Key Points:
- The top-line results for the domestic parks at Disney, Universal, and United Parks & Resorts should be favorable and stronger QoQ based on observed visits and time in the park (per Advan), and an assumed uplift from international visitors.
- Disney’s attendance and per-caps should outperform and Florida should outperform California. Part of Florida’s outperformance stems from Universal Epic; Epic has grown the Orlando market.
- Looking forward, the theme park season (for large destination parks) has started off well, and we expect that to hold onto its end (Labor Day), i.e., there’s no macro malaise evident.
Q2 will be the first quarter that the industry will comp Epic and broadly speaking, it was favorable both from the perspective of attendance and time-in-the-park. Epic Universe was up 27% YoY for June in observed visits reflecting both the appeal of the park, increased gate capacity, and increased marketing. Universal has also been very successful this year at the box office with The Super Mario Galaxy Movie and Minions & Monsters and its films’ stories / characters lift the parks. The Mario release (April 1st) was the #1 worldwide box office success this year; Universal Studios Hollywood has Super Nintendo World, which will have benefited from the movie’s excitement.
Unlike Q1 where California led, Florida led in Q2. California’s attendance has a higher drive-in mix and the spike in gas prices appears to have had a modest impact on Q2 attendance. Helping to offset that, per airport deplanement data, international visitors should contribute to attendance growth for the first time in several years, and it’s a bigger driver for Florida. (Our data does not capture international visitation.) Moreover, international visitation may have been further boosted by the World Cup. MCO reported domestic-deplaned declining -3% in May (vs. +4% in April) and international-deplaned increased +2% for both April and May (international is 13% of the total). MCO hasn’t released its June statistics yet; however, observed visits in June was +260bps stronger MoM. (Advan has visits data on every airport and terminal. The calendar may also be behind the May / June cadence).
The figure below shows observed activity for three select parks in Florida (on a trailing-7-day basis). Magic Kingdom and Universal are on the same scale. SeaWorld has been rescaled to overlap the two*. Since Memorial Day (the start of the season), observed activity has been above last year’s level for Magic Kingdom and Universal Studios Florida. Thus far in July, Magic Kingdom continues to be higher, whereas Universal has flattened out. SeaWorld had a slower ramp, but it has now caught up to last year’s level. (This observed activity is solely from those based in the US and it excludes international visitors). Looking forward, Q3 is a much easier comp, excluding whatever happens this year with hurricanes. The conclusion ex. that caveat – the theme park season (for large destination parks) has started off well, and we expect that to hold onto its end (Labor Day). Additionally, as we’ve previously argued, Universal’s Epic Universe has grown the pie for the industry (as the three’s managements have also stated).
