoland, NASA, Cruise companies, Florida beaches, and many many more) will spend private money to promote visiting the state without having to spend a dime of taxpayer money.

I can appreciate your argument in buying ads as a defensive mechanism to prevent other state tourism authorities from airing targeted ads in place of "Visit Florida" ads, but how effective is it to run an ad to visit the UAE during the St. Petersburg Bowl, or a spot for Napa Valley California during the Daytona 500? Visit Florida spends A LOT of money advertising during events that already have build in advertising. For goodness sake, I saw a Visit Florida ad during the nationally broadcast Disney Christmas Parade a few years ago that already had spots during every commercial break from WDW.

Certainly, "Visit Florida" should not go away, but spending money to advertise during events that already have built in advertising is like flushing money down the toilet. The agency may have impeccable accounting practices, but that doesn't necessarily mean they're spending money wisely. I think what the state is looking for here is for the agency to pull back and spend where they get the biggest bang for the buck.

May 3, 2017 at 11:54 AM · Because they paid $1 million to Pitbull for a lame remake of his hit rap song and tried to cover the embarrassment up behind secret documents. The legislature is pissed about the misuse of funds and could strip it out all.
May 3, 2017 at 2:00 PM · As a european visitor I never met with any Visit Florida adds.
Disney, Universal and Miami Vice where the buzz words. Deciding for a "far away" vacation brought you to a travel agency who had the brochures of how you could fill 3 weeks in Florida. That was the old days.
Now you type in anything you want and all the information pops up, from the source, not Visit Florida. The current pull is "When you love Potter you need to go to Universal Studios". That's what brings the (overseas) travelers to Florida. A 3 week stay will then be filled with Cape Canaveral, a visit to the Everglades, the Keys, Miami and maybe other theme parks but it's thanks to Google, not due to Visit Florida.
As long as the parks invest in attractions and ip's people care about, and they build it in a spectacular way, the tourists will come.
May 3, 2017 at 3:16 PM · There are 'visit Florida' ads?

News to me. I know Disney and Universal promote themselves in the US and abroad - but i've not seen a 'visit Florida' type add - showcasing other areas of Florida.

May 3, 2017 at 4:26 PM · In France, I have used many times Visit Florida website and brochures for preparing my trips. Thanks to the brochures, it was easier for me to convince 6 friends to discover Florida as a vacation destination (they are hooked now). Ok, I don't say that the Visit Florida taxpayer money is always well spent and I can't comment on the political game, but as we say in France: ne jetez pas le bébé avec l'eau du bain (don't throw the baby with the water of its bath).
May 3, 2017 at 6:38 PM · Thank you so much for needlessly injecting politics into a website I intentionally visit to avoid having to read about how stupid so many people in our country can be. This article serves no purpose but to allow the author to vent about an issue most readers couldn't care less about. There are many other good theme park sites out there so I won't be visiting this one anymore.
May 4, 2017 at 12:52 AM · Visit Florida's ads are huge here in London, often doing takeovers of the massive train stations. That's not going to be cheap, but it's incredibly effective - filling my daily commute with inescapable images of Florida sun. (Particularly effective on a muggy English morning, as most are.) And, I'll tell you from experience, those images linger in the brain for the rest of the day.

I think arguments of "Disney and Universal will spend on advertising anyway" are missing the point. The Visit Florida campaigns bring the state together as a complete vacation package, selling the idea of nature, weather and Americana along with the parks.

Those other elements are just as important for securing international custom. Most people are not the theme park nerds we are on this site - while parks are inevitably part of the appeal, for most adults they don't make for a holiday destination solely by themselves.

May 4, 2017 at 5:12 AM · This is one of my favorite articles you have written lately Robert! This is the reason why I love TPI!

This is a political post, but it is calling out ALL of Florida. This is a bipartisan issue that affects everybody.

First rule in business is that you can't get complaisant. Consumers are looking for the next best thing and if you do not provide it, your competition will. Why do you think Seaworld is struggling? They have not adequately kept up with customer wants and haven't gone on the offense when times looked rough (Blackfish).

Money for the state has to come from somewhere. While Florida doesn't have any income tax, they do charge more for basic government services like driver licenses than my "too taxed" Illinois. It is all about balance. States need tax revenue to keep running. Might as well invest in tourism so that out of staters can pay the bill.

May 4, 2017 at 7:57 AM · Great article, Robert!

California Adventure was on the receiving end of many jokes, as well as the slow pace of Disney deployment (which is still somewhat of an issue).

I agree that this is a misstep for Florida as well. What's good for tourism is good for Florida residents!

May 4, 2017 at 8:49 AM · You're upset because they won't be paying for you to visit as a journalist anymore. That's my take.
May 4, 2017 at 12:20 PM · Yeah, sorry Robert. I acknowledge the benefits you point out, but Disney and Universal are at a point in time where they don't need help anymore to get out-of-state folks to visit.
May 5, 2017 at 6:49 AM · Orlando might not need Visit Florida's help, but there are a signicant number of smaller cities throughout the state that do.
May 5, 2017 at 8:47 AM · What Florida needs to learn is that paying people $8.75 an hour is not acceptable.....
May 7, 2017 at 8:17 PM · I just love the fact that the responses to this one might be more "all over the map" than for any other post I've written in recent memory.
May 9, 2017 at 6:00 AM · This story from Florida newspapers came across my feed this morning and I was surprised that I had some background knowledge of this issue, all thanks to the article here at Theme Park Insider.
I'm not sure how common this practice is in tourism circles, but I agree with the premise from the reporter that deals like this make Visit Florida a target or at least subject to further scrutiny. It might actually be a great investment for Florida, but on the surface, it looks bad and can make Visit Florida a convenient target during budget season.

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