Uni's Theme Parks numbers were phenomenal; we hashed them over earlier on this thread.
There were a few interesting tidbits said about the Theme Parks during the call. For example, prior to the Q&A:
But the biggest highlight of all may have been at the theme parks where among other drivers the continued enormous success of our new Harry Potter attractions in Orlando contribute to over 50% growth in operating cash flow in the first quarter. Notably to experience the full breadth of attractions in both our parks in Orlando, Universal Studios Florida and Islands of Adventure, nearly 80% of visitors chose the higher value Park to Park tickets. Additionally, sales of season passes were at an all-time high.
And later:
Our Theme Parks had another remarkable quarter as revenue grew 33.7% to $651 million and operating cash flow increased 54.6% to $263 million reflecting higher guest attendance and per capita spending at both parks. Orlando is experiencing tremendous growth from the continued momentum of Harry Potter Diagon Alley which opened last summer.
The increases in attendance per capita and park to park it ticket sales have accelerated Orlando's operating cash flow growth. At the same time, the Despicable Me attraction continues to drive healthy attendance in per capita increases at the Hollywood Park.
I looked. You have to go all the way back to 1986 to see that kind of jump in operating cash flow at Disney. I wasn't the only one scratching my head trying to recall a time when these kind of increases were last reported. Jessica Reif Cohen of Bank of America asked the following:
The Theme Park numbers I don't think we have every seen theme park at any Company grow that quickly. So if you could just maybe highlight what your five-year plan is for the attractions and hotel rooms?
NBCUniversal CEO Steve Burke's lengthy reply was:
So if you go back to four years ago when we bought the Company, the Theme Parks were making about $400 million a year and right after we showed up Blackstone, we had a buy-sell agreement -- a buy-sell situation with Blackstone and we ended up buying out their 50% of the Orlando parks for about $1 billion.
If you move forward to today, this year the Theme Parks should do over $1.3 billion in operating cash flow. We are only one-third of the way through the year so we will see how the rest of the year goes but they are off to a very, very good start. And we see the Theme Parks now as a very big and very important part of our Company. They are about 20%, 20% to 25% of our operating cash flow and we see many, many years ahead of us of growth.
Our strategy is very simple. We are going to invest in great attractions, probably about one a year at each of our major theme park locations. We think we have a fantastic creative group led by Mark Woodbury, who they are coming up with really cutting edge, great, very modern terrific attractions. And then we also think in Orlando that we are significantly under hotel-ed. Guests who stay on property tend to stay -- their length of stay in the theme parks increases by a day and we did a study that showed us that we can have many more hotel rooms than we have. So we recently opened a lot of hotel rooms but you will see a very significant hotel build out in Orlando over the next five or so years and we think if you look at our Company holistically with Illumination led by Chris Meledandri making great animated films that can travel to the Theme Parks and all the other things that come out of our movie studio that we have the ability holistically to create great IP and see that IP go into our Theme Parks and help drive the future.
So Theme Parks I think when we first showed up were something that came with the rest of the Company and now they are right at the core of what we are all about and we think provide a tremendous growth opportunity.
I respect Burke but I think he's wrong about the typical "attraction per year" pattern most amusement parks back into. Recent amusement park history has shown that guests want more; they want immersive and well-themed lands based on popular IPs. Universal is not going to see the kind of growth they're experiencing right now if they fall into the usual "one per year" trap.
Attendance does seem to be booming at Universal right now. When asked what impact the strong dollar was having on international business, Burke added:
As it relates to Orlando, we have really seen no impact from the strong dollar. It is very difficult to tell because our attendance is up so dramatically. When your attendance is up 25%, it is basically coming from everywhere including international and we have very, very strong Latin American business and European businesses.
So we lap ourselves with Harry Potter this summer and would anticipate that the overage or the increase in attendance to decline but we don't think that international is going to be the kind of drag that is noticeable because we are on such a run and we are growing the overall business and a piece of that is international. But a big piece of that is local, domestic and faraway domestic as well.
Of course he's right; growth
is going to slow this summer but with the uncertain opening surrounding Diagon Alley, Universal still will have one and maybe two great quarters left before returning to normal levels.
Universal needs to come up with a strategy to turn its Orlando resort into a one-stop vacation destination. I just can't imagine that more hotels and a water park are going to do it. Yes, Universal is attracting a lot of folks right now but, when the day it done, it's still no more than a 2-day stop for most, meaning WDW continues to benefit from Uni's investments.
