Taking page from Disney, Comcast revs up Orlando theme park business

First, Comcast came for your living room. Now, it’s coming for your vacations.

The telecoms giant is investing in theme park developments in Florida and California, with the first vacation options expected to open later this month. The expansion will add upwards of 15,000 more hotel rooms over time to the Orlando area and comes on the heels of a proposed merger with Time-Warner. But the telecom company will have a run for its money trying to win your spring break, especially when competing with theme park all-star Disney.

Comcast got into the theme parks business in 2011, when it bought NBCUniversal and acquired Universal Parks and Resorts, a collection of theme parks in Florida and Southern California, in the process. The theme park business had been booming, especially at Universal Studios in Orlando. A year earlier, the park opened the Wizarding World of Harry Potter, which worked its fictional magic on fans and boosted paid admission to the Orlando Universal Studios by 20 percent.

Now, Comcast is revving up its theme park investments. A second phase of the Harry Potter theme park is set to open this summer Orlando, Fla., featuring a roller coaster named “Harry Potter and the Escape from Gringotts” (for those not familiar with the novels, this refers to a wild ride on magic carts through the massive underground vaults of the most famous wizarding bank in Potter’s world). A replica of the famed “Hogwarts Express” will shuttle visitors between the two parks.

Comcast has also been hard at work developing and constructing an 1,800-room hybrid theme park and hotel, Cabana Bay Beach Resort, also in Orlando with 50-50 partner Loews Corp. Cabana Bay and Harry Potter combined will span a 750 acre-complex. The first 600 rooms, part of what Comcast says is the largest hotel development in the United States right now, are expected to open this month.

"We're doubling down on theme parks," Comcast chairman and chief executive officer Brian Roberts told analysts during a conference in Las Vegas in January. “We think that there is a lot of 'there' there in the theme-park business for many years to come and that we have a low market share – and only one way to go."

Currently, Universal Parks and Resorts is the third-busiest cohort of theme parks in the world with a combined attendance of more than 36 million per year, according to estimates. It ranks just behind UK-based Merlin Entertainments Group (Legoland, Madame Tussaud's wax museums), which draws 54 million visitors. Both, however, are dwarfed by entertainment theme park giant Disney, which boasts 126 million visitors per year.

Sales have been solid. Last year, Comcast’s theme parks division brought in $2.2 billion in revenue and $1 billion in operating cash flow. Duncan Dickson, professor at the Rosen College of Hospitality Management at the University of Central Florida, says this is probably due to a happy accident for Comcast.

“If you’re trying to read the tea leaves, I would say their biggest desire was to gain NBC and to put them in the portfolio,” he says. “Oh by the way, here is a theme park business that is lucrative.”

Comcast is also pushing to get its proposed $45 billion merger with Time Warner approved by the Justice Department. If it goes through, Comcast would operate in 43 of 50 major American cities and control some 30 percent of paid television subscribers. Some say that prices for cable or Internet service could increase as a result.

The NBCUniversal purchase made Comcast look more like Disney. If the Time Warner deal goes through, Comcast and Disney would look even more alike, with both having major roles in the business of enabling entertainment and monetizing the process.

Though Comcast has a way to go before catching Disney, Mr. Dickson says adding more amenities probably will help Comcast and Disney parks in the long run.

“The competition is going to bring more visitors to Orlando, which is going to add more turnstile clicks to each theme park,” he says.

Such competition won't bring admission prices down, Dickson says. Already, each park has increased its daily tickets for this season and Universal is reportedly charging separate ticket fees for each Harry Potter theme park. But hotel prices could fall. Previously, Universal Studios largely had high-end accommodations; Cabana Bay will likely be more midrange.