Article: VRTP lowers profit forecast

[DaptoFunlandGuy]

From News.com.au

 

Quote

Theme park owner lowers profit forecast

Village Roadshow shares have plunged to a six year low after the theme parks operator warned of ongoing challenges at its Gold Coast parks.

Shares in Village Roadshow have plunged more than 11 per cent after the beleaguered theme park operator downgraded its earnings forecast as visitors stayed away from its drawcard Gold Coast theme parks.

Village Roadshow's already weak visitor numbers were compounded by a wet March and competition from the Gold Coast Commonwealth Games, the company said in a third quarter update.

The company warned investors that its full-year net profit will be even lower than the downwardly revised figures it gave in January of $12 million to $17 million.

Theme parks across the Gold Coast are yet to recover from the impact of the fatal accident at rival Ardent Leisure's Dreamworld in 2016, while Village Roadshow's cinema division has also faced challenges from weak 2018 attendances.

Village Roadshow is banking on a string of last quarter blockbusters to shore up its numbers, including Avengers: Infinity War, Solo: A Star Wars Story and Jurassic World: Fallen Kingdom.

The company on Tuesday said it currently expects its full year net profit after tax to be somewhere between break even and a $10 million loss.

The company's shares were down 35 cents, or 11.1 per cent, at $2.80 at 1211 AEST after earlier dropping as low as $2.70, their lowest level in almost six years.

"competition from the commonwealth games" - I have never seen a tourist industry complain that a major sporting event was 'competition' - it's always been seen as complementing each other. Wonderland did superbly out of the Sydney Olympics too.

[webslave]

Maybe they meant:

"Village Roadshow's already weak visitor numbers were compounded by a wet March and competitors from the Gold Coast Commonwealth Games, the company said in a third quarter update."

[New display name]

42 minutes ago, AlexB said:

"competition from the commonwealth games" - I have never seen a tourist industry complain that a major sporting event was 'competition' - it's always been seen as complementing each other. Wonderland did superbly out of the Sydney Olympics too.

Have you been to the Gold Coast in the last 2 weeks?

Edited April 17, 2018 by Skeeta

[DaptoFunlandGuy]

i know the coast was quiet. i know the locals were 'scared off' etc.

its the choice of words i'm taking issue with - are they really arguing that the people who would normally have visited the parks were instead going to watch the games? ie: competition?

Or were the games an 'impact' to their visitation because people were staying away?

subtle, but important difference in meaning.

[RossL]

But the games didn't even impact their third quarter.  And March is always wet on the Gold Coast.

Let's go back to what they changed, their pricing?  Is that really still successful?  They've just launched some discounts to it?

And here's their update:

Quote

VRL considers that the new pricing/ticketing and marketing strategy for the Theme Park division will be profit accretive however the impact for FY18 cannot be fully assessed until after the key annual pass renewal period of May/June.

Renewal rates are not going to be great unless they roll out some discounted VIP passes, so yeah, expect to get slaughtered on some of the expected revenue in May and June.

[New display name]

32 minutes ago, AlexB said:

i know the coast was quiet. i know the locals were 'scared off' etc.

its the choice of words i'm taking issue with - are they really arguing that the people who would normally have visited the parks were instead going to watch the games? ie: competition?

Or were the games an 'impact' to their visitation because people were staying away?

subtle, but important difference in meaning.

Did you consider normally the Coast is bustling around school holidays and the hotels are full of people wanting to go to theme parks and this was replaced with the hotels full of people wanting to go to game events.

@RossL is on the money too.

 

 

[Jamberoo Fan]

On 4/17/2018 at 3:46 PM, RossL said:

But the games didn't even impact their third quarter.

From the trading update, you linked in your post:

Quote

VRL’s Theme Parks on the Gold Coast have been impacted by low attendance numbers over the course of the Commonwealth Games and a wet March. 

They did impact.

On 4/17/2018 at 3:24 PM, AlexB said:

its the choice of words i'm taking issue with - are they really arguing that the people who would normally have visited the parks were instead going to watch the games? ie: competition?

Or were the games an 'impact' to their visitation because people were staying away?

It might have been both.

It should be pointed out firstly that VRTP are in a unique position - the VRTP Oxenford property was a Commonwealth Games venue and given the lack of car parking at the Studios (because it rarely needs it), it's fair enough that people may have been put off going to the theme parks at the Oxenford property out of a fear of not finding a car parking spot due to Commonwealth Games visitors possibly parking at the theme parks instead. Hence why VRTP took precautions. However, in the end, finding a car parking spot at the Oxenford theme parks during the Games was likely possible due to locals leaving the region for the Games duration.

VRTP (including SW) average attendance is 7000/day while Commonwealth Games is about 100,000/day. 22% (or 22,000 visitors/day) of Commonwealth Games average daily visitation & I believe 60% (or 4000/day) of average daily VRTP visitation is likely from the immediate Gold Coast-Tweed Heads region.

No doubt if it was the latter 'choice of words', 65% of VRTP visitation by locals would have disappeared (so reducing it to 1400 locals/day & 4400 visitors/day). Adding the earlier 'choice of words', it should have resulted in nearly no one going to the theme parks but if the 65% of the population who left the region for the past few weeks stayed instead, visitation should have declined to about 4250 visitors/day.

Basing it on the above 3 possibilities, the 1st possibility is the most likeliest - that is, because 65% of the Gold Coast-Tweed Heads region's population left for the Games duration (the latter 'choice of words'). The other 2 can be ruled out because locals did leave the region in the last few weeks and it's highly unlikely all VRTP parks would have been near-empty. Being tourist attractions, they would have been a reasonable amount of visitation (mostly from non-locals) to remain open even if it was less visitation. Otherwise, it would have been better to close for 2 weeks to save on operational costs.

On 4/17/2018 at 3:46 PM, RossL said:

Let's go back to what they changed, their pricing?  Is that really still successful?  They've just launched some discounts to it?

I haven't been following their pricing strategy closely but is the recently launched discounts you're referring to that 1 Groupon deal? 1 discount doesn't sound like much to say they got their strategy wrong.

On 4/17/2018 at 3:46 PM, RossL said:

Renewal rates are not going to be great unless they roll out some discounted VIP passes, so yeah, expect to get slaughtered on some of the expected revenue in May and June.

Currently, the future of Gold Coast theme parks are in Gold Coast residents' hands - do they want cheaper tickets resulting in likely lower quality parks or more expensive tickets resulting in higher quality parks? Just don't take the parks for granted. The best outcome from this new pricing strategy is if it brings in more customers, resulting in lower in-park costs (such as upcharges & food and beverage). However, this is unlikely. The chances of success would improve if they did solid marketing towards non-local audiences however in the current economic environment, it would be difficult to achieve a success in this. Hopefully, they could at least try to do some proper non-local marketing to test the waters (It's been a while since they've done any significant non-local marketing).

DC Rivals HyperCoaster would've been the perfect opportunity to return to targeting these markets but based on how much marketing I've seen (none), that opportunity has well and truly past (at least for interstate visitation). What better way to encourage non-local visitation than promoting the Southern Hemisphere's only hypercoaster? And I doubt the Commonwealth Games will help significantly particularly since they didn't do non-local marketing in the past couple of weeks.

It's not a guarantee that they will lose heaps of revenue. The next best outcome is if Gold Coast residents don't take the parks for granted and accept the new pricing strategy. If they in general can't afford it, fair enough but if they take the parks for granted, the parks quality will lower to their detriment. Accepting the new pricing strategy will allow the parks to gain more overall revenue to spend on improving the parks including adding more frequently higher quality attractions & possibly lowering in-park costs.

All other possible outcomes would mean in-park costs would increase due to less attendance. Less attendance would mean, instead of expansion, more older attractions being replaced to ensure capacity adequately meets attendance. However, expansion could be an option if they can successfully increase attendance from an increase in non-local visitation & new higher quality attractions could be added more frequently if they gain higher overall revenue.

The worst case scenario is if they get both less renewals & less revenue as that would mean they would lose more overall revenue, which would pretty much mean a return to discounting resulting in new attractions being built less frequently or if frequently, lower in quality. Otherwise, in the far future, the parks might as well have a 'free entry, pay per ride etc' pricing strategy instead and that would mark an interesting milestone in the history of Gold Coast theme parks. The outcome of this change in pricing strategy & the parks' reaction to that outcome could be the turning point in Gold Coast theme park operations.

[DaptoFunlandGuy]

8 hours ago, Jamberoo Fan said:

From the trading update, you linked in your post:

They did impact..

I think you missed the point.

GC2018 went from April 4-15. No part of the Commonwealth Games was in the 3rd quarter (which is January to March)... so there is no way to say the actual games impacted their third quarter.

[joz]

I'd have thought lower attendance during the week of the games would've been pretty well offset by studio hire for last 6 months and/or being gifted a whole new Sound Stage that they didn't have to pay for.

 

The reality is you are going to take a hit when trying to readjust the market. It's a pity that Village Roadshow is in a mess because that affects massively how much they can ride it out. I've said about pricing that they should have kept the lower price point except added block out dates in addition to the price hikes as part of the ween people off the cheap tickets process.

 

The weather is beyond their control, but that happens. The big story to me is they've lowered the SW one day admission ticket. That park's failure is 100% their fault. Oh but they have a plan, they're going to relocate the ride from another neglected vrtp property to it which will apparently help somehow?

Edited April 18, 2018 by joz

[MickeyD]

1 hour ago, joz said:

 

The weather is beyond their control, but that happens. The big story to me is they've lowered the SW one day admission ticket. That park's failure is 100% their fault. Oh but they have a plan, they're going to relocate the ride from another neglected vrtp property to it which will apparently help somehow?

Did I miss something @joz? Surfrider relocating to SW?

[DaptoFunlandGuy]

i was thinking the same thing...

[joz]

Rumours have been flying around for years, the grapevine says still on the cards. Still I don't know as many grapes as I used to so pinch of salt lol

[New display name]

If the rumours are true, Village are doing a good job bluffing everyone with a closing an opening date shown for maintenance this year.

[Jamberoo Fan]

On 4/19/2018 at 8:21 AM, AlexB said:

I think you missed the point.

GC2018 went from April 4-15. No part of the Commonwealth Games was in the 3rd quarter (which is January to March)... so there is no way to say the actual games impacted their third quarter.

Thanks. For some reason, I kept thinking the 3rd quarter was January to April and couldn't figure out how @RossL was claiming the Commonwealth Games didn't impact the 3rd quarter.

Either way, the trading update wasn't just about the 3rd quarter. According to the trading update, it was about the entire July 1st 2017 to March 31st 2018 period, which still excludes the Commonwealth Games:

Quote

Village Roadshow Limited (ASX:VRL) (“VRL”) today announced a trading update based on the 9 months to 31 March 2018.

Taking the rest of the trading update out of that context though makes it sound like it was really a trading update for the same period but up to the 17th of April 2018, which includes the Commonwealth Games.

[RossL]

Well that is because management are trying to avoid blaming themselves and making up rubbish.

If things went well, it would be their wonderful management (not the wonderful weather or the record number of tourists visiting the Gold Coast).  And because things haven't been great, blame the weather and blame the games which weren't even in the period.

 

[aaronm]

15 hours ago, RossL said:

If things went well, it would be their wonderful management (not the wonderful weather or the record number of tourists visiting the Gold Coast).  And because things haven't been great, blame the weather and blame the games which weren't even in the period.

Pretty much this. They've spent the last 3 years blaming the weather, then Dreamworld, then the weather and Dreamworld, now the Games for ongoing lacklustre results. Share price has taken a massive dive ($4 in January, now $2.40) because investors have lost confidence in the current management to deliver a decent profit (let alone start paying dividends again).

IMO the 9 months of downtime for WWF and current state of SDSC speak volumes about VRTP's ability to properly manage their assets. Too early to tell what the demand for Topgolf is going to look like but if that flops the company will be in an extremely sorry state.

[DaptoFunlandGuy]

22 hours ago, Jamberoo Fan said:

Thanks. For some reason, I kept thinking the 3rd quarter was January to April and couldn't figure out how @RossL was claiming the Commonwealth Games didn't impact the 3rd quarter.

Either way, the trading update wasn't just about the 3rd quarter. According to the trading update, it was about the entire July 1st 2017 to March 31st 2018 period, which still excludes the Commonwealth Games:

Taking the rest of the trading update out of that context though makes it sound like it was really a trading update for the same period but up to the 17th of April 2018, which includes the Commonwealth Games.

Pedant.

[New display name]

On 4/19/2018 at 10:29 AM, MickeyD said:

Did I miss something @joz? Surfrider relocating to SW?

 

On 4/19/2018 at 10:50 AM, AlexB said:

i was thinking the same thing...

 

On 4/19/2018 at 10:52 AM, joz said:

Rumours have been flying around for years, the grapevine says still on the cards. Still I don't know as many grapes as I used to so pinch of salt lol

 

On 4/19/2018 at 11:09 AM, Skeeta said:

If the rumours are true, Village are doing a good job bluffing everyone with a closing an opening date shown for maintenance this year.

And once again Surfrider re-opening date from maintenance has been removed.     One could say if it was to be moved why leave it on SW web site.

[joz]

The problem is the park doesn't have a headline act. There's no ride where you say 'You MUST go to SW to go on that ride'. Nothing there captures the public imagination in the way a Tower of Terror or Rivals does. Jet Rescue and Storm are both decent but not enough to visit the park for; ultimately they are filler. Surfrider if it moved would just be more of the same, filler. But worse than that its an old ride so not even something new. Worse than that its closed 6 months of the year. Worse than that it has a 140cm height requirement in a park aimed at small kids.

 

I don't know if they're still thinking of moving it, but by the time you move it and set it up properly it'll end up costing a few million anyway. May as well spend that on filler which is new and more appropriate for the park. Least something actually new might drive attendance.

[Levithian]

Need to point out its not village theme parks doing the reporting, its roadshow. So that includes all the other divisions too (cinema chain, distribution, production, etc).

Theme parks are never going to claw back 15-20 million in a year when the film production and distributor side has been slow since the last big development (aqua man?).

[Brad2912]

It’s only been slow because as soon as Aquaman bumped out GOLDOC took control of the entire studios for the Comm games. Believe it is handed back over to VTP from today being 1st of May

[themeparkaddict]

I think moving Surfrider is a good decision considering it is closed most of the year. One of the problems with Surfrider though is that it's ride time is too short and load times are long. 

[DaptoFunlandGuy]

17 hours ago, Brad2912 said:

It’s only been slow because as soon as Aquaman bumped out GOLDOC took control of the entire studios for the Comm games. Believe it is handed back over to VTP from today being 1st of May

Surely GOLDOC would've needed to pay market rates for taking over the studios though?

[Brad2912]

7 minutes ago, AlexB said:

Surely GOLDOC would've needed to pay market rates for taking over the studios though?

I think it was a condition in the government paying for sound stage 9... that the studios would be handed over entirely for the games. Bit of a contra deal