SeaWorld Entertainment (SEAS) has quietly traded to a new 5-year high today, so we wanted to provide a quick update on recent developments at the company. SeaWorld, which has been hurt by negative publicity in recent years relating to the poor treatment, breeding, and living conditions afforded to its orcas, has been engaged in quite a turnaround.
The company has made improving its image with the public a priority following the high-profile Blackfish movie release a few years ago, which depicted the downside of keeping/breeding orcas in captivity. It also showed how orcas became violent toward trainers. SeaWorld still has orcas in its parks, but it no longer breeds the animals, and the company is now much more focused on adding new rides and attractions that focus on conservation.
SEAS has also been making a change on the pricing front. It has increasingly been promoting its season passes. While this lowers the average ticket price per person, it clearly produces some benefits. It results in more repeat visitors during the season, and it increases in-park per capita spending.
Briefing.com has written a number of reports on another theme park operator: Six Flags Entertainment (SIX), the world's largest regional theme park and the largest operator of waterparks in North America. We are noticing some positive similarities. Six Flags emerged from bankruptcy in 2010, and a big part of its turnaround was a wholesale change in pricing strategies.
SIX decided to aggressively upsell guests to multi-visit monthly subscriptions (Active Pass base) and away from one-day sales, with a goal of boosting its recurring revenue stream and incentivizing repeat visits. It has also been pushing front-of-the-line VIP passes, just like SEAS. SIX realized that the goal is to boost attendance. It may get less money at the gate, but it will make up for it as people in the park buy food, merchandise, and other on-site offerings.
Overall, it seems that the steps SEAS has been taking to boost its image coupled with an increased focus on season passes have been leading to higher attendance. The stock jumped in early May on a strong Q1 report and gapped higher in late May when SEAS announced that Hill Path Capital boosted its stake in the company to approximately 34.5%, which was a strong signal to investors that it sees value here.