SeaWorld Quietly Releases Dismal Financial Results

SeaWorld Quietly Releases Dismal Financial Results

Originally published in Theme Park Tourist…

Though attention in the United States was focused on the 2016 presidential election on Tuesday, November 8th, SeaWorld used this big news day to quietly release what was expected to be a dismal quarterly financial report. And as anticipated, this statement revealed that things are still quite a bit shaky at SeaWorld Orlando, with attendance, revenue, and other metrics all coming in much lower than anticipated. However despite all the bad news, there are at least a few promising signs that show a recovery for SeaWorld could still be possible…

1. Attendance is up across the SeaWorld family of parks in Orlando, but guest spending is down

Image: SeaWorld Orlando

For the third fiscal quarter, which ran from July 1 to September 30, 2016, SeaWorld has reported that the combined attendance at SeaWorld Orlando, Aquatica and Discovery Cove has increased year over year by 1.3 percent. As you might expect, the primary reason for this is likely interest in the brand new Mako roller coaster, which debuted earlier this year on June 10, 2016. However, this projection was not as high as many were hoping, with many thinking Mako should have given SeaWorld closer to a 5 percent attendance increase in the late summer months.

And unfortunately even though technically more guests are visiting SeaWorld’s parks in Florida, (even if its not as many as SeaWorld had hoped) there’s also some additional bad news: revenue per person at SeaWorld parks have declined by 2 percent. SeaWorld says that much of this decline is due to an increased proportion of guests at Aquatica, which has a lower cost of admission that other parks, but the implication here is that guests are also spending less on food, souvenirs, etc. as well.

2. Annual passholder attendance is down for the year to date

Image: SeaWorld Orlando

Interestingly, even though overall attendance was up by 1.3 percent overall during the third quarter, SeaWorld has revealed that annual passholder attendance specifically for SeaWorld Orlando for the year to date is actually down. It wasn’t specified by how much annual passholder attendance has slid year to year, but SeaWorld is saying that fewer discounts in 2016 are likely to blame for this downturn.

3. Budget cuts are coming to SeaWorld parks very soon

Image: SeaWorld Orlando

Overall, SeaWorld generated $485.3 million in revenue during the third quarter across all of its theme parks in Orlando, San Diego and San Antonio, down from the $496.9 million in revenue reported last year during the third quarter. Net income was also down year over year, from last year’s $98 million to $65.7 million, which was far lower than what many analysts were predicting.

With so much bad news on the financial side, SeaWorld CEO Joel Manby has confirmed that budget cuts will be coming soon to try and save SeaWorld an estimated $40 million dollars over the next year. And while we’re sure these budget cuts will likely include common sense measures like staffing changes, adjusting operating hours, and more, there’s one change that Manby mentioned that has us a little nervous about the future of SeaWorld…

4. Theming? That costs too much

Image: SeaWorld Orlando

It’s no secret that SeaWorld has spent a lot of capital on new attractions in the past few years, and it looks like this trend will continue for the foreseeable future, as SeaWorld has comitted to investing heavily in its parks to try and pump its attendance back up to pre-2013 levels. However, CEO Joel Manby believes that SeaWorld may not be spending its attraction development budget as well as it could be, saying during an earnings call that SeaWorld’s goal should be to spend less in the future on opening new attractions. And one way he suggested for SeaWorld parks to accomplish this goal is for the parks to focus more on the experience of the ride itself and not so much on the theming.

If this approach sounds familiar, it’s the same one that amusement parks like Six Flags and Cedar Fair have taken for decades, to varying degrees of success. However, the market in central Florida is a little different, with Walt Disney World, and Universal Orlando Resort offering immersive experiences that use theming extensively to transport guests to fantastic worlds (often based on IP).

Image: SeaWorld Orlando

While the situation with SeaWorld Orlando is a little different (they can’t quite build something that ties into cultural touchstones like Star Wars or Harry Potter, after all), this potential move away from theming seems like a curious development, and it will be interesting to see if SeaWorld San Diego’s newest dark ride (which is projected to open sometime in the near future) will indeed skimp on the theming in the name of budget cuts.

5. SeaWorld Orlando is feeling the central Florida downturn more than anyone

Image: Brian, Flickr (license)

While the cost of developing new attractions certainly has been a big factor when it comes to SeaWorld’s bottom line, there’s an even larger problem that hurt SeaWorld in 2016, and it’s the same one that hit Walt Disney World and Universal Orlando Resort as well: the attendance downturn of 2016.

Once again SeaWorld blamed overall softness in the Orlando market for its meager gains in attendance, and cited the impact of Hurricane Hermine specifically as a contributor to its troubles this quarter. SeaWorld also blamed the slowdown in tourism from Latin America, and projected that attendance in Florida would have increased 4.0% in the third quarter if tourism from this area had remained stable.

Though neighbors Walt Disney World and Universal Orlando Resort have all felt effects from the overall slowdown in Orlando tourism, 2016 was supposed to be critical for the SeaWorld Orlando family of parks, and thus far, it has unfortunately been disappointment after disappointment for SeaWorld.

Image: SeaWorld Orlando

However, the one small bit of good news here is that SeaWorld has a solid plan in place for 2017 and beyond that will hopefully bring this theme park back to life with new rides, shows, animal exhibits, limited-time events, and more. Now they just have to survive through the rest of 2016.

Do you think SeaWorld’s fortunes will change in the near future? Or is it too late for the SeaWorld family of parks to be saved? And how do you feel about the prospect of SeaWorld Orlando stepping away from the idea of highly-themed rides.

 

 

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Don Korta
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