主题公园：“免下车目的地”可能是复苏的关键

1、Equity Research Americas | United StatesTheme ParksHitting the Road: Drive-to Destination May Prove Key to a RecoveryTravel & Leisure | InitiationWe are initiating coverage on Cedar Fair (FUN) with an Outperform rating and $37 target price (10 x 2021E EBITDA), Six Flags (SIX) with a Neutral rating a

2、nd $16 target price (10 x 2021E EBITDA), and SeaWorld (SEAS) with a Neutral rating and $13 target price (8x 2021E EBITDA). While the impact of the COVID-19 pandemic presents an unprecedented challenge for theme park operators, we think the space will recover in 2021 and beyond. In our view, the them

3、e park industry benefits from the shift in consumers preferences towards experiences over goods, especially among millennials, who are now having children and need a fun, affordable andfamily-friendly entertainment alternative. With high barriers to entry (a regional park can cost$400mm to construct

4、), we see limited supply growth, which benefits existing players, and the opportunity for industry M&A as tuck-in acquisitions can provide meaningful synergies given the robust season pass programs of larger operators. For consumers, a theme park provides a compelling value proposition, costing less

5、 than other leisure alternatives (e.g., sporting events) and lasts much longer. The value proposition is even more relevant for season-pass holders, who typically return to a park 3-4x per season. Season pass programs have grown significantly over the past few years, adding a layer of stability into

6、 a business that is dependent on a relatively short operating season.Cedar Fair: We think FUN is one of the most interesting names in our coverage universe. We forecast FUN will generate $456mm of EBITDA in 2021. We believe FUN can outperform peers in this environment, and see upside to consensus es

7、timates, given: (1) the drive-to nature of the product, (2) robust early season pass sales adding a layer of stability, (3) later opening dates, particularly for some of their largest parks, (4) a business that is not normally run at max profitability, making FUN more able to absorb hits to the topl

8、ine and (5), recent liquidity and cost saving measures have given FUN more runway in a zero revenue environment.Six Flags: SIX is not the same company it once was, in our view, with management turnover and long-term profitability targets forcing the company to potentially sacrifice long-term sustain

9、ability for near-term gains. Prior to the impact of coronavirus, a mismanaged season pass program and significant reinvestment costs already hampered 2020 numbers. While the impact from coronavirus is difficult to target exactly, we forecast 2020 EBITDA of $227mm driven by a 40% attendance decline d

10、ue to coronavirus closures and greater-than-expected cost rigidity in the P&L, offset by a 50% reduction in advertising spend.SeaWorld: As the coronavirus situation develops, we think SEAS is in a more difficult position than peers, given its reliance on international and other “fly-to” guests, as w

11、ell as a more rigid cost base. In total, we forecast EBITDA will decline from $457mm in 2019 to $163mm in 2020. Longer term, SEAS faces significant competitive capital from peers, which we show has historically hurt attendance.Key Risks: Theme park operators are sensitive to the health of the consum

12、er, weather patterns, and competition from other operators. Further, the coronavirus is a rapidly developing situation, with the potential fallout somewhat unknown.Research AnalystsBenjamin Chaiken212 325 2585 HYPERLINK mailto:benjamin.chaiken benjamin.chaikenBen Combes, CFA212 538 2383 HYPERLINK ma

13、ilto:bes besSarah Murray212 325 2282 HYPERLINK mailto:sarah.murray sarah.murrayDISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business w

14、ith companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that couldIndustry OverviewExecutive SummaryWhile COVIID-19 and the subsequent park closures represent an unprecedented headwind for the industry, we expect the space w

15、ill recover in 2021 and beyond. Given months-long park closures we expect 2020 attendance to fall by 43% for FUN, 40% for SIX, and 54% for SEAS. Once parks reopen, we expect regional parks to outperform, as they offer easy geographic access (most parks are “drive-to” day trip oriented) and are a rel

16、atively inexpensive leisure alternative. Destination parks (e.g., Disney, SeaWorld, Universal Studios) may take longer to ramp given their reliance on international and fly-to guests, and are generally at a higher price point.The following long-term drivers will be the keys to a recovery, in our vie

17、w: (1) a shift in consumers preferences towards experiences over goods, especially among millennials, (2) high barriers to entry (a full scale theme park requires $300mm-$500mm in capital) should support longer-term demand and pricing trends, (3) in times of economic uncertainty the theme park space

18、 provides a compelling value proposition for consumers, relative to other leisure alternatives (e.g., sporting events), with operators potentially benefiting from a trade down dynamic, (4) we think the operations are more stable than in years past, with season pass programs growing significantly in

19、use, adding a layer of stability into a business, (5) the industryis less cyclical than some may think (we are not comparing this recession necessarily to 08/09, but note park industry held up well in 08/09, and was one of the better performing categories in consumer discretionary spend coming out o

20、f the last recession). Below we lay out these long- term drivers in more detail.Of the three main operators, we expect FUN will be able best capture these tailwinds and outperform peers, and as such it is our only Outperform-rated theme park, given: (1) the drive- to nature of the product, (2) robus

21、t early season pass sales adding a layer of stability, (3) the later opening dates, particularly for some of their largest parks, and (4) a business that is not normally run at max profitability, making FUN more able to absorb hits to the topline.Impact from COVID-19Coronavirus presents an unprecede

22、nted challenge for the theme park industry, but after talking to management teams, we are confident that the industry will be able to adapt to the new challenges it may face (potential for increased sanitation, temperature checks, lower capacity on rides, etc.). When demand does return we think regi

23、onal drive-to parks will perform well. This view is based on industry contacts which suggest regional parks, which commonly serve the local community, should have more demand vs. destination parks that may require a flight.Leisure industry contacts we have spoken to in other sectors hold a similar p

24、osition on drive vs. fly experiences. This view also coincides with Credit Suisse aerospace analyst Robert Spingarn who suggests that consumers will likely prefer short-haul flights vs. international.Experiences over GoodsThis is an unprecedented time for travel and leisure, with months long suspens

25、ions of operations seen across the industry. We believe that long term, consumers shift away from goods and toward experiences will be the driving force behind a recovery. The long-term trend away from spending on goods and towards experiences continues to push growth in travel and leisure, and in p

26、articular theme parks. A 2019 survey by Momentum Worldwide (a large advertising agency) shows that 76% of all consumers, not just millennials, prefer experiences over material items. Further, our analysis of Personal Consumption Expenditures shows that since 2012, spending on services has far outpac

27、ed spending on goods (which have in fact contracted over the time period). Theme parks as a category have kept up with this trend, slightly outpacing other recreational services, as laid out below.Total ServicesRecreational Services Amusement ParksTotal GoodsTotal PersonalConsumption ExpenditureAver

28、age Annual Personal Consumption Expenditure Growth, 2012 -201920%15%10%5%0%-5%-10%-5%10%15%16%17%Figure 1: Spending on Experiences Has Outpaced Spending on Goods, Including for Theme ParksSource: Bureau of Economic AnalysisFavorable DemographicsThe consumer trend away from goods and towards experien

29、ces is particularly true for millennials. As more and more millennials start families, we think theme parks offer an affordable, fun, and family-friendly entertainment option that will continue to drive attendance. Further, we believe the intellectual property that theme parks use to brand their par

30、ks also creates a “nostalgia factor” which is an added draw for a millennial guests. For example, Cedar Fair has the Peanuts franchise incorporated into many of their experiential events, Six Flags has several rides and attractions based on DC Comics, and SeaWorld has Sesame Street attractions as we

31、ll as a stand-alone Sesame Street park. As shown in the 2018 Morning Consult Survey below, millennials, both parents and non-parents alike, were more interested in attending a theme park than adults as a whole, with 75%+ being interested in attending a theme park in the next twelve months.Interested

32、Not InterestedMillennial Non-ParentsMillennial ParentsAll ParentsAll Adults0%30%60% of Respondents Interested in Attending a Theme Park in the Next 12 Months90%18%21%36%36%59%58%75%78%Figure 2: Both Millennial Parents and Non-Parents are Very Interested in Attending a Theme ParkSource: Morning Consu

33、lt Poll of 2,201 US Adults, June 2018High Barriers to Entry with No Supply GrowthThe U.S. theme park business is relatively mature and has seen almost no supply growth in recent years. Barriers to entry are very high for a number of reasons, most significantly land costs, local zoning restrictions,

34、transportation infrastructure, and accessibility of capital, as well as the fact that many of the most desirable markets already have one or multiple facilities of varying scale.Remarkably, while the U.S. theme park industry experienced a pullback in attendance demand during the Great Recession, the

35、 business quickly got back on track, surpassing 2007 attendance levels by 2010. In 2018, the top 20 amusement parks in North America hosted approximately 157mm visitors, up 4% y/y. While we are still awaiting 2019 results for the industry, we note that SEAS, SIX and FUN all saw year-over-year attend

36、ance growth in 2019.While smaller parks designed for a more targeted audience could be developed, facilities on the magnitude and impact of a Six Flags or Cedar Fair property require at least 100-200 acres,$300mm-$500mm of capital, and at least three years to construct. Given the considerable risk a

37、nd long-term investment horizon, not to mention the many obstacles in front of a builder (e.g., zoning regulations), we are comfortable that domestic theme park supply growth should remain low for the foreseeable future. Looking at the current stock of SIX, FUN, SEAS as well as other private assets,

38、 a majority of the major parks in the United States were originally developed in the 70s and 80s; highlighting that most of the supply growth within the sector is behind us. More recent developments have had a very poor track record of success. One of the few sizable regional park projects developed

39、 in recent years was The Schlitterbahn waterpark, which opened in July 2009 in Kansas City, Kansas, for $163.5mm; however following a tragic accident in 2018, this park has since closed.Generally, most US markets are currently served by mid-sized and large-sized parks, with the exceptions including

40、Las Vegas (the Strip tried this in the early 90s), Seattle (rain), as well as Phoenix (heat), and much of this has to do with climate or lack of demand. For example, an originally estimated $200mm theme park (Grand Texas Theme Park) near Houston has been in the planning stages since 2013, experienci

41、ng several setbacks along the way, and has yet to open completely. It will be interesting to see how this project progresses, particularly as the former Six Flags Astroworld closed in 2005 (after operating since 1968) and the market has essentially been without a major park since.Network effect coul

42、d drive M&AMoving forward, we think M&A will be a larger theme in the space. While we dont expect any of the public operators to take on large new unit growth projects, we do think there are numerous opportunities for tuck-in acquisitions of smaller operators. This trend is not a signal of slowing c

43、ore growth, but we think a function of growing season pass adoption in the industry. For example, season pass sales as a percentage of attendance has gone from 44% in 2012 to 63% in 2019 for SIX and 40% in 2012 to 53% in 2019 for FUN. With a robust season pass program in place, we think it makes fut

44、ure deals easier to calculate. For example, Cedar Fair recently acquired two Schlitterbahn waterparks in Texas, and post synergies we estimate the deal will imply a 13x EBITDA multiple. Heading into the 2020 season, FUNs early pass sales were up 40% y/y, prior to COVID-19s impact. Bottom line, we th

45、ink the acceleration in pass growth will aid future transactions. On a similar note, using an anecdote from our ski resort contacts, season pass acceleration also makes it harder to compete for standalone operators and incentivizes the desire to join a portfolio.Embedded Pricing OpportunityWe believ

46、e visiting a theme park is one of the best price/value offerings for the leisure consumer in the United States. When factoring in that the typical park is open for 10-12 hours a day during the season, this further highlights the value that parks provide consumers, even when factoring in likely expen

47、ditures on parking and food and beverage (F&B). This compares with sporting events or movie theaters, where the experience may only last two to four hours on average.40035030025020015010050036Cinemas101SIX114FUN127MLB140SEAS228NBA263NHL380Average Total Price for Four TicketsNFLFigure 3: Theme Parks

48、are Affordable Relative to Other Entertainment OptionsSource: NATO, Team Marketing, International Theme Park Services, Company DataIn prior years, the theme park business was extremely reliant on a discounted pricing model which was mainly attributed to the limited demand visibility. As an example,

49、Six Flags in the early 2000s is a good microcosm for how the industry has progressed. Prior to 2009, in our view, SIX mismanaged its capital allocation, spending too much of their capital budget at one park (e.g., building a high-end coaster), and then was forced to use discounting to incentivize en

50、ough visitation in order to earn a return on the initial investment. Given the short season, SIX never gave consumers a reason to pay main gate pricing, as incentives and discounts were widely available. Anecdotally, a can of Coke in the early/mid 2000s could be used to receive significant discounts

51、 which most consumers used before entering the park. With that said, we think management at all three public operators have been more studious in recent years in allocating capital, which has contributed to more stable pricing industry wide.Season Pass Adds StabilityWhile the theme park industry has

52、 offered season pass products historically, in recent years companies have focused on growing this business. As mentioned previously, season pass as a percent of attendance has gone from 44% in 2012 to 63% in 2019 for SIX and 40% in 2012 to 53% in 2019 for FUN. Similar to the ski industry, which has

53、 seen success with season pass products, SIX/FUN/SEAS are emphasizing the growth of this concept at its parks to help mitigate the impact of weather, particularly during a short season.2019201820162014201235%30%39%40%41%45%46%50%50%53%FUNs Season Pass Holders as % Of Attendance55%Figure 4: Season Pa

54、ss Programs Have Expanded Across the IndustrySource: Company data, Credit Suisse estimatesPass members tend to visit more, so per capita spending is lower; however, the absolute spend ends up being higher. Depending on when purchased, a season pass may cost $90+, and we estimate it is generally used

55、 3-4x in a season based on historical averages. More recently, operators such as SIX have begun to transition from strictly season pass sales, to membership options, where customers are billed a low monthly charge ($10-$15) and the product is automatically renewed (unlike 1x season pass which useful

56、 life ends at the end of the operating season). For SIX, we think there are 2x the number of season pass holders vs. members. In theory, we believe memberships have a positive ramification on the P&L by reducing customer churn. We think season pass sales are beneficial for operators, and provide mor

57、e value for consumers; however, as we discuss later there is a balance, in our view, that needs to be protected when pricing single-day ticket products vs. multi-use products in order for all segments of the customer base to have an appropriate price point.For season pass revenue recognition, operat

58、ors use a historical average number of visits per season by pass holder (3-4x), then use that figure to release revenue as the person visits. For instance, if the average number of visits was four, the company would release 25% of the deferred revenue each visit. If the customer only visited three t

59、imes, the remaining 25% would be released in Q4. If a customer visited a fifth or sixth time, there is no revenue recognition for those visits.SEASFUNSIX40%35%30%40%50%45%53%60%55%63%65%Season Pass Holders as a % of Attendance, 2019Figure 5: SIX Generates the Largest Portion of Its Attendees From Pa

60、ss-HoldersSource: Company data, Credit Suisse estimatesResiliency in a RecessionWhile theme parks are a cyclical industry dependent on the health of the consumer, we note that during the 2008 recession, consumers spend at theme parks fell just 2.5%, performing much better than many other consumer go