Coast Entertainment warns of headwinds from inflation and Gold Coast wild weather
The operator of Dreamworld and WhiteWater World warns of a financial hit from recent storms, plus headwinds from inflation, interest rates, and Aussies snubbing the Gold Coast for trips abroad.
The damaging storms that forced the closure of Dreamworld and WhiteWater World on the Gold Coast over Christmas and New Year has left a financial hole for the owner of the theme parks.
Coast Entertainment, formerly known as Ardent Leisure, has also told investors that the closures has hurt its performance as the group faces a barrage of other headwinds from high inflation, interest rates and more Australians opting for an international holiday at the expense of the Gold Coast.
In a trading update on Tuesday, Coast Entertainment said that the two damaging storm over its peak trading period had resulted in the two theme parks closing for up to five days, and seen significant cancellations of travel and accommodation bookings into the Gold Coast.
“The adverse impact on the trading performance of the business has been felt beyond the days of closure, with most of this falling into the second half of fiscal year 2024,” the company said in a statement.
“Management is currently working with its insurers to assess the total financial impact and progress associated insurance claim.”
Queensland premier Steven Miles on Monday launched a $2.5m program offering 50,000 $50 vouchers to support tourist operators in the wake of severe weather.
Coast Entertainment reported that the December half had seen more challenged economic conditions, with further interest rate rises and continuing high inflation weighing on consumer discretionary spending.
In the prior period, the group said that the Gold Coast had benefited from pent-up demand, but was now experiencing a moderation in interstate travel due to cost of living pressures and a preference for international holidays.
The Theme Parks & Attractions business anticipated a positive underlying earnings result, but lower than the prior period, due to cost pressures driven by the high inflationary environment, particularly in labour and utilities.
Attendance growth was up 6.5 per cent on the prior period from increased promotional activity throughout the period and the opening of new attractions in the new Kenny and Belinda’s Dreamland kid’s world. Prior to the first storm at Christmas, the parks recorded a 22.9 per cent uplift in visitation for the peak month of December.
Unaudited results show that during the December half, aggregate value of ticket sales was up 11.8 per cent — the best since the fatal Rapid Rivers disaster during the 2016 fiscal year. As a result of the change in sales mix and its impact on revenue recognition, its first half unaudited revenue was $43.5m, broadly in line with the prior period.
Coast Entertainment, which also operates the SkyPoint atop of the Q1 tower on the Gold Coast, said that international visitation was gradually recovering, but remained well below historical levels during the period.
“It is important to note that despite the ongoing recovery, the mix of international visitation is substantially different from pre-pandemic performance, with Asia visitation still representing a small fraction of prior business,” Coast Entertainment said.
“Further recovery in international visitation in the coming periods, particularly from Asian markets, presents upside for the business.”
Shares in Coast Entertainment, which changed its name last month, were unchanged at 42c in a lower market in afternoon trading on the ASX.
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