Six Flags Is Still Shopping for Small Theme Park Players

Even as Six Flags Entertainment is making deals around the world, the regional theme park operator is looking to buy some assets closer to home.

During a call with analysts Wednesday, CEO Jim Reid-Anderson said the company wanted to accelerate a previously announced strategy to buy water parks and theme parks near properties it already owns. It acquired and rebranded two water parks, in California and Mexico, last year.

"There are dozens of parks within reasonable driving distance of our existing portfolio in the U.S., and these parks generate hundreds of millions of dollars of revenue," he said. "As with the two recently acquired parks, we will seek to acquire water parks and theme parks at low prices and then realize substantial revenue and cost synergies."

Part of the reason for adding nearby parks is to give attendees reasons to keep coming back — to upgrade from one-time visitors to season pass holders who have access to multiple parks, or members who pay more for extra benefits such as early entry, free photos, or food deals.

Six Flags, which has 20 theme and water parks around North America, recently started a new push for its membership program, adding four tiers that each cost a little more and offer extra benefits such as early admission, line skipping, parking, discounts, and more.

While the company has offered some type of membership for a few years, the progressive levels are new — as is the drive to sell visitors on a more costly membership.

"We're laser focused on converting folks to membership, whether they're single-day visitors or season pass holders," Reid-Anderson said. "And so it is a company-wide, park- specific, detailed approach to make sure that whether it's online or live in-park, we convert folks. And we have been seeing a noticeable change in the way that we have been converting members."

The California and Mexico theme parks that recently got nearby water parks turned those additions into record season pass sales, executives said.

Six Flags released its first-quarter earnings results late Tuesday but held the analyst call Wednesday morning. Revenue jumped 30 percent to $129 million and attendance was up 27 percent, but the company still reported a net loss of $62 million in a three-month stretch when most parks were not yet open.

The company also announced Tuesday that it was working with a partner to develop three more parks in China, bringing the total number of locations underway in that country to 10.

Reid-Anderson said he isn't giving a number for how many parks he expects to have in China ultimately. But he said Six Flags and its partner, Riverside Investment Group, has more in mind due to the demographics of China and relatively low number of entertainment options there.

"So a regional strategy in China makes a lot of sense," he said. "And we will not be stopping at 10 parks, I can assure you that, and our partner is very excited about being able to expand further with us."

William Blair analyst Ryan Sundby asked about reports that China's National Development and Reform Commission had expressed alarm about widespread theme park development and suggested stepped-up government regulation.

"Any kind of color or commentary there if that impacts you guys or how that can impact the industry overall?" he asked.

Reid-Anderson said that while there have been guidelines about development issued, there is no ban on new theme parks.

"They're mostly focused on the real estate aspects of theme park development but also touch on enhanced theme park standards," he said. "They're not laws, but they do portend greater regulation of theme park development in line with what we have in North America or Europe or around the world generally."

Reid-Anderson said Riverside has thus far been successful at navigating China's regulations and will stay on track.

"And I think it's really good to have regulations that makes sense," he said. "So right now, barring some other decision that's made, all our parks are progressing nicely towards their anticipated opening dates. And hence we've announced three more parks. We're very confident."

And beyond China, Reid-Anderson said, the rest of Asia, Saudi Arabia, and Latin America also hold potential for expansion.

"So I'm not going to comment and tell you we're going to build X number of parks or identify partners, but we are working with multiple people and my sincere hope is that we can continue to make new announcements as we go forward," he said.