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Disney World Faces a Surprising Challenger

By Rick Munarriz - Jan 23, 2016 at 8:00AM

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Florida's leading theme park operator could have a new rival in town.

Image source: Fun Spot America.   

Disney (DIS -0.90%) transformed Central Florida into the theme park capital of the world, and that has inspired a growing number of competitors. Universal Orlando -- now owned by Comcast (NASDAQ: CMCSK) (CMCSA -1.11%) -- set up camp just a few I-4 exits away. SeaWorld (SEAS -3.33%) has the most visited theme park in its chain located even closer to Disney than Universal's resort. 

Disney World knows its neighbors well. It has seen Comcast's parks grow faster than its own gated attractions over the past few years, ever since Universal Orlando opened The Wizarding World of Harry Potter. Disney's response -- an Avatar-themed land that will open next year at Disney's Animal Kingdom and Star Wars Land at Disney's Hollywood Studios at some point after that -- is coming. SeaWorld Orlando is finally starting to see its turnstile clicks stabilize after posting attendance declines of 4% in 2013 and 2014. Attendance has clocked in marginally higher through the first nine months of 2015. Disney doesn't have to respond to SeaWorld's potential turnaround, at least not yet. 

The family-friendly media giant knows what it's facing in Comcast and SeaWorld as competitors. Comcast is refreshing its attractions at a heady clip. SeaWorld is trying to bounce back by emphasizing new thrill rides and rescue-themed attractions instead of its marine life exhibits and iconic yet now notorious killer whale shows.

It's against Orlando's colorful backdrop that we see Fun Spot emerging. The family-owned operator of amusement centers in Orlando and Kissimmee has been starting to flesh out its attractions. What started out as modest entertainment centers anchored by go-kart tracks and video game arcades has been adding coasters, flat rides, and daredevil attractions.

Earlier this month, Orlando's Fun Spot America unveiled concept art for what it sees as its future. Fun Spot has some extra space, and the new design shows new rides, water park diversions, a skyway, and what appears to be a parking garage to maximize the utilization of its land.

Disney hasn't skipped a beat as Fun Spot America has been gradually building out its attractions. Attendance keeps growing with every passing year at Disney World. However, with Disney recently dramatically boosting its annual pass prices -- and single-day admissions a few months before that -- it may lead some to wonder if a crafty player toiling away at the low end of the market can force the House of Mouse to overextend its pricing elasticity. 

Fun Spot sells annual passes that regularly sell for $149, but are marked down into the double digits on promotions through the year. Right now you can buy an annual pass that includes both Fun Spot destinations for $99. That is less than a one-day ticket to Disney's Magic Kingdom.

Disney has rarely marketed its destination as a vacation value. It knows that it's the top dog in premium theme park experiences. It has invested more on its MyMagic+ wristband technology than most theme parks, regional amusement parks, and entertainment centers will spend to build out their entire attractions. However, as the competition gets more compelling -- at lower price points -- Disney will need to keep raising the bar if it wants to remain the top draw without having to put an end to its annual price hikes. 

Disney transformed Central Florida, and now it has to keep a closer eye on its transforming neighbors.

Rick Munarriz owns shares of SeaWorld Entertainment and Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
$108.13 (-0.90%) $0.98
Comcast Corporation Stock Quote
Comcast Corporation
$38.16 (-1.11%) $0.43
SeaWorld Entertainment, Inc. Stock Quote
SeaWorld Entertainment, Inc.
$52.85 (-3.33%) $-1.82

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