The Orlando theme park world has erupted with excitement! Universal Orlando announced yesterday that a water park unlike any other is rising from the ground. Volcano Bay will boom onto the scene in 2017, and Universal claims that this will not just be a water park, but is their “third theme park.” From the looks of it, and from the messaging Universal Orlando is putting out there, it appears that a lot of innovation will flow throughout Volcano Bay. Sure the concept art is pretty dazzling, but can another water park in Orlando really be a game changer? As they say, the best way to predict the future is by looking at the past. So let’s take a look at Orlando’s bustling tourism industry to get an idea of how we can expect Volcano Bay to shake up tourism in Orlando.
Orlando is the destination to beat. Reporting a record-breaking 62 million (!!!) visitors in 2014 has made Orlando appear to be unstoppable. Over the past few years the growth continues each year, and while it will be difficult to keep growing at such a rate, it looks like 2015 is going to be another strong year. In the first quarter of 2015 airport passenger travel to Orlando grew over 7% compared to last year. This continued growth, and Orlando’s king-of-the-mountain position in record-breaking visitation, means that Orlando will continue to be incredibly popular.
Length of stay
The average length of stay for domestic visitors in Orlando is around 4.5 nights (not counting Florida residents). This statistic has not changed much over the years. Of course, the average length of stay for international visitors is 7-10 nights. Looking at the trends, it is easy to predict that a new water park, no matter how immersive and inventive, is not going to impact the average length of stay too much. There may be a small percentage of visitors that will increase their stay in Orlando by a night in order to visit Volcano Bay, but it likely won’t be a big enough percentage to make a big impact on Orlando’s average length of stay.
Orlando hotel stats
Demand continues to be high and new hotels continue to come into the market, it almost seems like a new hotel coming to Orlando is announced each week. So how are Orlando’s existing hotels doing, and what part of Orlando is seeing the most growth?
Looking at the image below, with stats from VisitOrlando, we can see how the Average Daily Rate and Occupancy of Orlando’s different segments are performing. Universal Orlando falls into the International Drive segment. This segment has the third highest occupancy rate year to date. However, the growth of that occupancy rate is the second to lowest. But that’s not necessarily a sign of trouble because once a hotel or region’s occupancy is in the 80% range there really isn’t much room to grow.
The statistic to pay more attention to in this case is Average Daily Rate. Since Occupancy does not have much room to grow in the International Drive segment industry professionals will want to see strong rate growth. The good news is, at least for those in the business, the International Drive segment had the third highest growth in ADR year to date at 6.4%. This is kinda rough news for those wanting to stay in the International Drive area, but I would argue that the value is there.
So what does this have to do with Volcano Bay? Well, if the International Drive segment is able to grow its room rate by about 6% and still grow in occupancy, basically not losing any business, we can expect hotel room rates in this area continue to grow. Moreover, we can expect Universal Orlando’s on-site hotels to grow their rates once they have an incredible new water theme park to show off in their offerings.
In fact, the International Drive segment has so far for 2015 had higher growth in ADR (6.4%) than the United States lodging as whole, which had 4.7% growth in ADR so far in 2015.
Theme park attendance
We’ve talked about airline travel and hotel statistics, which gives us a good idea of the Orlando market at large. Let’s get down to business and talk about Orlando’s number one attraction: the theme parks!
2012 – Universal Studios Florida’s attendance grew 2.5% / Islands of Adventure grew 4.0%
2013 – Universal Studios Florida’s attendance grew 14% / Islands of Adventure grew 2.0%
So what can these figures tell us? Well, comparatively the four theme parks at Walt Disney World average around 2-3% growth each year. With Universal Studios Florida experiencing a 14% attendance growth in the year before Diagon Alley opened, we can see that Universal Orlando’s theme parks continue grow at higher percentages that Walt Disney World’s theme parks. We can also see the impact a new attraction or major offering has on these two parks.
With Volcano Bay being a water park with some theme park DNA thrown in, we can imagine that it will most likely add some more attendance to Universal Orlando’s regular theme parks. Or will guests choose to visit it instead of the regular theme parks? Only time will tell.
By looking at 2013’s water park attendance statistics we can see that the water parks have a much lower capacity and an average growth rate of 1-2%. Just like hotels, though, when water parks are at very high occupancy there isn’t much room to grow. It can be assumed that Wet ‘n Wild Orlando (which is owned by Universal Orlando) will be closed to make way for Volcano Bay. With Wet ‘n Wild being right down the street from Universal Orlando and being a much older park compared to the state-of-the-art Volcano Bay, it’s safe to say we will see Volcano Bay at the very least match Wet n Wild’s attendance figures.
To take it one step further, I’d wager that Volcano Bay might overtake Aquatica, SeaWorld’s water park that opened in 2008. Is it possible for Volcano Bay to overtake Disney’s water parks? It’s possible, at least early on.
Universal Orlando: a self contained resort destination
Perhaps the greatest change to Orlando tourism that will come about with Volcano Bay’s opening is that Universal Orlando Resort will really and truly be a self contained resort destination. Sure, it certainly has been well on its way with four resort hotels, two theme parks, and a shopping and dining destination. However, with a groundbreaking, industry changing (hopefully) water theme park, guests staying at the on-site hotels will have a huge reason to stick around and spend their entire vacations within the realm of Universal Orlando.
Lest we forget, there is yet another hotel being built on Universal Orlando property: Sapphire Falls. This resort is essentially a sibling to the ever-popular Loews Royal Pacific Resort, both of which will neighbor Volcano Bay. And with the brand-new, much loved Cabana Bay Resort right next door, three of Universal’s resort hotels will be within a very short walk to this brand new park.
Being the industry that it is, I would wager that Universal’s two big goals are to continue to drive growth in the room rates of their on-site hotels, increase their overall market share, and ensure their on-site guests remain on-site for the vast majority of their stay in order to increase overall revenue. Judging by the strong performance of the International Drive segment and the continued growth in attendance to Universal’s theme parks, I think it is safe to say that we are in Universal’s equivalent of the “Disney decade” and that Volcano Bay will help to solidify Universal Orlando Resort as a destination worthy of visitors’ time, money, and perhaps a little worship of the new Volcano Bay tiki gods.