Six Flags’ shares surged more than 20% after it reported record first quarter revenue despite falling attendance — a surprise windfall driven by higher ticket prices and increased dollars from customer memberships.
The Arlington, Texas-based chain — whose CEO Selim Bassoul outraged park goers last year when he said the theme parks had become “cheap day care” centers that were attracting “rowdy teenagers” — appears to be gaining traction with a strategy to hike its prices.
Revenue rose 3% to $142 million in the traditionally slow first quarter. Wall Street cheered the news despite the company’s $70 million loss in the quarter ended April 2 and a 5.9% decline in attendance from a year ago to 1.6 million.
Six Flags attributed the attendance decline to cold and rainy weather in California and Texas, where it estimated that it lost 180,000 park goers in the quarter.
The growth in sales was driven by park goers spending more money at the parks – specifically $4.53 more per customer on admission tickets and 89 cents more on other in-park spending — a figure that rose as customers elected to keep their memberships past an initial 12-month commitment despite hikes in prices.
Spending by park goers was up 7% per capita to $80.88, which was slightly higher than the $79.85 Wall Street analysts had estimated, wrote Jefferies analyst, David Katz, in a research note.
The attendance decline was “modest” Katz added noting that the overall quarter was a “stable start to the season.”
That’s a far cry from Bassoul’s bungles last year when current employees and customers took to social media calling for Bassoul’s ouster and threatened to stop going to the parks, which were also suffering from a growing number of violent incidents and accidents caused by faulty equipment.
A year ago, Bassoul also said on an earnings call that he wanted to attract customers who shop at Target rather than those who shop at Walmart, sparking outrage and indignation from the company’s customers.
“Last year we pushed pricing a little bit more ahead of our premium-ization,” the executive said on an earnings call referring to the improvements Six Flags is making to its 27 parks, including adding more shaded areas, more food and beverage offerings, improved parking and VIP lounges. Ticket prices increased by 34% in 2022, the company said on the earnings call.
“2022 was a year of transition,” Bassoul said on the call. “Many initiatives were successful and some were not. We are encouraged by the progress” and “we are still in the early stages” of our transformation.
Starting in July, the company will begin testing so called-dynamic pricing at three of its largest parks – taking a page from Disney, which introduced variable pricing in 2018. When demand for Six Flags parks is up, customers can expect to pay more for single day tickets while they might get a deal on slower days, Bassoul said. “We believe we have pricing power,” he added.
Customers who pay an extra fee, will also get access to VIP lounges at some parks – that come with Wi-Fi charging stations, television, leather couches, snacks and air-conditioning – the company said.
Bassoul has been at the helm for a rocky 18 months and has had to walk back some of the changes he implemented, including new “confusing” season passes.
“We had four or five membership programs,” Bassoul said. “It was very complicated for our front line employees and created a lot of arguments between our biggest fans and our employees. You do not create strategies that alienate our employees and customers.”
Shares closed at $26.63, up 19%.
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