Market Spotlight: Theme parks may ride through slump

[GAcoaster]

From the Associated Press:

 

Market Spotlight: Theme parks may ride through slump

Thursday June 5, 11:09 am ET

By Eileen Aj Connelly, AP Business Writer

Economic slowdown may not hurt theme parks as families opt for vacations near home

 

NEW YORK (AP) -- Parents who want to let out a good scream the next time they fill up the gas tank or grocery cart might want to think local for vacations this summer.

 

The weak economy is expected to help boost attendance at regional theme parks, as families opt for entertainment that doesn't require as much travel.

 

"It's going to be a close-to-home year," predicted Dennis Speigel, president of International Theme Park Services, an industry consulting firm. While the economy "isn't going to help anybody," he said, companies like Six Flags Inc. and Cedar Fair LP may benefit from the expectation that vacationers "will not be traveling as far because of gasoline prices."

 

Companies have started promotions early to attract more people, Speigel said. Six Flags, for example, cut its entrance fees by $10 for most of its 19 U.S. parks, if tickets are purchased online.

 

Six Flags Chief Financial Officer Jeff Speed said the company has seen in past economic slowdowns that attendance at regional parks tends to be resilient. "They're not going to do away with vacations, but they scale back a little bit," he said.

 

Keybanc Capital Markets analyst Scott W. Hamann agreed.

 

"To fly down to Orlando might not be in the budget for some people," he said, noting that regional parks get 80 percent of their attendance from within 150 miles.

 

So-called "destination" parks, like Disney World, Universal Studios and Busch Gardens, are not expected to feel much of a pinch, even if fewer people head there from the U.S., observers said, because the weak dollar has drawn more foreign travelers to this country, and many will make a stop at those iconic locations.

 

With few exceptions, regional parks attract few foreign visitors.

 

While it's still very early in the theme park season -- July will draw the most attendance and August is the second-most popular month -- Lee Alexakos, vice president of marketing and advertising for Cedar Fair, said the company had an "outstanding" Memorial Day weekend.

 

But Keybanc's Hamann cautioned weather and other factors can influence attendance over the summer months, and indicators so far are mixed. While season pass sales for Cedar Fair parks appear strong, he said, other signs, like hotel room bookings are "a little soft."

 

"Something that we might see this year is that people might take trips at the last minute," Hamann said.

 

Another factor that Wall Street will keep a close eye on is sales of food and souvenirs inside the parks, or in-park spending. In recent years, the metric has accounted for about 37 percent of annual revenue at Cedar Fair, and about 46 percent at Six Flags.

 

For the 2008 first quarter, Six Flags said in-park spending rose 13 percent, while Cedar Fair reported a 27 percent increase. Thomas Staggs, CFO for The Walt Disney Co., said during the company's first-quarter conference call that per capita spending at Florida's Disney World rose 3 percent, while it jumped 8 percent at California's Disneyland.

 

This is ALWAYS the case. The biggest seasons for GA were the early 80's when the economy was really bad.