SeaWorld Entertainment (SEAS) is tired of seeing its brand sink all the way down to Davy Jones’ locker. SeaWorld is taking steps to address the criticism that activists have been hailing at the theme park operator since last year’s “Blackfish” documentary began to gain traction depicting the downside of having killer whales in captivity.
Bigger tanks are coming. SeaWorld is backing down from requests to have its trainers performing in the water. It’s also back to heavy promotional activity to get turnstile clicks increasing again. Will it be enough?
SeaWorld has been moving quickly to restore its image since seeing its stock lose nearly a third of its value a couple of weeks ago after posting devastating quarterly results. It’s not easy to bounce back when social media turns on you, but SeaWorld investors hope that it’s up to the task.
So Long, and Thanks for All the Fish
SeaWorld’s been making some conciliatory moves since Wall Street’s displeasure with its second quarter’s financial performance. The biggest move from a public relations standpoint is that it announced new habitats for its orcas.
Two days after seeing its stock plunge 33 percent following the unsettling quarterly report, SeaWorld announced that it was updating its tanks. Starting with SeaWorld San Diego, the killer whale environment will have its capacity nearly double to 10 million gallons of total water volume. Viewing areas will expand so park guests can enjoy Shamu and friends even when they’re not performing. A common complaint is that the current environments are too small. This may not silence the concerns entirely; many protesters argue that the killer whales need to be set free. San Diego’s new environment will open to the public in 2018. SeaWorld Orlando and SeaWorld San Antonio will follow shortly after that.
SeaWorld has also ended its legal fisticuffs. SeaWorld has been battling the Occupational Safety and Health Administration in court after regulators demanded that the park stop placing trainers in the water with the killer whales. OSHA acted after a SeaWorld Orlando trainer died during a 2010 performance. The U.S. Court of Appeals sided with OSHA last April, and SeaWorld was readying an appeal to the U.S. Supreme Court. It has decided not to expose itself to any more negative publicity by forgoing the appeal.
Doubling the size of its tanks and keeping trainers out of the water would seem to address the two biggest concerns raised in “Blackfish,” but it remains to be seen if that will be enough to silence the social media venom and the occasional picketers at its marine life attractions.
SeaWorld doesn’t have much of a choice. Many consumers have turned on the company. At a time when most theme park operators are thriving in an economy that’s taking baby steps toward prosperity, we’re seeing SeaWorld still retreating.
Attendance declined 4.1 percent across its family of parks last year, and it’s off by another 4.3 percent through the first half of the year. Things aren’t likely to get better anytime soon. SeaWorld’s updated guidance is now calling for revenue to decline by as much as 7 percent for all of 2014. Most of the national and regional amusement parks have experienced an uptick in traffic.
Bad things happen when guests stay away. SeaWorld’s earnings have fallen short in back-to-back quarters, and the operator’s refreshed outlook calls for profitability to suffer an even sharper decline.
Swimming Against the Current
At least one analyst believes that SeaWorld is bottoming out here. FBR upgraded SeaWorld’s stock a week after its report. With the stock hitting an all-time low in the high teens, it wasn’t an outlandish call if one truly believes that the brand can bounce back. FBR sees the world’s obsession with animals and zoos eventually coming around to accepting SeaWorld back into the fold.
SeaWorld isn’t taking any chances. For the first time since going public at $27 early last year, attendance growth outperformed revenue growth. Revenue per capita took a surprising dip in SeaWorld’s latest quarter, suggesting that the company is getting more generous in offering deals and discounts.
The promotional activity didn’t end there. A few days after its stock’s meltdown, SeaWorld offered its Fun Card — passes that are good for unlimited visits through the end of the calendar year — as a “buy one, get one free” promotion during that weekend. Discounts and partly conceding to activists aren’t ways that companies prefer to succeed, but SeaWorld’s exhausted most of the other alternatives.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. He’s a seasonal resident of Central Florida, living in Celebration — near SeaWorld Orlando — when he’s not in Miami. The Motley Fool has no position in any of the stocks mentioned. Try any of our newsletter services free for 30 days.