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3 Reasons Rivals Won't Match Disney World's Big Price Increase

By Rick Munarriz - Jun 23, 2019 at 4:00PM

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Universal Orlando and SeaWorld Orlando aren't likely to follow the industry leader into massive price increases on their annual passes.

It's getting pretty expensive to become a regular visitor to Walt Disney's (DIS 3.29%) popular theme-park resort in Florida. Disney World increased its annual pass prices by as much as 25% last week, opening the door for SeaWorld Entertainment (SEAS 2.95%) and Comcast's (CMCSA 2.32%) Universal Orlando to follow suit.

Don't expect that to happen.

Disney World's move opens a window for its two largest rivals in the cutthroat Central Florida market to boost their prices. If the industry leader is jacking up its rates, why wouldn't SeaWorld Orlando and Comcast's Universal Orlando take advantage of the situation? Let's go over a few of the reasons Disney's competitors will probably hold the line on pricing this summer. 

Mickey Mouse at Cinderella's Castle

Image source: Disney.

1. The rivals aren't at their best

Disney World is pushing through its gargantuan increase because the first phase of Star Wars: Galaxy's Edge will open later this summer. Several new potentially bar-raising attractions will follow in the next couple of years.

SeaWorld Orlando doesn't have a game-changing addition coming to its parks until a new coaster opens next year. Comcast figured it had a no-brainer when it opened Hagrid's Magical Creatures Motorbike Adventure last month, its first well-received new ride in five years. The problem with Universal Orlando's new ride is that it's been marred by mechanical breakdowns and weather delays, and you can't market higher pricing on an unreliable addition.

2. Market share matters

Holding firm on pricing would give SeaWorld and Comcast a chance to close the gap with the global leader. Disney can rightfully argue that it will be losing its less lucrative price-sensitive pass holders, but you won't see SeaWorld Orlando or Universal Orlando smarting if they're signing up former Disney World pass holders.

Running theme parks requires a healthy flow of turnstile clicks. Investments in new rides and attractions are based on projected attendance trends, and if resisting the temptation to follow Disney here results in a strong than expected summer season it could justify the future investments to make the attendance growth happen more organically.

3. You can't go back on an increase

Investors love price increases that consumers hate, but the opposite is true when things go the other way. If Disney is biting off more than it can chew here -- whether customers get fed up or the economy sours -- it's not easy to roll back at least part of an increase.

It would be a mistake for SeaWorld or Comcast to test their pricing elasticity here if their businesses are vulnerable, and both operators have seen their businesses slow so far this year relative to 2018. Why risk future turnstile clicks just because the House of Mouse did? They have too much to lose.

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Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$108.64 (3.29%) $3.46
Comcast Corporation Stock Quote
Comcast Corporation
CMCSA
$42.84 (2.32%) $0.97
SeaWorld Entertainment, Inc. Stock Quote
SeaWorld Entertainment, Inc.
SEAS
$57.56 (2.95%) $1.65

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