Seaworld (SEAS) Q2 2016 Earnings Call

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.”

Seaworld (SEAS) Q1 2016 Earnings Call

Seaworld (SEAS) CEO Joel Manby made the decision to stop breeding Orca whales at their theme parks

The first quarter was a big quarter for news from SeaWorld, and early feedback from our March announcement has been very positive. We are confident that our transformative announcement to stop orca breeding and transition our theatrical whale shows into more natural encounters, as well as partnering with the Humane Society of the United States, is the right path forward for SeaWorld. It is consistent with our brand promise to a whole new generation of guests, as well as a large percentage of the population who want to learn and connect more directly to the natural world. We believe this move will contribute to gradual improvement in performance over time, as consumers begin to recognize our continued commitment to providing them experiences that matter.

Seaworld (SEAS) CEO Joel Manby thinks the customer response to the announcement has been overwhelmingly positive

First of all, from an announcement standpoint, we feel that we’re incredibly well. 65% of Americans knew about the announcement the day after we made it strictly from earned media, which is an incredibly strong figure, tends to be more like 10% to 30%. So, we got a lot of airtime, we got a lot of publicity. We anticipated it being positive from the research we did and we’ve done post surveys already from the announcement and it was along the lines that we shared in our investor deck, the day of the announcement that the positive to neutral or negative ratio of their feelings about SeaWorld were seven to one, which is incredible, so their positive feelings about SeaWorld grew in a seven to one ratio and their intent to visit grew about a four to one ratio, which was in line with what we anticipated.  We do think those are leading indicators to what people will do in visitation to the park. I think it’s too early to try draw a link directly to season passes immediately changing, but we’re very confident that it’s cleared the runway and people are seeing us in a more positive light and that will start to change.”  

Seaworld (SEAS) CFO Peter Crage said consumers are spending more in the park

Total revenue per capita was $66.80, relatively flat, but in-park per capita spending was strong, increasing by 4.5% to $25.27, primarily due to increased sales of in-park products, such as all-day dining packages and front of the line Quick Queue access.”

Economic Weakness in Brazil is affecting the Seaworld business in Orlando

For the year, Orlando generates about 30-or-so percent of its attendance from international guests. We don’t drill down into each of those countries, but Brazil is the lion’s share of that when you compare it to the other countries, so it’s significant for us.  We’re seeing some softness in others, but Brazil really stands out, obviously, because of the currency, the currency difference and we’re hearing anecdotally in businesses around Florida and Miami that Brazil is an issue for them as well.”