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Financial stakes of the long-awaited Atlantis exhibit are huge for Brevard's tourism industry, KSC Visitor Complex

5:16 AM, Jun 24, 2013   |    comments
The crew os STS-135 stand beside Space Shuttle Atlantis after the final shuttle mission
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The space shuttle Atlantis flew 126 million miles on 33 missions in its illustrious career before NASA retired the fleet nearly two years ago.

While Atlantis' new job is not as dangerous as roaring into space strapped to a humongous fuel tank and two booster rockets, its retirement mission is not going to be free of challenges.

The famed shuttle, the country's last to fly, is charged with attracting tens of thousands of new guests to Kennedy Space Center's Visitor Complex and sharing in - if not siphoning off - a bigger portion of the time and money spent by millions of tourists flowing into Central Florida theme parks and other attractions.

The stakes are huge - for Brevard County, for Florida and for the private company that operates the growing KSC tourist complex.

More than $100 million has been invested in the sprawling Atlantis exhibit, a long dreamed of centerpiece of the visitor complex that officials expect to boost annual attendance by 12 percent, or more. That's close to 180,000 new visits a year, and it means tens of thousands more tourists from around the world buying meals, gasoline, souvenirs and, possibly, hotel rooms in Brevard.

There is no plan to increase ticket prices from the current $50 per adult, for now, but officials said that decision will be reviewed annually.

"Atlantis is really unique, and it fits into a special category," said William Moore, the chief operating officer of Kennedy Space Center Visitor Complex, a property managed for NASA by Delaware North Companies Parks & Resorts. "I think this will stand apart from all the other attractions in the area."

Atlantis' new mission isn't without some calculated financial risk.

Building the $100 million exhibit, which opens to the public on Saturday, was made possible by a $62.5 million "conduit loan" from Bank of America to Space Florida, the Sunshine State's publicly funded space and aerospace development agency.

But Delaware North is the party really getting the loan. The company, charged with making the exhibit successful, chipped in more than $30 million of its own money for the project. The benefit of having Space Florida technically receive the loan takes some of the debt off Delaware North's books.

"Basically the building is on our balance sheet until it's paid off," Space Florida's top executive, Frank DiBello, said.

However, Space Florida is adamant that in no way is the agency, or Florida taxpayers, on the hook. If the worst happened, gate proceeds that normally would go to Delaware North would then go to Bank of America.

"Delaware North ticket and concession sales percentages are the only place where the paybacks come from," DiBello said. "The risk is Bank of America's ultimately, not Space Florida's or the taxpayer."

Richard Lehman, president of Income Securities Advisors Inc. in Miami Lakes, reviewed the funding mechanism for the Atlantis exhibit for FLORIDA TODAY and said it is probably safe. Lehman has been critical of some conduit loans, particularly ones involving sports teams and new stadiums.

"There are good reasons to ask the questions," Lehman said, "but in this case it doesn't look like there is much liability to the taxpayer."

Bank of America representatives would not disclose many details about the loan, citing client confidentiality with Space Florida. The bank also provided $40 million of this kind of conduit debt, through Space Florida, for the Visitor Complex's "Shuttle Launch Experience," a shuttle themed simulator ride that opened in 2007.

In that loan, just like the one funding the new Atlantis exhibit, the debt is being repaid from a percentage of Delaware North's ticket sales revenues.

"We see this latest transaction really as serving two primary functions," said Doug Davidson, Bank of America's global commercial banking market executive for North and Central Florida.

"One, it's an opportunity for us to continue to support Space Florida," Davidson said.

The other function, he noted, is to help rebuild a section of Central Florida, specifically North Brevard, that suffered economically when the shuttle program ended.

"And we support Space Florida because they are very well-positioned to bring economic development to that part of Florida."
Creating a niche

The Atlantis exhibit is probably the most ambitious project in the Visitor Complex's 46-year-old history. It's meant to draw Central Florida's self-proclaimed "space geeks" as well as casual tourists.

But as impressive as the exhibit is - consider, for example, that tourists will be able to stand just a few feet from the "space dust" that collected on the shuttle's wings during its 33 missions - Atlantis faces fierce competition for tourism dollars from the major Orlando-area theme parks that bring in millions of people each year to see Cinderella's castle, The Wizarding World of Harry Potter and Shamu leaping out of a pool of frigid water.

"It's great to be here because you have this place where everybody wants to go," Moore said of Central Florida's market. "It's also probably the most competitive marketplace in the world in terms of trying to gain people's time, because that's really the value."

Moore, who's been involved in theme parks and attractions since he was a teenager, said Atlantis stands apart from competitors because it attracts brainier tourists, the kind who go to science centers or museums or historical sites for vacations. These are the same tourists that are making other shuttle exhibits successful.

"It's a real, space-flown artifact," Moore said of the orbiter. "I think that makes it a standalone. And it gets added to the list of 'We have to go see this.' It's a pretty amazing view of the shuttle, and as word gets out, people are going to want to come see this."

According to Visit Orlando, about 43 million leisure travelers are expected to visit the Orlando area this year, up about 3.2 percent from last year. KSC's Visitor Complex brings in about 1.5 million tourists annually. By comparison, Disney's Magic Kingdom theme park brought in about 17 million visitors in 2011, says Visit Orlando.

Abraham Pizam, dean of the Rosen College of Hospitality Management at the University of Central Florida, said the KSC complex has an impressive exhibit with Atlantis, but it will have its work cut out trying to squeeze more visitors from a crowded market like Central Florida.

Also not helping: there are no active manned space launches from the Kennedy Space Center or Cape Canaveral, which Pizam said takes away some of the allure of visiting the area.

"There is a niche market and an interest," Pizam said of Atlantis. "Maybe with new ventures in space, that will increase attendance. There are still a number of diehard aficionados who are interested in space and all it has to offer. Some will come great distances to see Atlantis, but it's a much smaller market than the one coming to the theme parks."

The 70-acre Visitor Complex includes exhibits, live shows, IMAX films and opportunities to meet astronauts.

Moore isn't ready to predict the Visitor Complex would follow the lead of Universal Orlando Resort and Walt Disney World Resort, which raised adult ticket prices in the past month.

"We haven't raised ticket prices this year," Moore said. "We certainly know what's going on in the marketplace and we're watching that. But I'm not going to say we're not going to raise ticket prices in 2014."

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