Seaworld (SEAS) Q2 2016 Earnings Call

posted in: Earnings Call, Notes | 0

Seaworld (SEAS) CEO Joel Manby said macroeconomic and political volatility, particularly in the Latin America region, hurt visitors to their park

“Unexpected macro factors have weighed heavily on our recent performance. While our strategy is allowing us to make progress in markets outside Florida, the quarter was below the expectations we communicated to you in May, primarily due to accelerated declines during the quarter in Latin American guests at our Florida park locations and a broader downturn in the Orlando market, particularly in the latter half of June.”

Their announcement to soon get rid of killer whales at their parks helped their image

“First, after we announced the orcas currently in our care would be our last generation, our recent nationwide polls have confirmed continued positive public feedback. A fact, our recent surveys showed our announcement made the public more favorable about SeaWorld by an eight to one ratio which is even higher than the seven to one positive ratio we saw right after the announcement in March. And the announcement makes them more likely to consider visiting SeaWorld by a five to one ratio, and an increase from a four to one ratio that we reported to you right after the March announcement. We will continue to monitor this sentiment, but we believe this is a very good sign for the long term health of the business.”

Universal Studios Harry Potter hurting traffic to Seaworld park in California

“California is stabilizing and Texas is growing. In California, revenue is only down 2% year-to-date through June, an improvement compared to a decline of 8% in the previous year and a decline of 13% the year before that despite a lack of any new major attraction and increased competition this year from the new Harry Potter attraction at Universal Studios in Hollywood.”

Orlando tourism market is weak after the recent shootings there

“We are seeing data that shows year-to-date hotel occupancy in Orlando is down about 2%. Other tourism industry reports indicate attendance figures at theme parks are off across Orlando. We have also seen theme park competitors lifting blackout dates on their passes for the remainder of the year and some going back to non-peak pricing to attract guests.”

Seaworld (SEAS) CEO Joel Manby said they are focusing their incremental marketing dollars on attracting domestic visitors 

“So, as a company, we don’t want to de-emphasize it going forward, but the new money, the increases in marketing spend as we grow have gone entirely into that either an internet based strategy for domestic visitors, so anyone who’s vacationing will see us when they come to Orlando on the web and any traditional media is 300 miles and in. That strategy is clearly working. Our source of residency data says that in Tampa and in Orlando our local and drive-in overnight markets are up between 5% and 15% depending on the area and depending on the park.”

Seeing employee wage pressures

“On the OpEx side, wage merit, particularly minimum wage and competitive wage challenges and pressures in particularly Florida and California are built into that. Of course, we have some new attractions that cost us OpEx, but the majority of it is a wage pressure, rate wage pressure across the company in particular in California and Florida.”