Super-rich still able to fork over cash to have fun
Affluent folks resume flocking to theme parks
ORLANDO, Fla. – The economy could be teetering on the edge of a double-dip recession, and theme parks are still tossing discounts at reluctant travelers. But there are encouraging signs from at least one small segment of consumers:
The super-rich.
New data compiled by American Express Business Insights, a unit of credit-card giant American Express Co., suggests that what the company calls “ultra-affluent” consumers are beginning to open their wallets wider when inside theme parks – much more so than everyone else.
Perhaps sensing a similar shift, the parks themselves are moving ahead with new offerings aimed at the upper crust. After several years of planning and site preparation, Walt Disney World recently began pre-sales of homes inside its exclusive “Golden Oak” residential development, where multistory mansions will be priced as high as $8 million each. SeaWorld Parks & Entertainment, meanwhile, is in the midst of expanding Discovery Cove, its limited-admission boutique park where swim-with-dolphin packages start at $199 a person.
Abe Pizam, dean of the University of Central Florida’s Rosen College of Hospitality Management, said one explanation could be that rich travelers are beginning to feel more comfortable displaying their wealth now that the worst has passed of a brutal global recession in which extravagant spending would have been considered “shameful.”
“I think these people didn’t spend a lot before not because they couldn’t afford to, but because it was not socially acceptable,” Pizam said. “Now it is not so shameful as it was.”
According to American Express, spending at theme parks by “ultra-affluent” cardholders jumped 32 percent during the first quarter of the year when compared with the first three months of last year. Spending at theme parks by the remainder of the company’s cardholders was essentially flat for the quarter, up just 1 percent from a year ago.
The data was culled from the spending records of American Express cardholders. The company classifies “ultra-affluent” consumers as those who charge at least $7,000 a month on their card, or a minimum of $84,000 in credit-card charges each year.
To be sure, it remains a rocky economic environment for theme parks and the vast majority of their customers. Disney World recently extended a free-dining offer through the rest of 2010, while SeaWorld continues to peddle $5 children’s tickets; only Universal Orlando, currently held aloft by its new Wizarding World of Harry Potter, isn’t leaning on deep discounts right now.
The very wealthy comprise a relatively small piece of the overall tourist base for Orlando – a piece that has likely shrunk during the recession. Research from the Orlando/Orange County Convention & Visitors Bureau found that, between 2007 and 2009, the average household income of domestic visitors shrank 3 percent – to $83,616 – while the average for international visitors fell 13 percent – to $86,500.
“You want to take advantage of this niche market if you can,” Pizam said. “But they’re not going to make up for the losses of the hundreds of thousands of others who still can’t afford it. Let’s be honest, the parks are not built for the ultra-rich. They are built for the masses.”
Still, any positive trends are welcome after two years of grim economic news. And the parks are positioning themselves to capitalize on a rich-traveler rebound.
SeaWorld, for instance, is moving forward with plans to expand its 10-year-old Discovery Cove. Built around intimate experiences such as swimming with dolphins and hand-feeding parrots, Discovery Cove features limited admission – capped at 1,050 guests a day – and average ticket prices that are nearly three times as expensive as those of typical theme parks.
Company executives revealed plans for the expansion earlier this year while helping host an annual trade show for travel agents and other travel professionals. They said the additions will include a new tropical reef for swimming with sea life such as lionfish and sharks, and an island nature trail. But they have declined to provide further details since then; a more formal announcement is expected this fall.
While SeaWorld does not track guests’ income levels, a spokesman said the park is also seeing strong demand for high-end experiences such as shark encounters and beluga-whale interactions at SeaWorld and its “trainer for a day” program at Discovery Cove, which can cost more than $500 per person.
“People are still willing to pay for ultra-exclusive experiences,” spokesman Nick Gollattscheck said.
Disney is aiming for an even higher tax bracket with Golden Oak, where prospective buyers will have to plunk down $25,000 just to get their names on a priority reservation list.
In the works for more than two years, the exclusive development has been master-planned by the company’s “Imagineering” unit. It will ultimately have about 450 homes spread across 980 acres in the northeast corner of the vast resort. Disney, which announced last month that it would begin sales, says Golden Oak homes – to be built in a handful of pre-determined styles such as Spanish Revival, Dutch Colonial and Venetian – will be priced between $1.5 million and $8 million apiece.
In marketing materials, Disney touts a “privilege package” for Golden Oak residents, who will have concierge service available to arrange everything from theme-park tickets and groceries to a holiday home-decoration service. Residents will also have access to the amenities in a 445-room Four Seasons hotel to be built as part of the development.
Matt Kelly, a vice president with the Disney division overseeing Golden Oak, said the company’s research has revealed a rebound in the luxury real-estate market, much as American Express has found in broader consumer spending.
Some people have even already given Disney the $25,000 reservation deposits.
“We’re very pleased with the way it’s filling up,” Kelly said.