The Bad News for Orlando in NBCUniversal's Numbers

June 3, 2020, 12:03 AM · When theme parks reopen this summer (or later), the industry will rely on local visitors more than ever before. That's the message from industry leaders talking with elected officials and analysts as they plan their parks' return. And it's potentially bad news for the market that depends most upon out-of-market visitation — the world's theme park capital, Orlando.

Universal Studios Hollywood President Karen Irwin spoke Tuesday to the Los Angeles County Economic Resiliency Task Force, presenting a proposal from theme parks in the county to begin their reopening process immediately. But what I want to focus on here are her words about NBCUniversal's market research.

"Theme parks in Los Angeles County disproportionately serve the local market - 60% of our collective theme park attendance comes from local and outer California areas, driven largely by annual and season pass holders. Our marketing insights and demand studies, consistent with LACVB [Los Angeles Convention and Visitors Bureau] and Visit California, indicate that outer US and international visitation will unfortunately not return to 2019 levels until 2023," Irwin said.

"Notably, both organizations have pulled international advertising dollars and are shifting advertising spend to local travel. The expected recovery that will include much more dependence on the local and California markets well into 2022."

While Irwin cited research specific to Southern California, other industry sources also are citing a shift toward consumers staying closer to home in the months to come. Cedar Fair CEO Richard Zimmerman yesterday told the Goldman Sachs 2020 Travel and Leisure Conference that his companies' parks - including Knott's Berry Farm and Cedar Point - were well positioned coming out of stay-at-home orders since 90 percent of the chain's business comes from 150 miles of its parks.

Look at the big picture, and things get concerning for tourist destinations that lean heavily on out-of-market visitation. In the theme park industry, one market stands far beyond all others on that front - Central Florida. No other collection of major theme parks relies as much upon people from outside of its metropolitan area as Orlando's does.

International borders remained closed, and airlines are operating only a small fraction of their pre-pandemic flight schedules. The cruise industry can't sail, eliminating a popular attraction for many Disney fans thinking about a trip to Central Florida. Even road travel within the United States is tougher now, with hotels and restaurants closed or reducing their capacities. Heck, it can be tricky to find places to use a toilet, with rest areas and some gas station bathrooms closed.

While those facilities might soon return, it's going to be a long time before many guests have earned enough money to feel comfortable traveling again. And that's assuming that a vaccine becomes available before then. If Covid-19 remains a health threat, many people simply won't risk going too far from home to vacation among large crowds.

As Irwin suggested, Universal Studios Hollywood - along with Disneyland, Knott's, Magic Mountain and other parks in Southern California - can do well when people stay close to home, thanks to the nearly 24 million people who live in Southern California. When those consumers can't get to Hawaii, Mexico, Europe, or even the east coast, many of them hit up the region's theme parks for their staycations.

But Central Florida is home to just over eight million people. That's still a large and lucrative market, but it's tough to cut a pie one-third the size of Southern California into nine pieces... especially when just seven major parks share the Southern California market.

Orlando needs out-of-market travel. As the nation opens and the economy begins to recover, its theme parks and state and local visitors' bureaus will need to market aggressively to encourage people in the eastern half of the United States to come down for a visit. But if reopenings lead to a resurgence of Covid-19, all the marketing imaginable won't help bring people from out of state to visit the parks.

That's why businesses and residents in Central Florida - perhaps more than any other market in America, gives its dependence upon travel - need a solution to this pandemic. Not just a work-around, such as the procedures Universal Orlando and Walt Disney World are putting into place as they return. A solution.

Replies (15)

June 3, 2020 at 2:14 AM

The other difference in these 2 markets is the wealth. California is an incredibly wealthy state, with a diverse economy. Florida is much more dependent on tourism so there won't be as many cashed up locals to support the industry.

June 3, 2020 at 4:21 AM

Sadly this is all too true as we have just cancelled our planned vacation in Orlando for this Fall and are now looking at 2022. However that will very much depend upon costing. Every time we have travelled so far we have taken advantage of the UK-only free dining package offer which has made a huge difference to our ability to enjoy an on-site Disney resort stay. If Disney decide to cut those sorts of promotions and focus more on the local or US market that makes the whole trip less attractive. Equally it will depend to some extent on whether airlines resume flights and if so whether they price them as they did before. If the costs of flights double and if Disney looks to ramp up its resort costs whilst cutting back on the enticing promotions then we probably won't be conning back at all. Ever. The best thing Disney could do right now would be to release a big set of promotions for the whole of 2022 with some aggressive pricing and offers. UK residents will be cautious next year but probably willing to take a punt on 2022 if the price is right and if cancellation terms are generous.

June 3, 2020 at 7:01 AM

I don't think the situations between California and Florida can be compared in such stark terms when it comes to the theme parks. For Florida, you've got to extend market of potential visitors well beyond the day tripper range. I think you can extend the potential market out to 500-700 miles from Central Florida and maybe a little beyond that. Every day when I drive east on I-10 in the Florida Panhandle, I'm seeing more vehicles from out of state than from Florida on the road.

Air tourism may be down, but it seems that when people have more control over their travel situation (arrive in their own vehicle and with the ability to clean and disinfect their lodgings) they are willing to accept more risk with respect to the coronavirus. That also may be a reflection on the cultural attitude in the southeast part of the United States. Many of my friends and co-workers are done with the virus. They're back to business as usual.

June 3, 2020 at 8:21 AM

I'm writing from the UK. Our coronavirus response has been a shambles - the only possible way it could be worse is if we were in America. Looking at the way the virus has been handled and now the subsequent protesting across the USA, I expect people are going to very cautious about visiting the country any time soon, no matter how many fancy promotions Disney offer.

June 3, 2020 at 8:33 AM

Part of the answer is very simple - deep discounting. Increased prices and a terrible exchange rate make visits from the UK incredibly expensive.

June 3, 2020 at 8:41 AM

@Ian Robinson & boble000 Let’s not forget that our two major airlines are completely up in the air (no pun intended), at the moment. I have a vacation booked for next year and I’m hopeful that it will go ahead, but I also have no idea what the flight situation is going to be like, by then.

June 3, 2020 at 10:10 AM

The Disney parks capacity is going to be so reduced they will probably fill up anyway, and with their millions of annual passholders at both DLR and WDW they need to try and find space for, as well as the people they already had booked and all of the people still trying to contact them to find out how to make reservations, at this point honestly I don't think Disney cares about international travel for now they have more customers than they have space for.

June 3, 2020 at 10:20 AM

I was curious as to why Universal did not setup a reservation system for park entrance upon return to operation. Maybe they are not concerned about reaching the allowed capacity percentage based on feedback they have received from local residents and passholders. I'm headed over to Orlando this weekend from Tampa and I'm toying with the possibility of venturing over to Universal. I'm very interested to see how many people show up on Friday which might help me make my decision to visit on Saturday, although it may be hard to compare those two days. Would love to be a fly on the wall when the business leaders are making the reopen decisions. How are they balancing the costs to run the parks versus the amount of expected attendance while considering additional procedures for safety guidelines? If at all possible Robert, maybe you can setup an interview with either a high ranking Disney/Universal figure to get their thought process and what are all the variables they are considering?

June 3, 2020 at 10:56 AM

I think its very likely UO is going to be slammed on its opening day.

June 3, 2020 at 11:15 AM

I agree with the prospect of a capacity Universal this weekend. Today is another preview day type of deal and the Hulk Coaster has a 75 minute wait. Thats just a small indicator that people will show up. The parks in Orlando will have no trouble filling their parks at reduced capacity.

June 3, 2020 at 2:19 PM

All being well Mrs Plum and myself will be landing at Orlando Airport on the 5th October. Not too fussed what is open or the measures the parks will still be maintaining as I will be back "home".

June 3, 2020 at 6:43 PM

I have to agree with Tim above. I was up in Fernandina last weekend and half the cars were from out of state with the strongest representation seeming to be from Atlanta. I know Disney and Universal pull heavily from South America but there's 23 million within a 5 hour drive of the parks and 47 million within an 8 hour drive. If the parks are offering deals people will make the drive.

June 3, 2020 at 9:40 PM

Within a 3.5 hour radius or so from Orlando is about 17 million people. This distance is a very comfortable drive for a park visit. Household income also goes up significantly when you start adding the income wealth of the Palm Beach/Miami metro area into this equation.

The connection between Orlando and the Miami metro will grow even stronger in 2022 (2 years away) when the high speed rail line opens.

June 4, 2020 at 5:25 PM

We travel overseas frequently ( from the uk) and love florida. We were thinking about a trip in the autumn, but with so much uncertainty we won’t now. Add to the fact what will it be like at airports with extra health screening. Also with US immigration at large airports being amongst the most unpleasant airport experience in the western world at the best of times, it all adds up to put you off. Sadly I don’t think we will be back to florida for a couple of years.

June 5, 2020 at 3:32 PM

Well my take on it is that they don’t need people to come very badly. I had a original free dining reservation that was cancelled because of closure. I received the recovery free dining and booked for August(much hotter but we were still fine with coming) now I have gotten my new “compensation” because they cancelled all dining plans. It’s fine to not have the plan but don’t offer me something worth much much less after all the disappointment and uncertainty. The room discount on my value room amounts to almost exactly HALF the value of the dining plan that I originally had. For deluxe stays I’m sure that the room discount came out better but not on the price of a value room. Perhaps they only want to keep the people coming who stay deluxe??

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