Walt Disney Co. (DIS) opens an expanded section of its Magic Kingdom today with the aim of drawing more visitors to a Florida park battling stagnant attendance for the past five years.
Disney World employees at the Dumbo the Flying Elephant ride now hand out pagers to guests, who can take children to an air-conditioned play area until their turn comes. Customers are also able to purchase beer and wine in the park for the first time at a new restaurant modeled after the animated movie “Beauty and the Beast.”
The changes to the Fantasyland area, estimated by Sanford C. Bernstein & Co. to cost $300 million, mark the biggest expansion in the 41-year history of Disney’s Magic Kingdom in Orlando. They are part of a wider effort by the world’s largest theme-park company to find high-tech ways to shorten lines and boost sales.
“With new technologies, we’ve got greater capability to immerse people in stories,” Thomas Staggs, chairman of Disney parks and resorts, said in an interview. “The food can come out sort of magically and appear. In the Little Mermaid queue, it’s not so much waiting as playing a game and interacting with the crabs. That’s technology that wasn’t there when Walt was first envisioning the park.”
Reducing wait times for rides frees guests to spend money elsewhere in the park and should lead to higher profit eventually, according to Jaison Blair, an analyst with Telsey Advisory Group in New York.
“If you’re not standing in line you’ll take your daughter to the Bibbidi Bobbidi salon or your son to the store to buy something,” Blair said.
The changes aren’t cheap. Jay Rasulo, Disney’s chief financial officer, said on a Nov. 8 conference call that investments in the resorts unit, including new cruise ships and the remodeling in Orlando, will lead to roughly $500 million in added revenue this fiscal year -- and a similar rise in costs.
“Bulls like me say, ‘Yes, you are managing this asset for a lifetime and you must do periodic projects like this,’” said Todd Juenger, an analyst with Sanford C. Bernstein in New York. “Bears look at the same situation and say, ‘That’s why I don’t like the parks business, it’s a capital sinkhole.’”
The goal is a more enjoyable experience for customers. Guests waiting to ride the new Under the Sea: Journey of Little Mermaid attraction can peer through portholes and tell hologram crabs to collect treasure from the ocean floor. Diners at the castle-themed Be Our Guest restaurant enter orders on a touchscreen and head to their tables with a plastic rose- imprinted device that directs servers to their location.
Disney is also serving beer and wine with dinner at the restaurant, a first for the park. Among the options, a $69 bottle of the Lasseter Family St. Emilion Red Blend from the winery of John Lasseter, chief creative officer of Disney’s animation studios.
Fantasyland, one of the original themed areas in the park and home to attractions such as Cinderella Castle and It’s a Small World, is more than doubling in size with the makeover, according to the company.
During the two-year-plus construction, Disney closed Mickey’s Toontown Fair, a 1988 addition, and built an Enchanted Forest with waterfalls and castles tied to “The Little Mermaid” and “Beauty and the Beast” animated films.
The additions include Maurice’s Cottage, where kids can take part in an interactive play with Belle, a character from “Beauty and the Beast,” and Beast’s Castle, where parents can dine on thyme-scented pork chops as fake snow falls outside of windows nearby.
“It is a quantum leap forward in atmosphere for a Disney restaurant,” said Kevin Yee, a former employee who blogs at Ultimateorlando.com. “They’ve obviously spent a ton of money.”
With the use of pagers, new restaurant technology and interactive entertainment for waiting riders, the Fantasyland redo marks a step in a larger initiative that Disney calls next generation. The goal is for guests to pick rides and attractions before and during their trips to skip lines or shorten waits, according to Staggs.
Walt Disney’s resorts division, which includes the parks, cruise ships and a Hawaiian hotel, is the Burbank, California- based company’s second-largest business after television networks, contributing 31 percent of revenue and 19 percent of operating income in the last fiscal year.
While the Magic Kingdom remains the world’s most-popular theme park, attendance has been little changed at around 17 million visitors annually for the previous five years, according to a report by the Themed Entertainment Association and the consulting firm Aecom.
Universal Studios’ nearby Islands of Adventure boosted attendance 66 percent to 7.6 million over two years, after opening the Wizarding World of Harry Potter in 2010, according to the report. Universal Studios is owned by Comcast Corp.
Disney rose 0.5 percent to $49.06 at the close in New York. The shares had gained 31 percent this year, to rank eighth in the 16-stock S&P 500 Media Index. Comcast, up 57 percent, is first.
“The broader strategy is to meet Universal head on,” said John Gerner, a theme-park consultant in Richmond, Virginia.
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