Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Disney World's Top Rival Fires Back With a New Hotel

By Rick Munarriz - Jun 27, 2019 at 9:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Comcast's Universal Orlando opens its largest hotel today, giving it more ways and reasons to succeed.

The first guests are checking into the newest hotel at Comcast's ( CMCSA 1.10% ) Universal Orlando resort this morning. There's a lot riding on the first phase of Universal's Endless Summer Resort. The Surfside Inn and Suites tower opening today will add 2,000 rooms and two-bedroom suites, doubling in size when the adjacent Dockside Inn and Suites tower opens in the springtime of 2020. 

It took two decades for Comcast to build up its on-site lodging options from zero to six hotels offering 6,200 rooms. This resort -- while technically just outside of the current resort -- will push availability north of 10,000 by next year. It's not the only reason why today's new resort is a game changer for Comcast as it tries to close what is now a widening gap with larger nemesis Disney ( DIS 2.84% ).

Interior of a room at Universal's Endless Summer resort.

Image source: Comcast's Universal Orlando.

Checking in

There are more than 36,000 rooms available at Disney World's on-site resorts, and the vast majority of them are owned and operated by Disney. Universal Orlando has a lot of ground to make up, but its empire went from a sixth of Disney's rooms yesterday to what will be more than a fourth by March of next year.

Comcast's new hotel is about more than just the thousands of families that it can keep close to its theme parks, drumming up incremental turnstile clicks. Universal's Endless Summer resort is located farther out than the six existing hotels, so Comcast is taking a more aggressive approach to pricing. The rooms start at $85 a night during slow season, more competitive with the nearby third-party chains as the rest of the Universal Orlando resorts have triple-digit overnight rates.

The timing of the new hotel couldn't be better. It's been two weeks since Universal Orlando introduced Hagrid's Magical Creatures Motorbike Adventure, a ballyhooed story coaster that's been a downtime disaster between mechanical breakdowns and weather delays. Comcast is also coming off a quarter in which its theme park revenue posted a rare year-over-year decline. The new hotel is naturally opening too late to juice up the second quarter, but it will be available for the entire third quarter. 

Theme parks aren't a big part of Comcast's business right now. The segment accounted for just 6% of last year's revenue mix and 8% of its adjusted EBITDA. However, given the hazy long-term sustainability of its flagship cable television service business, there should be a lot more on the shoulders of Comcast's other segments. It also only helps that the Universal Studios theme parks are great outlets to promote Comcast's catalog of Universal, NBC, and DreamWorks Animation content.

It also only helps that Universal Orlando is widely expected to announce plans for a major theme park expansion on the large tracts of nearby land that it has been acquiring. The new area -- roughly the size of its current resort -- is actually closer to Universal's Endless Summer Resort than the on-site hotels. Theme parks will be a bigger part of the picture at Comcast, and today it has 32% more rooms to offer overnight guests at Universal Orlando than it did on Wednesday. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$150.37 (2.84%) $4.15
Comcast Corporation Stock Quote
Comcast Corporation
CMCSA
$52.35 (1.10%) $0.57

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
633%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.