Theme Parks Extend Pandemic Rebound
Most major U.S. theme park operators reported sustained recovery from early pandemic shutdowns in their latest quarterly earnings calls, with SeaWorld Entertainment looking to revive long-stalled plans to add hotels to capitalize on growing crowds.
Location and other details are yet to be revealed, but SeaWorld CEO Marc Swanson told analysts Feb. 28 that the Orlando, Florida-based operator of 13 U.S. parks now expects to have its first hotel open in 2025 and a second in 2026. Site reviews are ongoing “for additional hotels across our portfolio,” Swanson said.
SeaWorld Entertainment reported total attendance of 4.9 million in the fourth quarter of 2022, down 16,000 from a year earlier but 5.1% ahead of pre-pandemic 2019’s fourth quarter. Total quarterly revenue hit a company record $390.5 million, up 5.3% from a year earlier and 31% from 2019, and full-year 2022 revenue of $1.7 billion was up 15.1% from 2021 and up 23.8% from 2019, helped by new roller coasters.
Full-year 2022 attendance of 21.9 million was down 8.6% from 2021 but declined just 3% from 2019. Theme parks are big generators of nearby hotel and retail demand outside their gates, and SeaWorld is now looking for the added revenue boost that comes from on-site hotel bookings already seen by rival operators including Disney, Universal and Cedar Fair Entertainment.
Most of the major U.S. operators are seeing profits crimped by supply and labor inflation and facing lingering staffing shortages, though attendance and revenue are on a roll as people spend more at theme parks with pandemic capacity and other restrictions subsiding.
The lone exception to the current high-performance picture is Arlington, Texas-based Six Flags Entertainment, which is struggling to win back customers at its 27 parks after moves to raise gate prices and cut down on promotional discounts.
Housing Affordability Worsens
Rising interest rates are adding more challenges to what was already a widespread housing affordability crisis, with nearly three-quarters of U.S. households unable to afford the median-priced new home now going for more than $425,000, according to the National Association of Home builders.
The trade group reported March 2 that housing affordability now stands at a 10-year low, due largely to a dearth of construction of units geared to the “missing middle” of the income spectrum. This is especially problematic in the multifamily market, where construction of medium-density units including townhouses and duplexes has remained flat for the past three years.
The trade group noted interest rate increases of the past few weeks could further worsen affordability if they persist, with an estimated 1.28 million households priced out of the market for a new median-priced home when rates rise just a quarter-point from 6.25% to 6.5%. Another 1.29 million are priced out when rates hit 6.75%. Some nationwide lender surveys showed 30-year mortgages averaging closer to 7% for the week ended March 2.
Builders Oppose Union Rights Bill
Building and development organizations are among business groups opposing a revived push for federal legislation that would make it easier for independent gig workers to unionize and set enforceable timelines for negotiations to begin between unions and employers that otherwise aren’t unionized.
A similar measure was passed by the U.S. House in 2021 but failed to move forward in the Senate. A revised version of the Protecting the Right to Organize (PRO) Act was introduced Feb. 28 by a bipartisan group of lawmakers including Sen. Bernie Sanders of Vermont, Rep. Bobby Scott of Virginia and Rep. Brian Fitzpatrick of Pennsylvania.
Supporters including labor unions said legislation is needed to strengthen worker rights and the ability of workers to unionize by removing hurdles and loopholes that prevent unionization. It is opposed by developers and contractors, many of which employ large numbers of independent workers and subcontractors on projects.
The Associated General Contractors of America trade group said in a statement the proposal could spur labor unrest and “harm our economy at a time when many employers are struggling to cope with inflation, supply chain disruptions and labor shortages.” The National Association of Home Builders said sweeping revisions in the proposal “would negatively affect the construction labor market at a time of critical skilled worker shortages.”
Labor Department data shows just over 10% of U.S. workers were union members in 2022, with the percentage falling for the past several decades. But there has been a rise in unionization over the past year at large companies such as Apple, Starbucks and Amazon.
