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As Six Flags Entertainment sees it, the world outside North America could use some more theme parks. And the regional theme park company from Texas is ready to do its part.
President and CEO John Duffey said during an earnings call Wednesday that projects in China and Dubai have both broken ground and are moving toward mid- to late-2019 openings. The company announced this week that it had signed final agreements for another two parks in China that are expected to open in 2020.
“Six Flags has a unique brand that resonates with people around the world and we are just beginning to realize its potential,” he said. He added that “very promising” discussions are ongoing in several other countries with more deals expected this year; the company has met with Saudi Arabian officials to talk about the possibility of opening parks there.
“We are able to scale our organization to the opportunity, and because the parks require no direct financial investment on our part, international park openings are only limited by our ability to find new partners and suitable sites,” Duffey said.
He said North America — where the company operates 18 parks — represents less than 7 percent of the world’s population but almost half of global theme park attendance.
“The opportunity to expand our brand internationally and capitalize on the underpenetration of theme parks outside North America is substantial,” Duffey said. “We expect international licensing to be a significant growth driver for many years to come.”
Six Flags made $22.6 million in international revenue last year, about $6.2 million higher than the previous year, chief financial officer Marshall Barber said.
Still, that growth is not without setbacks. Executives said during the call that international licensing fees for the fourth quarter were down after problems emerged with a project in Vietnam that had been announced in March.
Barber said work has stopped and the company issued a notice of default to the partners, previously identified as NaVi Entertainment, for failing to fulfill its contractual obligations.
“We’re currently working with our partner to remedy the situation, and believe this is merely a timing issue,” Barber said.
Even if the deal with the current partners falls through, Duffey said Vietnam holds potential.
“Our hope is that we’ll get this project back on track, but if we don’t, we still view that as a great market and there are other partners we could aggressively pursue,” he said.
The comments about international plans came as the company reported higher attendance and revenues but lower profits for the fourth quarter of 2016 and for the full year.
Attendance increased to 30.1 million for the year, a new high, while full-year revenue increased 4 percent to $1.3 billion. Net income dropped 24 percent to $156 million due to non-cash compensation expenses. In the quarter, attendance increased 22 percent and revenue jumped 10 percent to $239 million.
Duffey said several factors drew more visitors to the parks: a higher number of people who have season passes or memberships and visit more than once; seasonal events meant to drive attendance in otherwise slow times; and the addition of virtual reality features to roller coasters.
“Our decision to include virtual reality with the price of admission was one of the many reasons so many people came to our parks,” he said.
This year, parks are adding new rides including a mixed-reality coaster that involves game play; a water coaster; dark rides; and free-fly roller coasters.
Duffey said the company is also testing Mardi Gras-themed events in Texas and Mexico over the spring to drive more attendance.
And he said there is still room to push ticket prices higher.
“We have continued to reduce discounts and have taken prices on all tickets up 3-5 percent annually over the last few years,” Duffey said. “We anticipate we will continue to grow pricing for years to come.”