The theme park industry's annual attendance report should be coming out any day now. The Themed Entertainment Association announced over the summer that it would release its attendance report in September. Remember, these will be the attendance numbers for 2024, so Epic Universe will not be in the mix yet.
The Disney and Universal theme parks have held the top nine parks in these rankings for years. The gap between the lowest Disney and Universal park and the most-visited from other companies is huge. In 2023, Disney's Animal Kingdom drew twice as many visitors as Knott's Berry Farm. I expect that gap to remain in the 2024 data, if not to grow larger.
So what can parks from companies such as the new Six Flags and United Parks (the renamed owner of SeaWorld and Busch Gardens) do to compete better with the industry's leaders? Here are three steps that I see that could help Six Flags and United begin to close the gap.
First, both companies could use an assist from the United States Congress in making stock buybacks illegal again. Spending the company's cash to buy back its own stock has tempted too many U.S. corporations over the years. Yes, buybacks help boost a company's share price by creating demand for shares that then will be taken off the market, reducing their supply. But that comes at the opportunity cost of spending the money on anything that might help the company create better products.
And better products are what Six Flags and United Parks very much need right now. Yet United's board has approved another $500 million repurchase of the company' shares. Imagine what SeaWorld and Busch Gardens could do to compete with Disney if it instead spent half a billion dollars on new attractions?
The best way for a corporate board to build long-term value for stockholders, shareholders, and the public is to spend the company's money to develop and produce products that will expand its market. Choosing the short-term stock price boost from a share buyback over the long-term work of building a company's product base is a drug junkie's thinking.
Yes, many companies across many industries have authorized share buybacks, including some companies that are doing very well. But Congress would be doing the American economy a huge long-term favor by taking this financial temptation away from publicly traded companies.
The second step I would recommend is that Six Flags and United Parks stop discounting their product. Yes, everyone in the themed entertainment industry has learned by now the importance of variable pricing. Tickets on high-demand days should not cost the same as ones on lower-demand days. When a company misses its forecast for customer demand, it makes sense to offer discounts on tickets and other products to help boost demand to what the company had hoped for.
But short-term sales and variable pricing are not the same as offering across-the-board discounting. Like stock buybacks, "everything must go" sales are a junkie's way to a quick boost. Six Flags has been offering one of those this summer, with its extended "Most Valuable Pass" sale that delivers admission to all of the expanded company's theme parks across the country all season long for about the same price as a "rack rate" daily ticket.
The sale of annual and seasonal passes provides theme park companies with money up front. They lock in revenue. But when parks sell passes for cheap, that up-front revenue forces companies to start raising prices inside the park to keep from limiting their revenue over the season. That can turn away the more lucrative guests visiting on daily tickets. Cheap prices also teach customers that a park is not worth that much money to visit, limiting the company's ability to grow revenue in the years to come.
Discounting to build market share works only so long as you have the cheapest product out there. As soon as someone else undercuts you, your market share goes away. The only path to building long-term value for a company - the value that helps you compete successfully with companies like Disney and Universal - is to build better parks, not just cheaper ones.
Okay, that's two steps based on building better parks rather than playing financial tricks. So how can a cash-strapped company that currently is trailing cash-rich Hollywood juggernauts such as Disney and Universal compete to do that?
My third step is this - recognize that you do not need to spend money to license IP to tell compelling stories. All it takes is hiring a few good, imaginative creative writers. And guess what? You can hire them for not that much money. Even a low-six-figure salary will buy you a writer capable of imagining a compelling story for a new ride, show, or land.
Granted, you will need to spend more money than that to bring that creative vision to life. Yet affordable project managers and creative directors can find ways to do that on even an "also ran" company's budget. But a board and its CEO have to be willing to tell the junkies on Wall Street that they're not getting their hit right now because they have chosen instead to spend that money building something special for customers, instead.
It's all about setting expectations. Do you want to train investors to expect quick returns on buybacks and spending cuts while you train customers to expect a cheap ticket price in exchange for an iffy experience? Or do you want to train customers to expect unique, compelling experiences that they will be willing to spend extra for while training investors to see your stock as a long-term play?
Disney and Universal have chosen the second path. That is why they are leading this industry. If Six Flags and United Parks - or anyone else in this business - want to compete with them, they need to change which path they are choosing to take.
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As long as pleasing their shareholders is more important to them than pleasing their guests, they will continue to slide. Improving their customer service, ride operations and food quality doesn't require a massive investment - just the desire to do better. But these companies have shown little to no interest in doing better for their guests. That's why they are struggling.
I think you mean "compete".
In my opinion, the success of smaller parks comes down to their employees. Employees are the direct interaction with customers, and while it's tough to compete with Disney and Universal's high customer service standards, they don't have to hire bottom of the barrel types that treat their job like an annoyance instead of an opportunity to positively impact a stranger's life. Both major regional chains need to invest more into their full-time employees, and be willing to increase their investments into part-time/seasonal employees. Cedar Fair looked like they were making a step in the right direction when they attempted to deliver year-round operating calendars at some of their seasonal parks, but they abandoned those initiatives shortly before the SF merger, and now SF has cut operational hours back even further and cut back on many of their career employees and opportunities for advancement within the company. The reason Disney and Universal succeed is not just because of their financial backing, but they offer employees actual careers and opportunities beyond what guests see (ride ops, janitors, cashiers, etc...). United has historically done a decent job providing pathways for long term career growth, but I feel that they have been doubling down on foreign and part-time/seasonal labor that has cut off pipeline of career employees to lead the parks into future decades. SF offers so little opportunity that there is ZERO incentive for a part-time/seasonal employee to come back year after year or to ever consider the possibility of making a career about working at a theme park. The management consolidation at Six Flags has further hampered career opportunities, and it seems that being a manager or supervisor at one of their parks is a dead end job that will eventually be trimmed in the sake of corporate efficiency.
If they took a page out of Dollywood's Playbook it would make a world of difference. It's unfortunate that current management seems most interested in ringing out every available cent they can find.
I can't really disagree with any of the points raised here, but I do think the premise that Six Flags and SeaWorld need to (or even should try to) compete with Disney is flawed. While both operate in the same industry, it's kind of like saying a chain diner needs to go head to head with a Michelin starred restaurant in order to survive, when in reality they both serve very different markets. Disney (and Universal Orlando) primarily serve long distance guests who are traveling in for anywhere from a weekend to a week specifically to visit the resort, with a passholder base of loyal regulars who consider it their primary form of out of home entertainment for a day off. On the other hand, Six Flags and SeaWorld cater to more of a local audience who might be interested in spending a day at the park every few months, with tourists from out of area that are visiting for other attractions siphoned off as bonus revenue. Unless those parks have the ability to become multi-day destination resorts themselves, there's just no realistic way they're ever going to come close to the numbers served by the world's most well known international tourist destinations.
Excellent point, AJ. Though many enthusiasts consider the 2 Herschend flagships to be at the top of the non Kabletown and Mouse controlled resorts, the attendance #s are nowhere close to that of the old media destination parks. And in fact the latest info shows them trailing many of the bigger Six Flags thrill parks. Dollywood and SDC are beloved by enthusiasts and the GP, but despite seemingly doing everything right they are not competition for UO or WDW.
The goal of the regional parks should be to own their respective yards with great customer service, quality food offerings, and, as Robert stated, themed environments. Pre merger CF was doing a great job with non IP themed lands though it appears the merger set this movement back.
This whole topic actually makes me deeply sad. No, I have never thought a regional Cedar/Six Flags park could "complete" with the big boys. But a couple of years ago, the Cedar parks were delivering a solid product and actually showing signs of "improving" with food offerings and additional theming.
But I can not even begin to convey the giant decline I've witnessed this year. The cuts, big and small, would almost be comical if it weren't so distressing. Every singly way they could diminish the product has been implemented. Smaller drink cups, reduced menu offerings, entire restaurants closed, rides closed because of lack of staffing, one ride op where there used to be two or three, paint peeling, no attempt to hide old props, carts, rides from view, no shows (or very limited runs), elimination of holiday events, charging for halloween houses and the list goes on.
Robert used to write about "declining by degrees..." Ha, the declines this year have been in clear sight.
It really makes me scratch my head in disbelief of how anyone could approve such wide-sweeping destruction of the product.
I agree with AJ that its not the same league, however if you give a company your business the basic expectation is that the product is going to be acceptable, and that is SF's problem. And its been a problem at some major CF parks like CP and KBF for years as well.
The countries population has grown and grown but it seems like seasonal amusement parks aren't as busy as they used to be. There are many reasons for this but I think SF/CF aren't doing themselves any favors by being so poorly managed.
On that note Russel said: "United has historically done a decent job providing pathways for long term career growth, but I feel that they have been doubling down on foreign and part-time/seasonal labor that has cut off pipeline of career employees to lead the parks into future decades."
United is a bottom of the barrel company to work for. I remember when the parks were owned by Busch they were well known here in Orlando for being the best theme park employer and now they are by far the worst. Worst pay, laid off pretty much their entire full time staff and replaced with part time/no benefits, people get promoted into management and then leave after a few months because the pay is so paltry, the company's poor business practices are just frustrating to have to deal with when it comes to dealing with customers. Literally everyone I know that worked there before Hill Path was pushed out and literally everyone I know that's worked there in the past decade has nothing nice to say. They don't even pretend to care anymore, did you see the health violations at Dragon Fire Grill? And all the CEO ever has to say is that there is bad weather and they need to cut more staff.
I actually know a lot more people that have stayed with SF/CF over the years than United.
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I normally don't like to point to one thing as a linchpin that makes all problems go away. Stock buybacks is one of the few exceptions to my rule.
There's no basic like button (not advocating for that system either), so I comment to +1 your assessment.