Posted on: Sunday, October 28, 2001

The September 11 attack | Coping with the aftermath
Theme parks riding low after attacks

By Mike Schneider
Associated Press

Additional security guards at Walt Disney World mean extra costs incurred at theme parks nationwide since the terrorist attacks. Associated Press

ORLANDO, Fla. — Security guards stationed at two rows of tables at the Magic Kingdom entrance stop guests and search their bags before the visitors can pass through the turnstiles and head down Main Street, U.S.A.

The guards, added following the Sept. 11 terrorist attacks, do more than provide extra security at the Walt Disney World theme park. They're also increasing Disney's costs.

The theme park industry is finding that the attacks will cost them tens of millions of dollars in added security, higher insurance premiums, and extra advertising and discounts to lure back visitors who are nervous about traveling. The higher expenses come at a time when the theme parks can least afford them — many are experiencing attendance dips, job cuts and an uncertain short-term future.

"They're definitely going to have a higher cost of doing business," said Steve Baker, president of Baker Leisure Group, an Orlando-based theme park consulting firm.

Perhaps the biggest cost increases will come from insurance premiums that are rising because of concerns that theme parks could be future targets of terrorism.

Although companies don't release insurance information, Oklahoma City-based Six Flags Inc. is expected to see its premiums increase by 50 percent, or $7 million, according to Katherine Styponias, Prudential financial analyst. Insurance costs at the company, the world's largest operator of regional theme parks, make up about 3 percent of operating expenses.

"With theme parks in particular ... the fact that they're a potential terrorist target has got to factor in for the insurance companies," Styponias said.

Not everyone agrees with the rationale behind the expected increases.

"It's difficult to conclude that there is a higher level of risk for theme parks today than on Sept. 10," said John Robinett, senior vice president of Economics Research Associates, a Los Angeles-based entertainment consulting firm. "I think you're seeing a knee-jerk reaction."

Almost every theme park will likely spend thousands of dollars extra on advertising or running promotional discounts in hopes of reversing a drop in business that followed the attacks.

Theme park visitors, who already are paying $50 a head to get into the most expensive parks, will be the ones who most likely absorb the extra costs.

"I think you can pass some of those costs on," said Harrison Price, a recreation economics consultant who did the original feasibility studies for Walt Disney World and Disneyland.