Yesterday we brought you news about Sea World Entertainment’s consideration of possibly selling off assets to boost the bottom line. While we don’t have any updates on that just yet, the company did release their second quarter results for 2017. It’s not good. Here are some highlights from their press release:
Attendance in the second quarter of 2017 was up by approximately 138,000 guests compared to the prior year quarter, and benefited from the shift in the timing of Easter but was largely offset by a decline in U.S. domestic (defined as guests outside of a 300-mile radius) and international attendance. Results for the first half of 2017 provide a more meaningful comparison to the prior year period due to the Easter shift. Attendance for the first half of 2017 was down by approximately 353,000 guests compared to the first half of 2016 and was primarily impacted by an overall decline in U.S. domestic and international attendance, which was largely concentrated at the company’s SeaWorld parks in Orlando and San Diego.
The company believes that the decline in U.S. domestic attendance, particularly at its SeaWorld Orlando park, was primarily driven by the combined impact of reduced national advertising and competitive pressures. In addition, the company believes SeaWorld San Diego was further impacted by public perception issues which have resurfaced since the company reduced marketing spend on its reputation campaign.
These factors were partially offset by improved attendance from guests within a 300-mile radius for the company’s Orlando, Tampa, and San Antonio markets. Additionally, season pass sales to date are up in all major markets outside of California. Although attendance at the SeaWorld San Diego park is still down overall, attendance from the local San Diego market has improved since the company’s new rides and attractions opened in the second quarter, and this trend has continued through the end of July.
“While we are making progress in key areas of our plan, we are not satisfied with our results for the quarter,” said Joel Manby, President and Chief Executive Officer of the company. “This quarter provided us with an understanding of what is working and where we need to make adjustments. We are increasing our investment in national advertising to generate sufficient awareness of our brand attributes and strong new rides and attractions, developing a new national marketing campaign emphasizing our distinct experiences, and reinvesting in our reputation messaging to target perceptions in key markets, particularly California. We will offset this increased advertising with additional cost reductions.
“In the first half of 2017, attendance increased from guests within 300 miles of our Orlando, Tampa, and San Antonio markets, and season pass sales to date for all major markets outside of California are up – which we believe is due to the favorable reception of our new attractions and demonstrates our strong appeal with the guests most familiar with our brand, our mission and our attractions. We are committed to our capital investment strategy and will continue to invest in new rides, attractions, and festivals across our parks. At the same time, we are maintaining our rigorous cost discipline, and while we are on schedule to achieve our targeted $40 million in net cost savings by the end of 2018, we are identifying an additional $25 million in potential savings, which we believe could be saved outright or reinvested in our marketing efforts. We believe our plan, with the changes we are making, is the right one and we are committed to working tirelessly to achieve our goals.”
Anyone who lives in Orlando and is familiar with the tourist market here can tell you, 2017 continues to be a soft year. The numbers that will come out later this year will be able to tell a larger picture, but Sea World is far from the only park with declining attendance figures. The major difference being, Sea World continues to take a bigger hit than its competitors.
According to industry insiders I have spoken with, this attendance dip is largely due to several factors: international economy being unsteady in major markets such as the United Kingdom and sections of Europe and price increase plateaus at both Disney and Universal. However, Sea World has been going after the consumer looking for a bargain (who might not be able to afford Disney) and I think that is a smarter play. If I had to take a guess, I would assume that pricing has lead to more locals visiting within driving range than before.
However, you can’t deny that Sea World Entertainment can’t seem to keep up with the market. Something drastic needs to change. A rebranding, selling off their assets and a major shift in marketing for a start. If you’re a fan of how the theme park business works, for better or worse, you’ve got to start paying attention Sea World Entertainment handles this. Because if they do, it will be one for the record books.
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