Green Tagged: Theme Park in 30 – Full Episode Transcript (March 30, 2023)

Philip Hernandez: From our studios this week in Los Angeles and Tampa, this is Green Tagged: Theme Park in 30, where we take the top theme park news from each week and examine why it matters to you from a professional standpoint. This week, we're gonna talk a little bit about what's going on with travel sentiment coming into the US, who might be winning, who might be losing, and where there's opportunities and maybe what you can do about it. I hope.

Scott: Yeah, if anyone has any clues, we're open to those. Yeah, if we've got some solutions, that would be great.

Philip Hernandez: So the big headline that we're gonna start off here is that inbound travel to the US was projected to be increasing by 9% this year, but instead it's actually going to decline by at least 5%, and things are just getting worse. So we're not sure where it's gonna end up, but right now this is where we are from the latest data that came out. This data came out a few weeks ago, and so you can see it's a little bit of a trailing indicator. That's why I mentioned it might be getting worse. This data that we're citing (we'll put it in the show notes) comes from a new analysis from Tourism Economics, an Oxford Economics company, and it's highlighting an even greater downside risk to the US travel sector should trade disputes and other policy changes intensify. The latest findings reveal that an expanded trade war scenario could result in sharper declines in travel demand and economic output than previously projected. So this is like they're adjusting their projections to say that it's getting worse. That's why I mentioned that at the top of the show.

So they say here that as global trade policies remain in flux, industry stakeholders must recognize the critical link between economic policy and travel demand. Our findings warn of high-risk consequences for the US travel sector with broad economic implications beyond tourism. Collaboration will be essential in navigating negative impacts, which is why we are talking about it, because we're gonna talk about collaborating and finding maybe a solution, or we're just gonna... I don't know, sit here and stare at each other when I get the coffee.

Scott: But that's very possible. Anything is very possible. Well, I mean, the fact that, you know, for the first time that I can remember (other than 9/11, as I think back)...

Philip Hernandez: Yeah, that was a blip. Yeah, that was a blip. That was a negative travel blip. And there's a pandemic. That happened.

Scott: That was a very negative travel blip. And COVID was one, but this one has to do with US policy more than anything. And I think that's what is disturbing. This is something that a terrorist attack and a global pandemic are a little bit out of our control, we would like to think, that...

Philip Hernandez: Yes.

Scott: ...policy is within our control. And it's one of those situations where multiple countries are issuing recommendations that are—I'm going to try to be as fair with these as possible—multiple countries are issuing recommendations that travel to the US either will have additional challenges or restrictions, or they are advising against it. So there's a range there depending on which country we're talking about. But it's not just the countries you might think of. Everyone's going to say, "Well, it's Canada and Mexico because of the trade issues," which it is.

Philip Hernandez: It's also like Brazil. I mean, it's also part of some European countries. I mean, it's... yeah.

Scott: Much—yeah, France, Germany. I just looked it up, you know, and they're not saying "don't go." What they're saying is—my favorite one was basically the French statement that I read which says, "Check with the American Embassy in France prior to your departure to see if there have been any last-minute changes in policy or restrictions in travel to the country," because we've seen it here: things are changing quickly. Whether we agree with them or not, they are changing quickly. And so even France is saying, if you're gonna travel, make sure you know what's going on before you get on the plane, because it may change from the time you take off to the time you touch down.

Philip Hernandez: Yeah, and I mean, the real other context for this is, like you're saying, travel to it—like airline bookings from Canada to the US are down 70% compared to the same time last year. And this is a quote from Forbes here to kind of encapsulate it, but it says, "President Trump's tariffs, imperialistic rhetoric, and viral headlines of foreigners with legal tourist visas and green cards being detained by US immigration officials are stacking up as significant hurdles for the US travel industry and setting international travel back several years." So that's exactly what you're saying. You know, it's not just that the countries are advising against it, but then you have also the trailing indicator of the flight decrease here. It's like, responding to see flights being canceled or just demand for them decrease, and then you see the headlines that are being broadcast in the other countries. So it's like this echoing effect, basically.

Scott: And here's the thing that concerns me: there are going to be people out there who are going to say—who believe that this is not valid information or this is somehow fake news. There are also going to be people out there who are going to say, "See, I told you so." The truth is, it doesn't matter. It's impacting travel anyway, because it's out there. Philip and I both travel internationally for work, and it's the same thing that we look at.

Philip Hernandez: It doesn't matter yet.

Scott: You know, everybody thinks that when I go to the Middle East I'm very cavalier about it. No, I look through all of the warnings and the challenges and the things that I need to make sure I'm prepped for before I go. I am registered so that I get updates on any sort of challenges in being a United States citizen in another country. And now things are happening in reverse. They're happening when people from other countries are visiting the United States. And, you know, the concept of being detained simply because you are visiting from another country—even if you have done everything legal up to that point—you know, the rumors are out there. I'm going to call them rumors for now because I personally do not have substantiated documentation. I am sure it's there. But the rumors and the stories of people being detained who have all of the proper documentation, who have gone through all of the right processes to be here in the States, and the rumors of them being abducted and detained without due process is terrifying for tourism. It's terrifying. And whether it's true or not does not matter. The fact that this perception is out there is detrimental to international travel coming into the United States, which is bringing international dollars into the US—certainly through the industry that we are most connected to here, which is the tourism and leisure industry. So we've got to find ways to make people feel safe. It goes back to what we've talked about over and over again, and that's creature comfort. We have to make sure that we as an industry, we as individual organizations, make people feel safe to come here. To me, that's the big challenge.

Philip Hernandez: Yep. Yep.

Scott: To me that is the overarching problem. I wish I had an answer.

Philip Hernandez: Yep. I think that's going to be part of our discussion—is trying to... we're not really going to have an answer, but maybe discussing other components of it, you know, because it isn't just going to be the travel coming inbound to it. We're also seeing the Consumer Confidence Index dip. So basically the current reports are total US travel spending (including both domestic and inbound) is going to have a $72 billion reduction. But I think that...

Scott: Say that number again, Philip: 72 billion reduction.

Philip Hernandez: $72 billion reduction in total travel expenditures for this year.

Scott: Ouch. Ouch. So if you are an organization or a company or a vendor that relies on your product being sold because people come to see it, that's going to slow things down. That's gonna... It's funny because, you know, I've had—for the first time in the 10 years of my company this past year, the past actually three or four months have been—it’s been much more difficult to get projects off the ground.

That's gonna... it's slithering. It's funny because, you know, I've had for the first time in the 10 years of my company, this past year—the past actually three or four months have been—it's been much more difficult to get projects off the ground.

Philip Hernandez: Mm-hmm.

Scott: Projects that we thought were buttoned up and ready to go, people are now going, "Well, let's hang on for just a second and see what's going to happen here." And I'm wondering if it's because of this kind of uncertainty that they've been hesitant and holding back. And those are projects in the US. Projects outside the US seem to be continuing forward without a hitch.

Philip Hernandez: Yeah, that's what I was thinking. I was actually thinking, you know, when we're looking at this, it's like we could flip it and say, "Okay, this is all bad, bad, bad." But if you just do a thought exercise and invert it, and ask: who could this be good for? And I think it could be good for other countries, especially countries that can embrace a friendlier... you know, I could see other countries even making campaigns to say, "We're a friendly destination," or "We want you to come to our country," and they could revamp. So this is creating an opportunity, I think, in the market for other countries. And then for us in the tourism industry, it could be an opportunity to look at doing partnerships with those. You know, it could be working in other countries like Scott does a lot as a consultant, but also IP licensing.

Scott: Well, and the other countries—I mean, the other countries have already started doing this. You know, they're working (working again, working in the Middle East). These are countries that had a PR problem as far as tourism goes. So they started working with IPs or partnering with SeaWorld, Warner Brothers, Six Flags. They started partnering with all of these recognizable brands so that they could be less scary, quite honestly. And again, I'm not saying that they are scary places; I'm saying that there is a perception there, and they had a problem. And this could benefit them, quite honestly. I mean, this kind of branding... because I think we're now having a branding problem. The US now has a branding problem.

Philip Hernandez: They had a branding problem, and then they're trying to correct the branding problem.

Philip Hernandez: Yeah, the US now has a branding problem.

Scott: And I think that if indeed this... you know, "Who is it good for?" It could be very good for, like, Saudi, for example, with Project 2030, where they're investing so very, very much money into their tourism and leisure industry. If people aren't willing to travel to the US—because it's, you know, if you're in Europe, you can go one direction or the other. And if... if you can—now I'm curious to see, because a lot of the reasons that countries are giving not to come to the United States are... well, specifically—I mean, let's just call it out specifically—because the United States requires you to identify as either male or female. Now Saudi Arabia is the same way. So are they going to say, "Well, wait a minute, if financially we can bring this group of tourists into our... will we loosen up?" I don't know. I don't know.

Philip Hernandez: Yeah, we don't know. I think these are all opportunities, and they're things people can look at. If, again—it's all branding. If you think of countries almost as if you're trying to create a competitive advantage and looking at a SWOT analysis, you're looking at the US and you're like, "Oh, they're going into a weaker branding position." You know, we used to be the biggest destination—one of the biggest in the world, the top three, you know, in where most people come to the US. And so if we're going to be giving up that position, then that creates an opportunity for someone to fill it. And like you said, they could look at their policies and say, "Maybe we can adjust this. If we do this, could we get this in?" You know, maybe Japan also—they've been working on, we talked about the Japanese tourist program previously—maybe they can also expand that program and capture more interest from people that are not the US and kind of get from, like you said, other countries nearby, right?

Scott: Mm-hmm.

Scott: Well, and I'm wondering if this is just going to benefit... because we've had a lot of discussion about some of the recognizable park brands opening up in the UK, opening up in... If you can go to a Universal property without visiting the United States, is that going to benefit Universal UK? Or if you can go to... well, Puy du Fou is French, so there's that. But if you don't have to travel—if you don't have... to me this seems like it's going to be a big boon for the local attractions, and especially those outside of the United States. I think that's who's really going to benefit from this downturn.

Philip Hernandez: Yeah.

Philip Hernandez: Well, we talked about it a little bit last week, when we talked about the Herschend acquisition and the sale. It's funny because you look at this data, because by the time that we get it (or by the time it comes here), like I said, it's trailing. So you've got to know that people had this information earlier. Like I mentioned when I was at the TEA event, the hotel operators—they already knew, because they can see in real time, right? So they've known for months that the travel is decreasing, but these are all trailing indicators. So you've got to know that Disney has economists on staff, and that, you know, Universal has. And so you've got to think that they've probably forecasted and they've laid out scenarios like this. So it's almost like we're piecing together their strategy now and looking at it, and you can see, well...

Scott: Of course, they do.

Philip Hernandez: Yeah, going into this area, you know, if the US continues to lose its position and Europe becomes better positioned—especially the London area—then, you know, putting something within the London driving region, and it being a US brand but not having to go to the US... I mean, you could see a good argument, a strong argument, considering the new data we got (which they probably had at the time they were doing their master plan).

Scott: Yeah, yeah, absolutely. Absolutely. Well, you know, and again, I think back to... I think back to 9/11. One of the things—because I was working with Busch Gardens Tampa during the 9/11 situation—one of the things that saved the Busch Gardens Tampa park is we were at about a 50/50... we were about 50 percent tourism (you know, importing tourism) and about 50 percent local. And it was when both internal and international tourism shut down basically after 9/11, the park still was able to keep its head above water because we had such a strong local draw. I'm curious to see—now, Orlando was hit hard during that, and I'm wondering if this is gonna be the same situation here. The companies in Orlando may not... I mean, the companies that have parks in Orlando may not, because they, as you say, were smart enough to start investing outside of... you know, not putting all of our eggs in one basket kind of thing.

Philip Hernandez: No, that's an excellent point. I was thinking of that too, because you're thinking about how, again, as with everything, it's gonna impact people differently based off their business model. So Disneyland—I'm not sure this matters to Disneyland, because there's so many locals that it's like the parks are still too busy.

Scott: There are people who moved to California. There are people who moved to California because of Disneyland. I mean, let's be honest. They're that dedicated a fan base. Yeah, like you. Like you. Exactly right.

Philip Hernandez: Yeah, like me. Yes. But then you have other sectors. Again, we've talked about all of this when we talked about Universal going into Vegas and how the percentage of Vegas relies on international tourism so much more. Like, Vegas will be more impacted than Los Angeles, because Los Angeles relies less on that whole part as a percentage of their operating. And then Orlando...

Scott: Right.

Philip Hernandez: We've talked about this for years. It's no secret. You know, Orlando really relies on international—being an international hub for folks. And I mean, this is a whole supply chain problem, right? If flights are being canceled, that means the airlines are gonna reduce flights, which means that it's gonna have a multi-year impact on the industry. Because if people can't get there, they can't go to it. So you need the flights to remain intact. And in order for the flights to remain intact, they need a certain level of demand. I mean, it's a whole chain.

Scott: Well, and then it goes into hotel rooms. Because if there is a decline, then hotel rooms diminish. So that if there is going to be a resurgence again—depending on how long the decline goes—if there's going to be a resurgence again, many of those hotels will have closed their doors and we'll have to rebuild that part of the industry as well. The ones I really feel sorry for are the...

Philip Hernandez: Yes.

Scott: ...and I don't want to call them mom-and-pops, but when you go—like if you're in Orlando and you drive down I-Drive—there's a lot of independent businesses that rely on the tourism that the theme parks bring. And those are the ones that I think are really going to be hurting, because nobody—nobody local in Florida—stops at the Disney (D-I-Z-N-E-E) gift store. They're going to go to the parks or they're going to go to Disney Springs or whatever. But it's those, and things like coffee shops, things like, you know, restaurants, things like the smaller tourist bases, the helicopter flights... You know, Orlando has—you can fly around Orlando in a helicopter, but nobody's going to come to Orlando just to fly in a helicopter. They're coming for Disney and then fly, or coming for Universal and then fly in a helicopter.

Philip Hernandez: Mm-hmm.

Philip Hernandez: Yes, well not yet.

Philip Hernandez: That's all gonna be inbound international travel, because those people want to experience those. It's not gonna be people who live there. But it's interesting: on the 20th (a little bit—10 days ago, as we're recording this), Disney World had their shareholder meeting. And we're not gonna get into that—I didn't have time to, like, notate every single thing and fact-check everything that was said in that. So, another time, kids, another time. We didn't get to that this week.

Scott: Yep.

Scott: Mm-hmm.

Scott: Mm-hmm.

Scott: But they did make some announcements though. They did make some pretty cool announcements.

Philip Hernandez: Yeah, so they did make some big announcements. That's what we're gonna talk about. I'll give you just the basic sentiment of the call, which is that remember last year there was this kind of struggle about, you know, activist investors. This one was pretty much like no one said anything and they just were like, "We're gonna just go straight through." But basically what Iger did is reiterate his investment in the parks—which is interesting, now we think about it in the context of what we're talking about. It's like, all this uncertainty, the instability or whatnot, then it makes sense as a brand that he's like, "Hey, the parks are strong. Parks aren't going away. You should come visit the parks because the parks are great." And in line with that, a few days later (which is this week, on the 26th) they did announce a bunch of stuff specifically for Disney World. A lot of this was announcements that they already had made, but they gave us dates and then a few new things. So...

Philip Hernandez: The quick list is:

• There's a refurb coming to Buzz Lightyear.

• The Villains show and the Little Mermaid show are going to open on May 27th.

• The new nighttime parade is going to debut later this summer (no date yet, but it's still happening).

• They're also bringing Goofy to the CommuniCore Hall to do interactive elements there.

• Test Track is going to be reopening also later in summer.

Philip Hernandez: So a lot of live entertainment. And I'm wondering here, is this a play for locals or is this a play for internationals? Because I don't think internationals are gonna care about a Villains show and a Little Mermaid and Test Track and all this blah blah. But maybe, I don't know.

Scott: Well, so Little Mermaid—let's look at Little Mermaid just in a microcosm for just a hot second. Little Mermaid was one of the most popular shows, and it's been closed for quite some time. This has been closed... if I'm not mistaken, this was a COVID close that never came back. So—and this is a brand new show. This is a brand new show. So it's...

Philip Hernandez: Mm-hmm.

Philip Hernandez: Interesting. Yeah, I remember it from when I worked there, but you're right. It's been down.

Philip Hernandez: It's like they're just barely now getting back to 2019.

Scott: Well, what they've—I think what's happened, I think, to kind of directly answer your question—I think that this one may play to the locals because it was a... it was a favorite. Favorite. It was a favorite. Everybody loved it. And people have been grousing about the fact that it's been gone for so long. The Villain show—I think this is something that they've been teasing about. You know, they've... this has been everything from a Villain's Park to a Villain's Land. Now we're down to a Villain show, but still, Disney villains are so hot and so popular. So I think this is something that is gonna "Disneylandify" Walt Disney World a little bit to bring in some of the locals. I think the live entertainment brings in the locals, I really do. I think the reopening of Test Track is focused on the internationals. But I think all of these... I think the refocus on the parks is exactly what we're saying. This is telling people it is worth the hassle to come here, because our parks are better than ever.

Philip Hernandez: Yep. And then you add to that the context too of, like, Epic is going to be opening on the 20th and they just announced this stuff for the 27th. So it's almost like a week. I mean, that's pretty... I mean, so it's like, I think you could—it's almost like you could make the case if you were traveling here from Brazil or traveling here from the UK. You're like, "If we come in June, then we can do all of these things, because we can do Epic and we could go see all these new shows. We can do all these new rides."

Scott: Disney and Universal do not operate in a vacuum. They know exactly what the other park—not exactly, well, more than we think, let me put it that way. They know more than we think about what and when things are going to open. We all know each other. Everybody knows each other. You've got people (vast—well, not vast majority, but there's a huge contingent of frontline people and even middle management) that work in both parks. And then...

Philip Hernandez: Cause they all know each other and they've worked for both companies, gone back and forth.

Scott: ...than have a part-time gig at SeaWorld. So, you know, they know what's going on. It's not hidden—it's only just not announced. That's what it really boils down to. So you're absolutely right, Philip. This is one of those situations where they're going, "Well, we can go in June and we can—instead of spending one week, we'll spend two weeks, and we'll see all these new things at Magic Kingdom and Walt Disney World and we'll see all these new... and we'll see Epic and we'll see..." You're absolutely right. This is a power play.

Because, again, they had this international—they were prognosticating this international downturn in tourism as well. And so they're doing everything they can. So this may be one of the things I mentioned earlier: can we find a solution? This may be one of those solutions, and that is: make it so that it's worth the—it's worth the quote-unquote "hassle" to come to the US, because we've got so much to do that makes it worthwhile.

Philip Hernandez: I'm not sure that IAAPA was referring exactly to this, but like you just said, this is basically what they meant. It wasn't IAAPA—sorry, it was the global tourism report when they said that collaboration within the industry is gonna be essential. And I mean, I think they mean all dimensions of collaboration. So they mean problem-solving, but they also mean this. Effectively, they'll never admit this on their shareholder calls (because they can't), but I'm sure...

Scott: Yeah. Yeah.

Scott: Absolutely.

Philip Hernandez: ...like, I'm sure that Disney, Universal—the people are sitting there together, and they're saying, "How can we work together to make this something where you have to come this summer because of all this happening? You know, we're opening our new park and you open these things. We're gonna do it kind of in the same window, but not the same weekend, because we still need the news. You know, we don't want to compete for news. So we're gonna give you this week and we're gonna get this week." But they're definitely coordinating this, I think.

Scott: It happens all the time. I know that for a fact. I've experienced that firsthand—that especially from an opening standpoint and a media standpoint. There are specific times where the parks will all get together and say, "Okay, like, for example, seasonal events that all have to open in roughly the same window." They will say, "Okay, we're gonna do our Halloween media night on this night, and are you gonna do yours here? And you're gonna do..." They never want to compete. They never want to compete for media. That's stupid. It doesn't benefit anybody. So all of these...

Philip Hernandez: Yep. So I think this is exactly it, because effectively then you can get media covering Epic on the first weekend and then you can get media covering Disney World. And then now all of the vacation planners and that whole legion of people who work to sell trips can now go to everybody and say, "Here's new news," and now it's even more reason for you to finalize that trip that you've been looking at to come to the US and do this this summer. And I think this is the collaboration that they meant earlier.

Scott: Yep, I agree.

Philip Hernandez: I wonder if other regions are going to need to do this at all, or really it's going to just depend, I guess, on how much the local industry is impacted by international travel.

Scott: Right, and some other markets are really good at collaboration because they're all owned by the same company, and other markets will have to reach out and shake hands across the aisle a little bit.

So, this is all great. This is all well and good for a short term—here's what we're going to do in the summer. But my question is (and I think you raised it in our show notes, so I guess it's your question, really): how long is this going to take? I mean, how long is this going to last? Is this going to impact things like the Olympics? Is this going to impact things that are a little further down the road? And I...

I don't think we have enough information yet. As you say, we're kind of getting this data on the back end as opposed to on the front end. And I'm wondering if we have enough to recognize whether it's gonna... by 2028, is this still gonna be a problem?

Philip Hernandez: I actually am gonna go with that it is gonna be a problem almost no matter what, because I think that the damage is basically done. I think unless there is an enormous political change in the US before the four-year window, I think basically people that are waiting on the midterms... I don't think that's gonna happen early enough, because the damage will have been done by the time we get there—because we just talked about how this is a multi-year cycle. And so, to bring it to me, to give just a real example here of something I just recently had to deal with: I was trying to figure out my trip to China to go to IAAPA Asia. That's when I discovered, just recently when I was trying to find this travel, that, like, the amount of flights that we had in 2019 have still not recovered. I mean, we have hardly any that can get me to where I need to get, which means it's so much more expensive to get there, or I'll have to go to DFW or go to a different hub to get a plane to go where I want or take connections in Europe. I mean, it's crazy. And it's like, that is the problem. And when you see all this negative sentiment and then the supply chains that provide the people or that provide the infrastructure to flying into LAX—when those start to diminish, then they're just not gonna come back, and you're not gonna be able to correct in time for something like the Olympics. And it's also just a sentiment. You can't... you know, they talk about that whole "trust is a bank and you put into it and then you take out," right? But the withdrawal is always harder, right? You know, it's like you have to do three or four deposits to get one withdrawal, cause that's how humans work.

Scott: ...you take that, right.

Philip Hernandez: And all we've been doing recently is just damaging our reputation. I think it's gonna be harder than people think to turn that around. So I just think there's a lot of people that are just going to protest or not want to feel like they want to even come here. We're not gonna be able to turn that around in enough time to get that demand for 2028. It's just not gonna happen. That's my take.

Scott: Yeah, I hope that from a... again, the microcosm of tourism—I'm not talking about the economy as a whole, because I don't understand it well enough to really speak intelligently—but from the economy of tourism, I hope that we can continue to find ways to make it worth the effort to come to the United States. I hope we can continue to find ways, because this is money that's just coming into the US. This is not making taxpayers pay for anything more. This is not helping internal companies increase their profit margins. This is bringing money in from outside the country, which benefits us as Americans. When the money comes in from outside, it benefits us. And if we break that, I think you're right, we're going to have a challenge. I think the thing that we have to put out there—so that everybody just kind of bring this back full circle—is cooperation, handshaking, finding ways to make those people who are visiting from other countries (or even other parts of the country, other parts of the United States)... if we can collaborate and work together, I think that is a way to at least—I mean, we're still gonna be competing for people's time and money, I get that, I understand that. But it is better to get them traveling to your town—that increases the chance that they will come and see you exponentially. And if you can work with your Convention and Visitors Bureaus, if you can work with each other directly, I think that is gonna be the first step in hopefully solving this problem.

I wish we could solve this problem completely. Unfortunately, we are out of time. So, and maybe we'll... I don't know what we're gonna do in Unhinged, because we never know what we're gonna do in Unhinged, but for those of you who are not part of our Patreon show Unhinged, this is your information for the week. I hope you enjoyed this little discussion. We will see all of you next week. So until next time, on behalf of Philip Hernandez and myself, Scott Swenson, this is Green Tagged: Theme Park in 30, and we will see you next week.

Philip Hernandez: Yeah, if you felt that we added value and that it was enough value to visit us on our Patreon, go to our Patreon. Just type in Green Tagged on Patreon or follow the link in the description.

Scott: He will never let me do a clean exit. He will never let me do a clean exit. It always has to be something. He has to get the last word. He's such a control freak.