Looking at the latest financial reports for some of the US’s biggest theme park operators*, they show that many are starting to see the light at the end of the tunnel. Lance Hart from Screamscape takes a closer look.
The arrival of the COVID-19 pandemic in 2020 was an event like nothing this generation has ever seen. The rapid global spread of the virus caused world governments to bring in a number of restrictions, in an attempt to slow the spread. For the entertainment industry, this was a first. One by one, virtually every theme park, museum, movie theatre, attraction and resort across the globe found themselves shutting down.
Different governments and points of view also meant different interpretations of the “stay at home” orders. Some attractions found themselves in a place where they could reopen in a limited form after a few months. Others had to find more unique ways to keep their business alive, such as hosting limited attendance festival events.
For others still, there seemed to be no escape from the orders keeping their doors shut. This was especially the case for theme parks and attractions in California. These were some of the first to close and essentially the last to reopen. Many did not begin operating again until in the spring or summer of 2021, over a year after they had closed down.
Financial reports show if tactics have paid off
The 2021 season proved to be a bit of a mixed bag for many parks, especially for the big chains that found themselves faced with an assortment of new problems.
In addition to rising supply chain issues causing havoc in unexpected ways, most parks were also facing serious staffing issues.
To ride out the waves of the pandemic there simply was no one solution that worked for every location. This has been the cause of some interesting financial performance results from the park chains. With the first quarter of 2022 now behind us, we are getting our first look at where the various theme park chains in the US stand right now. For many, this will give the first indication of whether the actions they took during the pandemic paid off for them, or not.
Cedar Fair
Cedar Fair’s Q1 2022 financial reports show some hope for the chain as it looks to the future. The parks brought in $193 million in revenue during the first three months of the year. This is a vast improvement on the same quarter in 2021 when all of Cedar Fair’s parks were closed.
In an attempt to paint a more relevant picture of the company’s performance, it compared the Q1 2022 results to the Q1 2019 results (pre-COVID). This does show Q1 2022 having an impressive 33% increase in revenue over the same time frame in 2019. Of course, as the majority of Cedar Fair’s parks are closed for much of Q1 anyway (with Knott’s Berry Farm being the sole year-round park), the chain did still report a loss of $84 million for the quarter.
Season pass sales for 2022 are up, however. Cedar Fair reports $59 million in advance sales for the upcoming season. This certainly does imply that there is a high demand by guests to visit this season.
Keeping this in mind, it is a good thing that Cedar Fair also believes it will not suffer from the severe staffing problems that plagued it in 2021. The chain kept its parks closed until mid to late-May 2021 in most markets last year. This put it behind in the need to hire.
The severity of the staffing problem varied from market to market. Some parks were able to put on a fairly normal season. However, others were forced to limit their hours, and even cut back to five days a week in the summer. By contrast, Cedar Fair reports that the chain will have a 60% increase in operating hours for the 2022 season over the previous year.
Another factor that may generate some positive results this season is the chain’s limited 2022 CapEx plans. Anticipating that there could be high demand this season, Cedar Fair made the choice to limit its capital investment for the 2022 season. It will be focusing more on internal improvements rather than building costly new attractions.
SeaWorld Entertainment
SeaWorld Entertainment also posted its Q1 2022 financial reports this month. This report saw the company’s revenue for the quarter increase by $99 million over Q1 2021.
Unlike Cedar Fair, most of SeaWorld’s parks opted not to open major new attractions over the 2020 and 2021 seasons. Instead, planned new attractions were delayed until 2022.
While this had created some ire amongst 2021 guests who had expected the delayed 2020 attractions to open last year, it should pay off handsomely for the chain as it is now able to enter the 2022 season strongly with major new attractions at virtually every park. Plus, it has also opened a brand new park: Sesame Place San Diego.
As a result, the company reports that attendance in Q1 2022 was 3.4 million guests. This is said to be its highest Q1 attendance number since 2013. While staffing remains to be an issue for the parks, they remain in high demand, although the company notes that international tourism numbers had yet to return to pre-COVID levels.
Universal Studios
Unlike SeaWorld and Cedar Fair, the Universal Studios theme parks are part of a greater multi-media empire. This means that the full financial reports of the owner (Comcast) don’t necessarily reflect their performance, except when broken down to highlight the theme park division.
In this case, Comcast had great praise for the Universal Parks & Resorts division in its Q1 2022 report. According to the figures, the parks brought in a stunning 151.9% increase in revenue in Q1 2022 compared to the same quarter the year before, rising from $619 million to $1.56 billion.
This is fantastic news for the performance of the Universal parks at the start of this year. Yet there are a couple of significant factors to note in this comparison. The new Universal Studios Beijing theme park resort had not opened in Q1 2021, and the original park in Hollywood was not open at all in Q1 2021 due to COVID safety restrictions in California.
By the time the theme park in Hollywood was able to finally reopen, it had been closed for a full year. Also in Q1 2021, while the parks in Orlando and Japan were open, all were running with reduced capacity restrictions.
Despite it all, Comcast CEO, Brian Roberts said:
“Our recovery from the pandemic at theme parks has been fantastic and shows no signs of slowing down.”
In short, the company’s performance surpassed all the analyst projections. So, it is no wonder that it quickly restarted construction work on Epic Universe in Orlando. This is expected to open as early as 2025.
The Walt Disney Company
The Walt Disney Company also released its financial reports for the quarter (which is actually Q2 2022 for the company). The main highlight was the success of the Disney+ streaming service. The company also reported that it had a “fantastic performance at our domestic parks” during the quarter.
There are still some COVID operational issues with parks in the Asian markets. Hong Kong Disneyland reopened not long ago, after being closed since January 2022. Meanwhile, Shanghai Disneyland also closed once again in mid-March 2022 and has yet to reopen. On top of this, Disney’s domestic parks are still limiting daily attendance at the parks.
In spite of all this, Disney’s theme park division reported that its revenue figures for the quarter rose from $3.2 billion in Q2 2021 to $6.7 billion in Q2 2022. Given that the international parks aren’t all back to full performance yet, this impressive growth can be mostly attributed to the performance of the Disney properties in the US as well as the restarting of the Disney Cruise Line.
The new Disney Genie+ upcharge service and individual Lightning Lane attraction passes also play a role in the increasing numbers.
Early financial reports from 2022 are promising
Across the board, the early performance results are fairly consistent. Virtually every property is either seeing early rises in revenue or rises in advance ticket and season pass sales, or is anticipating higher than normal attendance levels. This is alongside what seems to be a clear pent-up guest demand for the theme park experience.
How well these trends continue in the years to come could entirely depend on how well the 2022 season goes.
If guests leave satisfied, this means that they are more likely to plan a return visit in the future. As a result, the future could be bright indeed for years to come. But if guests encounter too many difficulties, such as over-crowded parks mixed with under-staffing issues and higher than expected costs, they may leave feeling frustrated with the experience, and may not be as likely to return quite so quickly.
[* Six Flags’ results had not been released at the time of writing this piece. Lance’s next post looks in more detail at Six Flags’ performance and strategy.]
Top image courtesy of Universal
