The owner of the Universal theme parks remains bullish on the business, even while Universal's Orlando and Osaka parks are attracting just one-quarter of their usual attendance during the pandemic. But Universal has slowed its investment in the parks as it rides out the continuing business effects of the pandemic.
Comcast Chairman and CEO Brian Roberts spoke this morning online as part of the Goldman Sachs 29th Annual Communacopia Conference for investors. When asked about theme parks and when he thinks more people might return, Roberts said,
"I think very possible that for many people, they're going to wait until we have a vaccine, and that's okay. I mean that's a personal choice. For other people, the answer is they want to be at the theme parks sooner than that — and they're comfortable.
"I think we've given them reason to be comfortable, as we have put in what we think are the best possible protocols and safety that the experts locally have advised. The consumer results and satisfaction scores show they are very overwhelmingly comfortable — the customers that have come to both Orlando and Osaka. It's about 25 percent of our usual attendance — some days are more and some days are less. We hope to open Hollywood in the foreseeable future.
"But that's not the business that we've been enjoying. When we bought NBCUniversal, I think Universal was around $500-600 million of EBITDA, and we were around $2.5 billion when COVID did. And we've lost all that — or much of that — and therefore we have a long way back. It may take a vaccine until that happens.
"In fact, as I think about the entire company, probably 70 percent of the COVID effect is this one conversation, and there's only so much we can do about that. But for the 10 years that we did own NBCUniversal, the fastest growing part of our company was Universal theme parks, so you have to ask, 'Do you think it's coming back someday, and are these great assets?'
"Companies that aren't as well capitalized that are not part of a bigger enterprise, maybe won't be able to come back with the strength in the hotels and customer experience that Universal parks will. So I'm really bullish on the business. It's really the main part of COVID that we have not been able to completely get fixed yet, but I'm optimistic for the long term."
Universal Orlando and other theme parks in Florida are operating under capacity limits, as they look to promote safe social distancing and prevent the spread of the Sars-CoV-2 virus. However, daily attendance at the Universal Orlando theme parks has varied wildly, with strong attendance on weekends balanced by lighter attendance on weekdays, illustrating that attendance continues to be dominated by locals who work during the week rather than by tourists on vacation.
When Roberts was asked about Comcast's upcoming capital investments, Roberts said of the parks,
"At the right time, we can invest in theme parks, but not now. So we've slowed down some investments in theme parks, but I hope they will come back and I want them to come back."
Universal officials earlier this summer confirmed that the company has "paused" development of its announced Epic Universe theme park, which was to anchor the new south campus of the Universal Orlando Resort, located next to the Orange County Convention Center. However, construction continues on the as-yet-unannounced new roller coaster in the Jurassic Park land of Universal Orlando's Islands of Adventure, and new Super Nintendo World lands are nearing completion at Universal Studios Japan and Universal Studios Hollywood, where a new Secret Life of Pets: Off the Leash! dark ride is finished and ready to debut as soon as that park is cleared to return.
TweetI thought that Roberts' attempt to throw shade on Six Flags/SeaWorld/Cedar Fair was the most interesting thing here. Honestly, if this pandemic drags on for another year, it might be the non-destination, all-outdoor, regional parks that do better relative to normal than the travel-dependent parks such as Universal and Disney.
But when the pandemic ends and people want to travel again, capital-depleted regional parks probably will have a very tough time competing with destination parks, especially if the destination parks can bring major new attractions to market swiftly.
I think he’s right to be bullish. I don’t think our want for travel has changed. Although next year probably won’t be a “great” year for parks attendance wise if jobs don’t rebound instantly, I don’t think it will be a “bad” year either. By 2022 I imagine everything will be more or less back to normal, and these former profit engines will be again.
Huh? What ... I'm sorry I was napping ... Did someone say my name?
This is obviously a fluid situation. What would have been telling is if Roberts had been asked about the UEU creative and construction team layoffs that are coming in December and how that should translate regarding immediate plans.
But I strongly believe that Russell's "hot air" comment is on target and I believe that because I don't think Comcast has settled on any specific strategy. At the same time I have to believe that they are going to have to announce something big in 2021, or they will forever be relegated to second place behind Disney. WDW has TRON, Guardians, Ratatouille, HarmonioUS (have you seen the size of those show barges?) waiting in the wings. Those attracctions will open in time for the company's 100th anniversary celebration in 2023. 'Flight of Passage' and SWGE remain hugely popular. While Roberts may not have a plan right now, I gotta believe he knows Comcast must unveil something really substantial in the next 12 months.
I have no inside information, but a couple of years ago there was chatter about Nintendo. This is pure conjecture. There was a piece of concept art (from where, I don't know) that showed Nintendo land being built at USF in KidsZone. It would absolutely cost a billion (maybe two), but if Bullish Brian wants to keep pace with WDW, that strikes me as the kid of investment Comcast needs to make.
And I hope they do, because with that IP, I'm sure it will be outstanding.
Great to read Brian Roberts so positive. NBCUniversal can ride out the interim downturn with the support of Comcast but it makes a huge statement that Universal Theme Parks are not in danger. This will ward off the circling Chinese who are watching every attractive company like a hawk.
People haven't switched their entertainment preferences away from theme parks so when a vaccine is found and the virus stabilises people will flock back to them, local, internal and external visitors.
I agree with Chad, 2021 will still see controls and restricted numbers but from 2022 onwards I expect them to exceed pre-2020 levels as people will make up for lost time.
Therefore, Roberts' bullishness is totally justified as Comcast can keep the wolf from the Universal door.
There so right with regards to Universal bouncing back almost immediately after a vaccine is found. Even though the pandemic has caused so many hardships for many people and plenty of people won't be able to afford trips in 2021 even if a vaccine is found Universal / Disney will be fine.
The fact is that both Universal and Disney are premier destinations which frankly target higher income families. Those families were not as affected by the pandemic and will be back as soon as a cure is found. I'm sure the numbers won't be back to pre-pandemic levels right away but it won't be as bad or as long as many are thinking.
As soon as our family gets our shots we will be on a plane for a much needed vacation!!
The substance of it is more he does not believe the sky is falling mid to long term. Sounds reasonable. The rest is as it is. Measuring success with EBITDA alone makes proper trained academic accountants fall into tears. Maybe some recent young art history graduates investment banks like to occupy as analysts still seriously buy that talk. Albeit even that is unlikely.
Here is news about more than 5,000 less-than-"bullish" Central Floridians ... Orlando Sentinel (9/16/20): "Universal Orlando has alerted the state that 5,400 furloughed employees won’t be back to work anytime soon as the recovery from the coronavirus pandemic is expected to stretch in 2021."
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Insert TH counterpoint here...
Honestly this does sound like a lot of typical hot air to keep Wall Street happy. I know a lot of analysts have been trying to prop up the travel and tourism industry, but if you're already in the market with severely devalued assets, it's going to take a long time to just get back to where we were in January, let alone recoup the lost revenue and additional costs of operating over the past few months (and who knows how many more months to come). I'm honestly shocked that there haven't been any ownership shifts over the past couple of months as ruthless investors were looking to buy low. However, the lack of divestitures doesn't mean the market is healthy, and most certainly wouldn't give me the confidence to be "bullish" on the industry's future. In fact, you could argue that the lack of buying/selling/merging within the industry suggests that buyers don't see a lot of immediate promise in the industry where companies are saddled with tons of debt with increasing operational costs and slimming margins. The same holds true for the cruise industry and tourism in general, not just theme parks, where there's been a widespread "hold onto your butts" mindset where not even the most financially stable buyers are interested in investing in a listing ship.