Does Disney World have a LEGOland problem?

A column in the Motley Fool insightfully points out that Walt Disney World has a problem.

LEGOLAND Florida’s arrival will be a mixed blessing for Disney (NYSE: DIS). On the one hand, the new park should bring more tourists to central Florida. Travelers coming down to check out LEGOLAND Florida will likely make the time to stop by one of Disney’s four theme parks.

Conversely, the downside to LEGOLAND Florida is that Disney-bound tourists will likely head on over to kick the tires of the new attraction. Disney has spent the past few years transforming its massive Florida resort into a self-contained destination. It shuttles airport arrivals right to its hotels, making car rentals unnecessary. It prices its length-of-stay passes aggressively, encouraging visitors to spend an entire week on site.

Walt Disney World has focused too long on keeping premium rooms (DVC and otherwise) filled and artificially keeping guests on property (Mickey’s Magical Express and Magic Your Way). But those may not be enough to defeat the combined forces of Harry Potter and LEGOland. Those two new properties are sure to direct some traffic from Disney’s mouse trap. And, since the incentive to stay on property for the complete length of stay isn’t there without Magic Your Way and the need for a rental car, more guests will be booking off property.

What Walt Disney World needs now is a reason to visit the actual parks. I think they need to attack simultaneously on three fronts. They need to offer a better value for the dollar (better food, better accommodations, better service, etc), expand value resorts with rooms and prices that cater to families, and improve the guest experience.

Let’s concentrate on the third one today – Improving Guest Experience. The mysterious NextGen project should help with that (but probably at a price for the premium experience). They really need to improve the ultimate measure of guest satisfaction – how many attractions they experience in a day.

If you’ve been to the parks in the last few years then you’ve noticed that the number of off-season days, where you have the park practically to yourself, have been greatly reduced and busy days, when promotion or holiday draws families to the parks, are more plentiful and really crowded. Even if wait times are low, Fastpass has made it so that guests can virtually be two or three places at once. This crowds the walk-ways and generally makes for a worse experience for those guests who arrive late in the day and/or don’t utilize fast pass. It all adds up to the average number of rides a guest experiences in a day trending downward. The opposite of what Fastpass was supposed to accomplish.

To Disney’s MBA management minds, this is exactly what is supposed to happen. Every moment of every park is maximized for labor costs and visitor options. But to the guest, its just one poor  guest experience after another intersparsed with the odd cast member trying to make some magic.

This is a trend Disney needs to reverse and fast. Adding capacity to the parks, especially to those parks that are effectively half-day parks (DAK and DHS, I’m looking at you) is the best way to do it. (Opening a fifth gate would take too long and cost too much.) As long as families feel they can do DAK and DHS in a day and that EPCOT is only for adults (particularly during the food and wine festival when there is little for the kids) there is the temptation to skip one of those parks and collapse the other two into a single day visit. Suddenly Walt Disney World’s four parks becomes a two day ticket and the family can spend a day each at Universal, SeaWorld, and LEGOLand. Even if it’s just a couple thousand families a week spending more time elsewhere, soon you’re talking a lot less cheese for the mouse.

All the theme parks (and I’d argue the water parks and WWOS too) need something along the lines of the Fantasyland Expansion for Magic Kingdom. They might grow EPCOT a new country pavilion with an actual ride or figure out what to do with Wonders of Life or both. Disney’s Hollywood Studios can add the rumored Star Wars land (or import the Pixar rides from California Adventure). Disney’s Animal Kingdom can add the continent of Australia (I know they have plans for this) and a show or parade focused on the after-hours experience. Whatever they’re going to do, something big needs to be ready by Summer 2012.

Now that Jay Rasulo has taken his resort development arsenal to Burbank, Tom Staggs needs to perform the financial wizardry necessary to justify these capacity improvements. Better to invest today than suffer losses tomorrow.

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