Theme Parks on the Road to Recovery
CNBC Media and Entertainment Reporter
Though the economy's been on a roller coaster and fuel prices are painfully high, but the theme park business is actually looking up. Across the board — from local parks to Disney's vacation destinations - there are signs of strength.
Just last week Comcast, parent to CNBC, doubled down its bet on parks, buying the remaining half of Universal Orlando which it didn't already own for $1 billion. Ahead of the busy summer season Universal Orlando is already booming. Attendance at the Florida parks grew some 65 percent in the first quarter, boosted by the year-old "Wizarding World of Harry Potter." And Universal's entire parks division grew revenue 16 percent in the first quarter.
Six Flags, certainly went through a rough spot - just emerging from bankruptcy last May. But since then it's been on a massive upswing, its stock more than doubling in the past year. In the most recent quarter Six Flags narrowed its quarterly loss, while growing revenue from admissions, food and merchandise. Oppenheimer's Ian Zaffino has an "outperform" on the stock, largely because of the company's ability to raise ticket prices. He calculates that the company's ability to push up prices will grow Six Flag's bottom line some 10 percent.
Cedar Fair, with a dozen parks including Cedar Point and King's Dominion, has seen its shares grow 44 percent in the past year. The company has been battling activist shareholders, but it offers a dividend and it may actually benefit from high gas prices. Cedar Fair's parks are exactly the kind of local attraction that may benefit if people cancel longer trips and look for diversion closer to home.
And just last week Disney raised the prices for its domestic parks by a few percentage points, its second price hike in the past year. Here in southern California the cost of a one-day ticket to Disneyland went up by more than 5 percent, the cost for a longer pass even more. Cowen & Company analyst Doug Creutz says Disney is looking to compensate for its higher costs. Creutz says he thinks Disney will watch carefully to see if the higher prices impact attendance, and if they do, the company may be willing to pull them back down. The company successfully phased out deep discounts, now we'll see how these price hikes fare.
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