Disney could get a surprise win from Universal’s big bet on Epic Universe

Disney World is facing a formidable new challenger, but execs aren’t breaking a sweat — yet.

Universal’s eagerly anticipated new theme park, Epic Universe, opens to the public on Thursday in Orlando. It features attractions from tentpole franchises like Harry Potter and Super Mario, plus a Dark Universe section focused on villains and rides from the “How to Train Your Dragon” movie.

“Everything is so magnificent,” said Francis Dominic, a theme-park-focused influencer who toured Epic Universe before its grand opening. He described it as immersive, colorful, and “what theme parks should be and could be in the 21st century.”

By unveiling this flashy new park in Disney’s backyard, Universal is “now applying so much pressure on what Disney can do and should do,” Dominic added.

If Epic Universe is a huge hit, it could steal attention from Disney’s nearby parks. An employee at the new park told BI that “they’re not trying to necessarily overtake Disney — and they don’t necessarily think that’s possible — but they want to be a strong and healthy competitor.”

But Disney’s parks chief Josh D’Amaro, who’s on the short list to succeed CEO Bob Iger, isn’t shaking in his shoes. He’s even suggested the excitement for Epic Universe is an opportunity for Disney.

“If something is built new in Central Florida, like Epic Universe, and if it brings in additional tourists — I can almost guarantee you that, that new tourist coming into the market is going to have to visit the Magic Kingdom,” D’Amaro said at MoffettNathanson’s media conference in mid-May.

Travel agents and analysts that BI reached for this story also think Epic could give Disney World an unexpected boost.

A Disney spokesperson referred to comments previously made by executives, and Universal didn’t respond to a request for comment.

A win-win?

While D’Amaro’s remarks may sound like spin, some media analysts think he’s onto something.

Morgan Stanley’s Ben Swinburne pointed to Disney’s US parks bookings, which are tracking up 4% and 7% in the next two quarters, the company said on its early-May earnings call.”Thus far, Epic’s impact to WDW is either neutral to potentially already expanding the market in Orlando,” Swinburne wrote after Disney’s earnings.

This apparent strength follows a strong quarter in which Disney’s US parks revenue rose 9%, despite economic volatility.

Travel agents have also told BI that there’s enough demand to keep both Epic Universe and Disney World bustling.

Jenn Novotny, who runs the Upon a Star trip-planning service, visited Epic Universe before its grand opening, which she described as “spot-on gorgeous” with theming that’s “literal perfection.”

Novotny said she’s seen a 9% surge in Universal bookings this year ahead of Epic’s launch, but that Disney World demand hasn’t waned. In fact, she expects her Disney bookings to grow by 18% this year.

Disney-focused travel agent Donna DeGiacomo said her clients are also buzzing about Epic Universe — and it hasn’t come at the expense of trips to Disney World.

That aligns with what D’Amaro had told analysts: “That cannibalization is not coming from us.”

Trouble in paradise?

However, Joe Bonner of Argus Research doesn’t buy that “rising tide lifts all boats” sentiment. The analyst told BI that Epic Universe will likely shave off some of Disney World’s market share. The question is: how much?

“It’s only logical to think that there will be some negative impact on Disney parks revenue,” Bonner said.

If tourists flock to Epic Universe over Disney World, Bonner said Disney may have to ramp up promotions to lure guests back. Profits would suffer, but D’Amaro said he’d do so if necessary.

“We can dial promotions up and down when we need to, against specific segments, if we’re sensing the need to do that,” D’Amaro said.

MoffettNathanson’s Robert Fishman is encouraged by Disney’s parks’ resilience amid concerns about consumer sentiment and competition from Epic Universe, though it’s not home free yet.

“We believe some cautiousness is prudent” given the Epic Universe launch and general economic uncertainty, Fishman wrote in a note.

For some parkgoers, the economy may be a bigger deciding factor when choosing between Disney and Universal’s parks.

Disney superfan Shae Noble told BI in late April that she’s tempted to go to Epic Universe, but she’s torn between a trip to Disneyland in California (where she and her partner have annual passes), Epic Universe’s new Super Nintendo World, and destinations like Italy.

“If the economy was better, we would take those days and go to Universal,” Noble said. “But because the economy’s not good, we’re like, ‘Well, we’ll just stick with Disney, for now.'”

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