Despite guest surge Dreamworld operator Coast Entertainment Holdings' profit impacted by bad weather and rising costs

Despite a rise in guest numbers to its Gold Coast attractions Dreamworld and WhiteWater World over the past six months, Coast Entertainment Holdings has revealed that rising costs and severe disruptions from storms over the Christmas holidays will result in a decrease in its underlying profit for the first half of the 2023/24 financial year.

Prior to the storms hitting South east Queensland over the Christmas holidays, Coast Entertainment Holdings (formerly Ardent Leisure) says attendances at Dreamworld and WhiteWater World were up 22.9% for December.

However, the Sydney-based company was forced to close Dreamworld for three days and WhiteWater World for five days in the aftermath of the storms which caused widespread damage across the region and local power blackouts.

In a trading update issued to the ASX on 16th January, Coast Entertainment advised “as a result, 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 FY24.”

With the company yet to reveal the financial cost of the damage to its properties as it is still in the process of working with insurers, the statement added “notwithstanding the adverse weather events, macroeconomic headwinds, and the business cycling a strong 1H23, the Theme Parks & Attractions business has reported continued attendance growth, up 6.5% compared to the prior period.

“This was driven by increased promotional activity throughout the period and the opening of new attractions in the new Kenny and Belinda’s Dreamland kid’s world.”

The company noted that its newest attractions, Dreamworld Flyer and Wiggles Big Red Boat coaster, will benefit the current half after opening in late December.

On the revenue front, an unaudited $43.5 million reported by the company is in line with the previous corresponding period and 12.5% above the FY20 first half immediately before COVID.

This is despite the aggregate value of ticket sales rising 11.8% compared to a year earlier and hitting their highest level since 2015/16.

The flat revenue result is due to a change in the sales mix and its impact on revenue recognition. Coast Entertainment also points out that the previous corresponding period benefitted from $2.4 million of annual pass revenue that filtered through the Queensland Government’s post-COVID stimulus packages.

Coast Entertainment, which also operates the SkyPoint observation deck at Q1 in Surfers Paradise, has recorded an increase in international visitors to its attractions over the past year although they are still ‘well below’ historical levels.

It added “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.

“Further recovery in international visitation in the coming periods, particularly from Asian markets, presents upside for the business.”

Amid the growth in visitor numbers, Coast Entertainment says the gains have been achieved against a backdrop of consumers tightening their belts and a decrease in interstate travel to the Gold Coast as more Aussie holidaymakers head for offshore destinations.

Coast Entertainment is forecasting positive EBITDA for its Theme Parks & Attractions business, although lower than the FY23 December half due to higher costs, most notably wages and utilities. The company says SkyPoint has traded in line with expectations.

The company has reined in cost increases to below inflation, aided in part by head-office restructuring and a reduction in directors’ fees.

The rebranding of Ardent Leisure as Coast Entertainment Holdings took effect as of Monday 18th December.

Images: Dreamworld latest attraction, The Wiggles-themed Big Red Boat Coaster opened just in time for Christmas (top) and the company introduced new branding at its SkyPoint attraction at the beginning of December last year (below).