Amusement Parks Ready for Profitable Summer
Stephanie is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In 2009, things looked bleak for the nation's amusement parks, with revenues sinking to $11.6 billion overall. But since then, as recovery for other industries has been sluggish, theme parks have experienced impressive growth. IBISWorld expects 2013 to be a record-breaking year for theme parks, raking in $13.4 billion. This would be a 2.8% increase from last year.
Disney exceeds expectations
Walt Disney (NYSE: DIS) posted higher-than-expected earnings for its second quarter, due in part to the $3 million the company put into improving its parks, cruise ships, and resorts. Perhaps bolstered by $1.51 billion in income for its latest quarter, Disney raised ticket prices for its California and Florida parks. Visitors now pay $92 in California and $95 in Florida for a single-day admission.
But if analysts were worried higher prices might scare guests away, reports of longer-than-ever lines likely assuaged those concerns. Added to that is the fact that Disney hiked its prices last year, as well, and the company ended 2012 with larger-than-ever profits.
For Disney, however, its media networks appear to be the biggest earners for the company. The owner of ABC, Lifetime, ESPN and more enjoyed nearly $5 billion in revenue from its networks for the second quarter, attributed largely to recent growth at ESPN. While its theme parks are still important to Disney's shareholders, the performance of its media outlets appears to be more vital to the company's earnings.
The wizarding world of Universal
Thanks to the magic of a certain young wizard, Comcast's (NASDAQ: CMCSA) Islands of Adventure at Universal Studios saw a 66% leap in admissions from 2009 to 2011. This period was significant because The Wizarding World of Harry Potter debuted in 2010, with an expected expansion to the adjacent Universal Studios Florida park in 2014. Plans to add The Wizarding World of Harry Potter to its Hollywood theme park the next few years are currently underway.
Last year, theme parks were big earners for Comcast, with the company achieving $2.1 billion in sales in 2012. Obviously, its parks are only one of many ventures for the country's largest cable service provider. In addition to its parks and cable customers, Comcast owns NBC and CNBC, along with significant holdings in several other cable outlets. Still, parks are an important new part of Comcast's business, with the company reporting Universal theme parks as a "standout" in its earning report. Profits on NBCUniversal fell 2.4 percent, while theme park revenue rose 12.2 percent during the same period.
Not to be outdone by Disney, Universal Studios Florida actually boosted its ticket prices this year to $92, beating Disney by becoming the first park to lift ticket prices above $90. But will it harm sales? With Universal Orlando now offering new rides based on the films Transformers and Despicable Me, movie fans will likely show up to try them out. But loyal Harry Potter fans will no doubt pay the new price to try out the new Harry Potter and the Forbidden Journey ride at Universal Orlando.
Six Flags over everywhere
While it's no Disney, the Six Flags (NYSE: SIX) chain of amusement parks is no slouch in the amusement-park game itself. Known as the world's largest chain of theme parks, the company operates 19 venues throughout North America, including Six Flags parks in 11 states, Canada, and Mexico.
For its most recent quarter, the company reported $87.5 million in revenue, an increase of 31.8% compared to last year at the same time. With the summer season beginning, analysts expect an increase over last year's summer earnings, when it brought in $272 million between July 1 and September 30. A new 40-story open-air swing ride at its Texas park and a highly-anticipated Batman roller coaster at its Chicago location are expected to bring guests from all over the country.
As vacation stocks go, Disney, Universal, and Six Flags are all winners, showing remarkable recession recovery. With ticket prices topping the $90 mark at Disney and Universal locations, however, Six Flags may be the best bet for this summer, since many consumers are still watching their own wallets during this recovery period. Still, what continues to make both Disney and Universal winners is the fact that only a portion of their earnings comes from amusement park revenue. With many of both companies' other ventures continuing to perform well, investors shouldn't rely solely on park ticket sales to determine whether the companies are wise investments.
It's easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney’s allure for investors lies in its diversity, and The Motley Fool's premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. So don't miss out -- simply click here now to claim your copy today.
Stephanie Faris has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!