EXPANDED DISNEYLAND POSES THREAT, PROMISE FOR SOUTHLAND TOURISM

The theory behind California Adventure, Walt Disney Co.'s new $1.4 billion Anaheim theme park, is simple: Create a destination resort and you can hold visitors captive for days, or at least until they run out of money.

Disney is hoping that many of those visitors will head back to Iowa or Nebraska without ever stepping foot outside Anaheim. That could be bad news for rival Universal Studios Hollywood, Knott's Berry Farm and the rest of the Southland's tourism industry.

"You talk to the tourism folks and they're quite worried," said Jack Kyser, chief economist for the Los Angeles Economic Development Corp.

If the new resort does its job, people will spend several days at the new Disneyland California Adventure complex and maybe mosey over to Universal Studios or to Hollywood for a half-day or a day, at best. That could reduce overall spending on everything, from shopping to hotels.

But for some, a day may be all they need. Knott's general manager Jack Falfas, for one, said he hopes the park will get Disney visitors to spend at least a day at Knott's.

"We know we'll never be Disneyland," he said.

Still, most see the expanded Disneyland as good for regional tourism in the next few years. The second Disney park is likely to steal visitors in its first year or so. But it's also expected to bring more visitors to the region, who observers believe will find their way to other attractions.

When it opens in February, the new 55-acre park next door to Disneyland will feature typical amusement park rides, like "California Screamin," a looping roller coaster. But it also will offer live shows at a 2,000-seat theater--the first live stage facility inside a Disney park--fine dining and the 750-room Grand Californian Hotel, the first Disney hotel to be built inside one of the company's theme parks.

Outside the park, in a nearby entertainment mall dubbed Downtown Disney, adults will be able to choose from a wide assortment of entertainment, ESPN Zone, the House of Blues, a Latin dinner club and a wine-tasting room.

By keeping visitors at the resort for several days, Disney can drive up per-person spending. Typically, day visitors spend about $50 a day each at theme parks, but those who stay in hotels spend about $250 each.

"Right now, people spend a day at Disneyland, but trying to stretch that has been tough for Disney," said Christopher Dixon, an analyst with UBS Warburg. "California Adventure will change the dynamics, turning (Disneyland) into a bona fide resort destination where people will stay three or four days."

John Robinett, a principal with Los Angeles-based Economics Research Associates, an entertainment and leisure consulting firm, said that when California Adventure opens, other parks, including Disneyland, will likely see a 10% to 15% drop in attendance.

"Usually, it's a temporary phenomenon, though," he said.

After a year or two, parks tend to regain ground after local residents have already tried the new theme park and are ready to revisit their old haunts, such as Knott's or Magic Mountain.

Dave Schmitt, a principal with Management Resources, a consulting group in Tustin, argued that California Adventure could benefit Universal Studios by boosting domestic and international tourism into Southern California.

"There' s a certain synergy when a new theme park opens," he said. "Tourists will be coming to Southern California for a four- or six-day trip and, after they've done California Adventure and Disneyland, it leaves a couple of additional days to do other things."

Kyser said there's no doubt that California Adventure will provide a boost to Southern California's economy. The new park is expected to draw 6 million to 7 million visitors in its first year.

The question is how much time those visitors will spend in L.A. County. Kyser suspects many will land at Los Angeles International Airport and simply take tour buses to Anaheim.

"We end up with the added traffic congestion," he said.

Part of the problem for Universal is that the theme park has been slow to add new attractions, said Kyser. The company had big plans for new attractions, hotels and retail shops that would turn Universal Studios Hollywood into a destination resort in its own right, but the company put the $1 billion project on hold in 1998 in the face of intense opposition from homeowners, trade unions and politicians.

"You had all kinds of agendas on the Universal project to the point that it almost got to be the theater of the absurd," Kyser said. "The need to think strategically about this got lost in the hubbub."

Eliot Sekuler, a spokesman for Universal Studios Hollywood, declined to discuss the potential impact on the park of California Adventure, but he disputed Kyser's contention that the company has been slow to add new attractions.

In spring, the company opened the "Rugrats Magic Adventure," a live show with actors and dancers dressed up in Rugrats costumes. The company updated its tram tour, adding video screens so visitors can see movie snippets as they visit particular sets. And next year, the company plans to add a live animal show based on the popular cable television show, "Animal Planet."

"We're enjoying a very good year," Sekuler said. "In general, there's a lot of momentum coming off the summer, and we're expecting a big holiday season."

Kyser said theme parks need a new "mega-attraction" about every year, and the Rugrats show doesn't really qualify. The park's last mega-attraction was "Terminator 2:3D," a three-dimensional movie combined with live action entertainment that opened in spring of 1999.

But Knott's GM Falfas said major attractions, like parent company Cedar Fair's $26 million Millennium coaster at Cedar Point in Ohio, have to carry a park for a couple of years.

In the past two years, Knott's has added thrill rides Supreme Scream and Perilous Plunge and wooden coaster, Ghostrider. Last summer, it opened a $26 million water park, Soak City. In 2001, the park will add a Skycoaster bungee-style ride, but will focus the bulk of its promotions on other recent additions.

Six Flags Magic Mountain in Valencia,too, has done a good job developing new attractions, Kyser said. The addition of Hurricane Harbor, the company's water park, has helped turn Magic Mountain into more of a destination.

Magic Mountain unveils a new ride about every year. The most recent addition was Goliath, a 255-foot-tall looping roller coaster that opened this year.

Universal Studios does not release attendance figures, but according to Amusement Business, an industry trade publication, the park's attendance--like that of Disneyland-has been flat in recent years.

Universal Studios Hollywood had about 5.1 million visitors in 1999, the same as in 1998. Six Flags Magic Mountain saw a 3 percent increase in attendance from 1998 to 1999, when the park had 3.3 million visitors. By comparison, Disneyland had about 13.4 million visitors last year.

Amy Means, a publicist for Magic Mountain, said the park isn't worried about California Adventure.

"It's great for the industry because it brings a lot more visitors to Southern California," she said.

Magic Mountain vies for a different clientele.

"We're the park of choice for thrill seekers," Means said.