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.Tweet
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