Theme parks and resorts are some of the major tourist
attractions in the U.S. and should benefit from a pickup in the
consumer spending. This bodes well for Disney (
) and Comcast's (
) NBCUniversal units. While Disney operates Disneyland and Disney
World resorts, NBCUniversal operates theme parks under Universal
Studios brand. We estimate that theme parks constitute about
8% to our $46.40 estimate
for Disney's stock and very little to our
$27.40 value for Comcast's stock
. Our estimates are 20% and 10% above Disney and Comcast's
respective stock prices.
Below we take a quick look at certain trends that might affect
the profitability of this business in near future.
Attendance will rise as the economy improves
Theme parks are considered as a destination for leisure activity
and therefore the attendance is tied to state of economy as well as
level of travel & tourism. Consumers are more likely to travel
when the economy is in a better state and discretionary spending is
more viable. The economy has improved gradually in the past year,
and although not as much as previously expected, we expect theme
park attendance to gradually improve.
Trending per capita expenditure at theme parks
Per capita guest spending at a park comprises of spending on
tickets, food/beverage and merchandise. Tickets form a major
portion of this spend.
Recently, Disney hiked ticket prices for its theme parks which
was soon followed by price hikes from Universal Studios Orlando.
This is a positive sign given the economic recovery. As more people
begin to turn up at theme parks they will spend more on
food/beverage and merchandise and so overall per capita expenditure
International tourism is likely to influence theme parks
business to some extent. Recent quarterly results for American
Airlines indicated that the international travel to the U.S. has
been increasing which seems to be a positive development. However
on the flip-side, there is a concern that the earthquake in Japan
might impact travel for Japanese tourists to the U.S. Since
Japanese tourists form the fourth largest group of international
visitors to the U.S. with 2.9 million tourists in 2009 and have
overall per capita expenditure standing at around $4,400 this is
one small area of concern.
See our complete analysis for Disney and Comcast