Universal Orlando’s parent company said Wednesday it will pour hundreds of millions of added dollars more into new attractions in Florida and California this year, accelerating an already aggressive construction plans in program schedule at its U.S. theme parks.
Cable-and-media giant concern Comcast Corp., which reported second-quarter earnings Wednesday, said it plans to boost capital spending at its NBCUniversal division by 50 percent this year to $1.1 billion — twice as big an increase as initially projected.
The vast majority of that money will be spent within the NBCUniversal family of Universal Studios theme parks — particularly Universal Orlando, which just opened a major Transformers thrill ride and a Simpsons retail area. The park is racing to finish a second Harry Potter land and an 1,800-room hotel by early 2014. The Orlando resort recently paid approximately $31 million to buy the land beneath its Wet 'n Wild water park, as well, though it hasn't yet announced any new plans for that neigbhoring attraction. Philadelphia-based Comcast, which became the sole owner of NBCUniversal earlier this year, has come to view the theme parks as an important growth engine, having been persuaded by the financial success of the 3-year-old Wizarding World of Harry Potter in Orlando. Comcast says its Orlando attendance soared more than 40 percent after that $265 million collection of rides and shops opened in the Islands of Adventure theme park. Guest spending has increased by even bigger margins.
“We’re starting to get some real critical mass,” Comcast Chairman and Chief Executive Officer Brian Roberts said of the theme parks, which should top $1 billion in operating cash flow this year.
Comcast is investing aggressively on both coasts. Universal Studios Hollywood, where attendance has also swelled on the popularity of recent King Kong and Transformers attractions, will next year open a copy of Despicable Me: Minion Mayhem, an attraction that first opened last year in Universal Studios Florida. The California version will also include an adjacent children's play area, with both wet and dry features.
“Despicable Me,” a 2010 animated movie featuring a soft-hearted villain and an irascible horde of yellow, goggled “minions,” has grown to become one of NBCUniversal’s most valuable franchises. The movie sequel has grossed more than $300 million in the U.S. since opening July 3, according to BoxOfficeMojo.com.
Universal Studios Hollywood will also get its own Wizarding World of Harry Potter, though it is unlikely to open until 2015 or 2016.
Comcast executives appear most excited about “Diagon Alley,” another Potter land that will open in Orlando next year. Like the original Wizarding World, the second one will include an assortment of attractions plus themed shops and restaurants.
On a conference call with investment analysts, Roberts singled out the fact that Universal Orlando guests will be able to travel between Wizarding World in Islands of Adventure and Diagon Alley in Universal Studios Florida aboard a train based on the magical “Hogwarts Express” from the Potter books and films — a feature that should help drive big gains in sales of two-park tickets. The new Potter land is “going to be connected to the first in a very innovative way, a very creative way,” Roberts told analysts.
In another sign of the company's expectations, Universal Orlando is building a fourth hotel that will open in the first quarter of next year, just ahead of Diagon Alley. The 1,800-room Cabana Bay Beach Resort is being financed by a joint venture between Universal and Loews Hotels & Resorts, which runs the three existing on-site hotels.
Comcast executives predicted that the slate of new attractions would ultimately exceed even their own internal return-on-investment requirements.
“The investments we’ve made in our theme parks over the last few years have reset the level of our parks’ profitability,” Comcast Chief Financial Officer Mike Angelakis said during the conference call. “We expect these [new] investments to do the same”
The upbeat outlook followed a second quarter in which the Universal theme parks threw off a little less cash for Comcast.
Universal Parks & Resorts generated $231 million in operating cash flow during the quarter, down 1.6 percent from a year ago. Total revenue rose a modest 1.1 percent to $546 million.
Comcast said the results were pinched in part by higher operating costs incurred to support new attractions. Transformers: The Ride – 3D opened in Universal Studios Florida on June 20, less than two weeks before the quarter ended.
The parks’ performance was also hampered by the timing of the busy Easter holiday, which fell earlier in 2013 than it did in 2012.
Company executives, who have highlighted attendance increases in previous quarters, on Wednesday said only that attendance at their theme parks was “healthy’ during the second quarter. But they said per-guest spending rose.
The company said the original Wizarding World of Harry Potter and the Hollywood version of Transformers, which opened last year, continue to drive growth in the parks.
“They’ve clearly exceeded our return thresholds, both on attendance and on per-capita spend,” Angelakis said. “The theme parks really have some momentum.”