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SeaWorld Splashes the Competition

By Rick Munarriz – Updated Apr 17, 2019 at 11:13AM

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In the first step of a turnaround, SeaWorld Entertainment's 8% increase in attendance in the fourth quarter -- and 8.6% for all of 2018 -- beat larger rivals Disney and Universal Studios.

SeaWorld Entertainment (SEAS -1.49%) was able to close out 2018 the same way it started, taking its first steps in the right direction after years of going backwards. Shares of the theme-park operator moved higher on Thursday after posting mixed, but ultimately satisfying, financial results. 

Attendance rose 8% during the seasonally sleepy fourth quarter, and the growth in turnstile clicks was consistently positive in 2018. Guest counts rose 8.6% for the entire year, as new rides, festivals, and other experiences helped renew interest in SeaWorld's gated attractions. Its larger rivals didn't come close, as Disney (DIS -3.20%) and Universal Studios' parent Comcast (CMCSA -3.62%) scored more modest attendance increases.

SeaWorld's fourth quarter wasn't perfect, but in terms of growing its visitor counts on a percentage basis, no national theme park or publicly traded regional amusement-park operator came close. 

Manta roller coaster at SeaWorld Orlando splashing along the water.

Image source: SeaWorld Entertainment.

Hope floats 

Revenue didn't keep up with the guest-count gains during the quarter. SeaWorld Entertainment's top line rose 5.5%, to $280 million for the fourth quarter, as a 10.9% increase in in-park spending was held back by a disappointing 1.9% uptick in admissions revenue.

There's a lot of weight in those metrics. Folks are spending more money on food, merchandise, and other premium offerings once inside the park, since that line item is growing faster than the 8% uptick in attendance that appeared during the quarter that contained the holiday. However, the 1.9% gain in tickets and passes means that the average customer paid less. 

SeaWorld revamped its annual pass pricing in October. While it seemed to introduce pricier plans with enhanced benefits, it wasn't enough to help drive admissions per capita higher. SeaWorld has been doing a great job of adding new thrill rides and family friendly attractions -- as well as ramping up its festivals that appeal to foodies and music buffs -- but the turnaround won't be complete until folks are willing to pay more to get in than they did a year earlier. 

Investors have been rewarded. The stock has nearly doubled since its springtime low nearly 11 months ago. The recovery in 2018 wasn't perfect, but after four consecutive years of declining revenue, this is the first year in which SeaWorld stepped up to benefit from the positive tailwind provided by Disney and Comcast parks in Central Florida and Southern California. 

Building on top of last year's gain will be the challenge, but now that we're six years removed from the brand-tarnishing Blackfish documentary, the sky could be the limit for SeaWorld. It was able to wrap up 2018 in the same strong fashion that it closed out the first nine months of the year.

Disney and Comcast have big rides opening later this year at Disneyland, Disney World, and Universal Orlando. SeaWorld should be a welcome beneficiary of the uptick in tourism, as long as the guests coming in make time to check out area attractions in the downtime. 

SeaWorld is unlikely to lead the pack in attendance percentage gains in 2019, but at this point, it doesn't have to. All that SeaWorld needs to do now is make sure that the turnstiles continue to turn in the right direction.

Check out the latest Disney and SeaWorld earnings call transcripts.

Rick Munarriz owns shares of SeaWorld Entertainment and Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
$94.33 (-3.20%) $-3.12
SeaWorld Entertainment, Inc. Stock Quote
SeaWorld Entertainment, Inc.
$45.51 (-1.49%) $0.69
Comcast Corporation Stock Quote
Comcast Corporation
$29.33 (-3.62%) $-1.10

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