• Theme Parks Rebound Despite Staffing Struggles, Housing Affordability Worsens, Consumer Sentiment De

    Theme Parks Rebounding Despite Staffing Struggles

    Most major U.S. theme park operators are enjoying the benefits of rising attendance over the past year, as visitors satisfy pent-up demand by buying tickets, food and merchandise at well above year-ago levels. That’s good news for neighboring hotels, stores and other businesses that depend on park traffic.

    But despite the higher revenue and profits, a recurring theme during the latest quarterly earnings season was that short staffing is preventing these parks from fully capturing the financial benefits of bigger crowds in the form of line control and sales at on-site stores and restaurants.

    “While staffing has improved from early in the year as shown by our higher labor hours in the third quarter compared to prior year, we are still not at optimal staffing levels,” Michelle Adams, chief financial officer at Orlando, Florida-based SeaWorld Entertainment, told analysts during a Nov. 9 earnings call. “We continue to suffer from staffing shortages and various roles across our parks at various times during the quarter, which among other things impacted our ability to fully capture park revenue.”

    SeaWorld Entertainment, which operates 12 U.S. parks under brands such as SeaWorld, Busch Gardens and Sesame Place, joined several rivals reporting staffing challenges simultaneously with significant year-over-year gains in park attendance, revenue and profits. Those included Cedar Fair, Disney and Comcast’s NBCUniversal division. SeaWorld reported a total of 15 days of closings due to Hurricane Ian that reduced visitor counts by about 90,000 at its Florida and Virginia parks in late September and early October.

    One exception to the rebound trend is Arlington, Texas-based Six Flags Entertainment, which reported a 21% annual drop in revenue and a 26% decline in net income from its 27 North American parks in its third quarter. Executives acknowledged that the company’s attendance and revenue have been stagnant since 2018, with crowds declining in the past year after it did away with several discounting programs, but said staff is now better able to handle those crowds.

    “Lower attendance has helped the company restructure the operations to take pressure off its understaffed parks,” Six Flags CEO Selim Bassoul told analysts Nov. 10. Cutbacks at Six Flags recently included a move to reduce hours at its Magic Mountain park near Los Angeles, traditionally a year-round venue that will now be closed Tuesdays through Thursdays for most of November and December and likely into 2023.

    Housing Affordability Worsens

    Housing affordability was already moving out of reach for many in several U.S. regions before the pandemic, and it has gotten worse during the past year from a combination of rising mortgage rates and high inflation.

    The latest tracking by the National Association of Home Builders and Wells Fargo found that affordability during the third quarter reached its lowest point since the Great Recession, with just 42.2% of new and existing homes sold nationwide during that period deemed affordable to families earning the U.S. median income of $90,000.

    “This marks the second consecutive record low for housing affordability in more than a decade, trailing the previous mark of 42.8% set in the second quarter,” the builders trade group said in a statement on its latest Housing Opportunity Index, tracking the affordability of monthly mortgage payments relative to national and regional median incomes.

    Under federal guidelines, housing is considered affordable if it costs no more than 30% of household monthly income for rent or mortgage payments, along with utilities. The trade group and Wells Fargo found the nation’s five most affordable large housing regions based on median incomes were Lansing, Michigan; Indianapolis; the Scranton-Wilkes-Barre area of Pennsylvania; Toledo, Ohio; and Syracuse, New York.

    The five least affordable large regions during the third quarter were all in California: Los Angeles; the Anaheim-Santa Ana region of Orange County; San Diego; the Oxnard-Thousand Oaks region of Ventura County; and the San Francisco Bay Area. Cumberland, Maryland was rated the nation’s most affordable small market, with 92.1% of homes sold in the third quarter being affordable to families earning the median regional income of $71,300.

    Consumer Sentiment Declines

    Rising prices helped send consumer sentiment back down after trending upward for the past few months, according to the latest findings from the University of Michigan’s closely watched national consumer surveys.

    Preliminary numbers released Friday showed the November sentiment index, deemed a gauge of consumer perceptions of the overall economy was at 54.7, with numbers above 50 generally indicating positive responses. That was down from 59.9 in October and 67.4 in November 2021.

    Respondents gave current economic conditions a rating of 57.8, down from 65.6 a month earlier and 73.6 a year earlier. Consumer expectations for the future rated a score of 52.7, down from 56.2 in October and 63.5 in November 2021.

    “Consumer sentiment fell about 9% below October, erasing about half of the gains that had been recorded since the historic low in June,” survey director Joanne Hsu said in a statement Nov. 11. “Instability of sentiment is likely to continue, a reflection of uncertainty over both global factors and the eventual outcome of the elections.”

    Hsu noted that in recent surveys, many consumers have spontaneously mentioned that their economic expectations will be influenced by election outcomes. Results from several U.S. elections, including races that will determine control of Congress, are still to be determined as vote counts are completed.

    Source: www.CoStar.com