Is Universal Orlando repeating Disney World's mistake?
You probably don't want to face off against Universal Orlando parent Comcast(NASDAQ: CMCSA) in a game of Monopoly. All it does is keep building hotels. The theme park operator filed updated plans with the county last week for what would be the resort's sixth hotel, according to an Orlando Sentinelarticle.
Comcast has been voraciously building out its resort since the success of The Wizarding World of Harry Potter cast a levitation spell on guest attendance in 2010. It opened Cabana Bay Beach Resort, the resort's fourth and largest hotel, in early 2014. That was just months before it would debut the Diagon Alley expansion of J.K. Rowling's wizard universe, a move that would be highlighted by the addition of a richly themed train experience that connects Universal Orlando's two theme parks.
Buying annual passes for Universal Orlando is about to get a bit more complicated -- and possibly more expensive. The Orlando Sentinel is reporting that the theme park resort is shaking up the way it breaks out the annual passes that frequent visitors typically purchase. According to the report, Universal Orlando's official blog posted -- and quickly took down -- a post spelling out the changes on Monday morning. A Universal spokesman confirmed the inadvertent post, explaining that full details will be revealed later in the week.
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Universal currently offers three types of passes. The entry-level Power Pass has usage restrictions. It doesn't include complimentary parking, and blackout periods prohibit visits around peak travel periods. It's available at $234.99 a year for Florida residents. The $309.99 Preferred Pass includes parking and year-round-access to the two theme parks. The $444.99 Premier Pass throws in valet parking, access to the expedited Universal Express queues during the final few hours of the day, and a free one-night admission to the scare zone-rich Halloween Horror Nights on a non-peak evening.
The premature post detailed a new "seasonal pass" that would have more restrictive blackout dates than the Power Pass. There was no pricing spelled out in the post, but it's worth noting that when Disney(NYSE: DIS)expanded its offerings late last year -- also expanding the number of pass tiers with blackout periods -- it did so with a significant price increase.
Disney's move in early October was seismic. The price for the cheapest Disney World annual pass with year-round access soared 23%. A few months later it would jack up one-day ticket prices for day guests by as much as 18%.
When Disney World's attendance declined during this year's March quarter -- and again in June -- it was easy to assume that these moves played a starring role. With more people priced into annual passes with blackout dates -- something that will likely be a byproduct of half of Universal's passes coming with visit restrictions -- it probably weighed on attendance during the Spring Break and early summer holidays.
Comcast needs to be careful. Its theme parks are gaining ground on the House of Mouse, and its theme park revenue has been outpacing Disney's growth in recent years. It's been adding new rides, attractions, and resort hotels at a more aggressive pace than Disney, and next summer it will debut its first on-site water park.
It was easy to assume that Universal would shake up its annual passes next year when the Volcano Bay water park opens. That's when a new tier that includes the water park or other perks would make sense. This week's move seems premature, especially if it's accompanied with a significant price hike. Comcast will need to be careful. Given the lessons learned at its larger theme park rival this may be the worst time to get greedy.
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