Source: SeaWorld Entertainment.
It's perfect timing for a change at SeaWorld Entertainment (SEAS -3.35%). The theme park operator announced yesterday that its bar-raising Mako roller coaster will officially open in Florida on June 10.
It's going to be a pretty popular summer attraction. Mako will break several local records for thrill rides, checking in as Orlando's tallest, longest, and fastest roller coaster.
It didn't seem as if Mako would draw much of a crowd when it announced plans for the new white-knuckled attraction last year. Public sentiment was still burning against SeaWorld in the wake of 2013's Blackfish documentary. Attendance was starting to stabilize. SeaWorld closed out 2015 with a meager 0.3% uptick in attendance -- after back-to-back years of 4% slides in turnstile clicks -- but it also came with folks paying less to enter the park. Revenue dipped slightly in 2015.
However, SeaWorld shook up perspectives last month by announcing an end to its active orca breeding program. The move was enough to get the Humane Society of United States to team up with SeaWorld. PETA still isn't satisfied. It wants SeaWorld to move its killer whales to sea pens that offer sanctuary without the dangers that relocated orcas face in the wild. However, most mainstream consumers seem to be appeased by SeaWorld's move that will make this the final generation of killer whales to live at the parks without the burden of having to perform as those shows are drawing to a close.
SeaWorld is now a place where a millennial can visit without facing social stigma from friends or picketing protestors at the gates. That's a pretty big deal, and CEO Joel Manby hosted a webcast last week for the chain's annual pass holders, addressing the changes centering around the end of the active breeding program and the decision to wind down orca performances in the next few years in favor of habitat viewing experiences that will emphasize education over tank tricks.
He explained how SeaWorld was able to partner up with the Humane Society because they have similar goals. They both want an end to commercial whaling, seal hunting, and shark finning, and SeaWorld is an active rescuer of distressed sea life that it nurses back to health.
Manby was asked if SeaWorld shouldn't have given in to the critics, and his response is significant.
"We didn't cave to PETA or any activist organization," he responded. "We changed because society's mind-set was changing. The truth is our customer base was shrinking. More and more people distrusted us and didn't support having orcas under human care."
It was a grim assessment of where the SeaWorld brand stood in the marketplace, but it's also easy for Manby to be blunt since he wasn't at the company until a year ago. If sentiment wasn't turning three years after Blackfish it probably wasn't going to happen. This didn't simply strike a nerve and go away like Kony 2012 or the more SeaWorld-relevant The Cove. Activists that streamed Blackfish got vocal in social media, and when that resulted in bands backing out of music festivals and guests staying away it wasn't a matter of who was on the right side of history. The orca shows had become patron-shedding distractions.
SeaWorld will never be Disney (DIS -1.01%), and for investors that's probably a good thing. SeaWorld trades at a much lower price-to-sales multiple than Disney, and its 4% yield also produces a lot more pocket change than Disney's 1.4% payout.
The arrival of Mako in two months also draws a thicker line between SeaWorld and Disney. The House of Mouse would never build a coaster with a 200-foot drop. Disney World's fleet of coasters max out at a drop of 80 feet. Disney prefers themed experiences and family friendly rides over record-breaking thrills. That's not a bad thing for either company. Cheap gas prices will make Central Florida a popular destination this summer, and SeaWorld will be there to catch more park guests than it has in at least three years. It has the less tarnished brand and the steel scream machine to make that happen.
