This Amusement Park is Taking on Dubai

Dubai's demographics provide insight on the potential profitability of Six Flags' newest park.

Apr 16, 2014 at 2:49PM

Six Flags Entertainment (NYSE:SIX) just reached a deal with a property developer in Dubai, and plans to build an amusement park in the city's industrial outskirts. To date, Six Flags has remained in the North American market like it's competitor Cedar Fair (NYSE:FUN). Although the move to Dubai is exciting, Foolish investors should look at the demographics to decide if the move will have a large impact on Six Flag's profitability.

Dubai Deal
Newspapers in the Middle Eastern Emirate reported that local property developer Meraas Holding reached a deal with Six Flags to build a theme park, which is expected to open in 2017. Details are currently limited, but this is not Six Flags' first attempt to create a theme park in Dubai. In 2008, Six Flags announced a deal with Dubai Holding to open a park by November 2013, but Six Flags terminated the agreement in 2010 after Dubai Holdings breached the contract because they failed to make a payment.. With global credit markets in better shape than a few years ago, it looks likely that this deal will be completed.

Revenue & profitability
Six Flags is currently the largest theme park operator in the world, with 16 locations in the US, 1 in Mexico, and 1 in Canada. Six Flag's competitor Cedar Fair has 11 amusement parks, 3 outdoor water parks, 1 indoor water park, and 4 hotels within United States and Canada. A few of Cedar Fair's attractions include Cedar Point in Ohio, Dourney Park in Pennsylvania, and King's Dominion in Virginia.


Total Revenue





Six Flags

 $1.013 B

 $1.070 B

 $1.110 B

Cedar Fair

 $1.028 B

 $1.068 B

 $1.135 B

As the table above shows, both companies have achieved increasing revenue in the prior three years. This is to be expected since amusement park revenue is highly correlated to the overall economy.


Net income





Six Flags

 $13.145  Million

 $403.039 Million

 $156.873 Million

Cedar Fair

 $65.295 Million

 $101.856 Million

 $108.203 Million

In 2011 both companies had a hard time translating sales to the bottom line. In 2012 Six Flags took advantage of a tax-carryforward, which added $184 million to the bottom line. Profitability in 2013 was normalized and can be expected for the next few years. The question then becomes how diversifying into Dubai will effect Six Flags' profitability.

Demographic difficulties
While geographic diversification is a positive, since it decreases exposure to the North American economies, Foolish investors may worry about the saturation of amusement parks and entertainment in Dubai. There are currently 22 amusement-related parks in Dubai, which include Universal Studios Dubailand, F1-X Theme Park Dubai, and Legoland Dubai. This is a lot of amusement parks for a 2.1 million population, many of whom are low-skilled Asian construction workers who are more likely to send their disposable income to their family's rather than ride roller-coasters.

What about tourism? There were approximately 10 million visitors to Dubai in 2012, a yearly increase of 9%. Tourism will likely increase as the area continues to develop, but the issue remains that there are a lot of businesses competing in Dubai for entertainment and amusement park dollars. In Six Flags' North American market, the company serves a population of approximately 100 million and 175 million within a radius of 50 miles and 100 miles, respectively.

Foolish Takeaway
Six Flags and Cedar Fair achieved revenue and profitability growth due to the rebound of the US consumer. The Dubai deal Six Flags recently signed should help limit exposure to the US economy a little bit, but it is unlikely to have a significant impact on profitability. With that said, could diversification into China or India be next?


3 stocks poised to be multi-baggers
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multi-bagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

christian sgrignoli has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information