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Universal Orlando opens huge retro hotel

Universal Orlando has invested hundreds of millions of dollars during the past four years in attractions that have drawn throngs of new visitors to Central Florida. Now, Orlando's No. 2 theme-park resort is trying to keep more of those visitors on its property.

Today, Universal will welcome its first guests to the Cabana Bay Beach Resort, the first hotel built at Universal in more than a decade. The largest hotel under construction in North America, the retro, beach-themed Cabana Bay will be Universal's fourth hotel. Once the final phase is completed by summer, the hotel will increase the resort's inventory of rooms from 2,400 to 4,200.

Universal isn't done, however. Executives at Comcast Corp., which owns the NBCUniversal media-and-entertainment empire, say they plan to build more hotels in Orlando in the coming years — potentially quadrupling or quintupling Universal Orlando's current inventory.

Experts say Universal's aggressive hotel expansion threatens to take business from other hotels, particularly competitors that ring the resort and rely on Universal visitors to fill their rooms.

"Once they get fully opened, I'm sure we'll see an impact, especially in peak season," said Jane Miller, general manager of the Holiday Inn Express & Suites on Major Boulevard, less than a mile from Universal.

NBCUniversal President Steve Burke told investment analysts last fall that the company's research shows travelers who stay at Universal Orlando hotels, operated through a joint venture with Loews Hotels & Resorts, typically spend an extra day or two in the resort's theme parks.

"We have far too few hotel rooms in Orlando," Burke said. "We've done a study that says we could have as many as 10,000 or 15,000 hotel rooms and still have occupancy that makes those rooms profitable."

In ordering more hotel rooms, Comcast is borrowing a page from the Walt Disney Co. playbook. Disney has built about 30,000 hotel rooms and time-share suites in the U.S. — 90 percent of them at Disney World — that allow the company to capture more of the total vacation spending by visitors to its theme parks.

Once merely a side business for its theme parks, hotels are now a major profit center for Disney. The company's U.S. hotels generated more than $2.2 billion in revenue last year — one in every five dollars produced by Disney's domestic parks-and-resorts operations.

"Universal has looked at Disney, and they see it's a very effective strategy. And they're trying to mirror that," said Scott Smith, an assistant professor who teaches lodging and revenue management at the University of South Carolina's School of Hotel, Restaurant and Tourism Management.

Universal is emulating Disney's hotels in another respect, too. Unlike Universal's first three hotels — all of which are marketed as "deluxe" properties with rates routinely exceeding $300 a night — Cabana Bay will offer the resort's first rooms with "value" and "moderate" prices. Rates at Cabana Bay, will start at $94 a night for a family suite.

Disney has made a similar push into rooms that target price-conscious consumers.

As Universal adds more hotel rooms, it also threatens to siphon bookings away from Disney. But Smith said Disney will be somewhat insulated because it targets slightly different core audiences than Universal.

"Disney gets smaller children, the pirates and the princesses. When you're a teen or tween, you really want to go to Universal," Smith said.

Universal isn't done adding attractions. Comcast says it plans to spend $500 million a year on theme-park capital spending during the next few years, an amount that should allow it to open major attractions each year at both Universal Orlando and Universal Studios Hollywood in Southern California.

And this summer, it will open the highly anticipated Wizarding World of Harry Potter - Diagon Alley at Universal Studios Florida — the sequel to its smash-hit original Harry Potter area at Islands of Adventure.

Universal Orlando opens huge retro hotel 03/30/14 [Last modified: Tuesday, July 8, 2014 2:10pm]
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