Earnings Call Transcript - PRKS Q2 2023

Operator, Operator

Good morning, everyone, and welcome to the SeaWorld Second Quarter 2023 Earnings Conference Call. All participants are in a listen-only mode. After today’s prepared remarks, there will be an opportunity to ask questions. Please also note that today's call is being recorded. At this time, I'd like to hand the floor over to Matthew Stroud, Investor Relations.

Matthew Stroud, Investor Relations

Thank you, and good morning, everyone. Welcome to SeaWorld's second quarter earnings conference call. Today's call is being webcast and recorded. A press release was issued this morning and is available on our Investor Relations website at www.seaworldinvestors.com. Replay information for this call can be found in the press release and will be available on our website following the call. Joining me this morning are Marc Swanson, Chief Executive Officer; and Jim Forrester, Interim Chief Financial Officer and Treasurer. This morning we will review our second quarter financial results and then we will open the call up to your questions. Before we begin, I would like to remind everyone that our comments today will contain forward-looking statements within the meaning of the Federal Securities laws. These statements are subject to a number of risks and uncertainties that could cause actual results to be materially different from those forward-looking statements, including those identified in the Risk Factors section of our Annual Report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. These risk factors may be updated from time to time and will be included in our filings with the SEC that are available on our website. We undertake no obligation to update any forward-looking statements. In addition, on the call, we may reference non-GAAP financial measures and other financial metrics such as adjusted EBITDA and free cash flow. More information regarding our forward-looking statements and reconciliations of non-GAAP measures to the most comparable GAAP measure is included in our earnings release available on our website and can also be found in our filings with the SEC. Now, I would like to turn the call over to our Chief Executive Officer, Marc Swanson. Marc?

Marc Swanson, Chief Executive Officer

Thank you, Matthew. Good morning, everyone, and thank you for joining us. We are pleased to report another quarter of solid financial results despite the impact of significantly adverse weather, in-park venue closures and related disruptions due to construction delays, and a shift in the timing of the opening of new rides during the quarter. Our results during the second quarter further underscore the resiliency of our business, the effectiveness of our strategy and the tireless efforts of our outstanding team. Some combination of unusually hot and cold weather, rain and/or the fallout from Canadian wildfires impacted most of our markets during the quarter. In-park spending was impacted by the adverse weather and delays in construction projects resulting in prolonged closures of certain in-park facilities and other in-park disruptions during the quarter. Despite the unusual headwinds in the quarter, attendance still grew at certain of our parks and total per capita spending increased for the 17th consecutive quarter. During the quarter, SeaWorld Abu Dhabi opened, the first SeaWorld Park outside of the United States. We are really proud of this park. Happy to see attendance well-ahead of expectations to date and excited for what this park will deliver over time. I continue to be very encouraged by our group booking revenue trends, which are up significantly versus 2022 and 2019 and group bookings revenue to date through the first six months of the year already exceeds 2019 bookings revenue for the full year. I'm also very excited about our remaining summer events over the next few weeks and our planned Halloween and Christmas events, which have grown bigger and bigger over the years. And based on what we have planned we expect this year to be our best events yet. I want to thank all of our ambassadors for their efforts these past few months as we wrap up this summer season and head into our increasingly popular Halloween and Christmas events for the balance of the year. We are also thrilled to have recently received recognition from USA TODAY readers for having some of the best parks and attractions in the country. Aquatica Orlando was voted best outdoor water park in the United States. Our Mako roller coaster in SeaWorld Orlando was voted best roller coaster in the United States. Tidal Surge in SeaWorld San Antonio was voted best non-roller coaster ride in the United States. And Celtic Fyre at Busch Gardens Williamsburg was voted Best Amusement Park Entertainment in the United States. Several of our other parks and attractions received top 10 rankings as well. We are proud to receive these awards and the recognition of our collection and parks across the country. We have made significant investments in our business this year and we'll continue to make investments to improve the guest experience, allow us to generate more revenue and make us a more efficient and profitable business. We expect these investments to yield very attractive returns. We are currently planning new initiatives for the balance of this year and next year that will make us an even stronger, more profitable and more resilient business. We have high confidence in the plans we are executing on today and for the future and in our ability to deliver substantial operational and financial improvements that will lead to meaningful increases in shareholder value. Now let me update you on the progress of some of our strategic initiatives. First, we are making good progress on our cost and efficiency related work with our dedicated internal team and specialized outside consultants and continue to find additional cost reduction opportunities. We have revised up our target savings to $60 million from our previous target of $50 million. The team continues to find ways for us to source and organize more efficiently, better utilize capital and technology along with scheduling improvements to drive labor efficiencies and eliminate unnecessary and redundant expenses. We expect these cost savings initiatives along with our revenue enhancement initiatives will lead to increased margins over time. Second, on the digital transformation front, we continue to build out our CRM capabilities, which are still in their infancy, and roll out and improve our mobile app. On CRM, we see significant upside opportunities for ultimately having richer data about our past members and guests and being able to more effectively engage, analyze behavior and tailor and target messages and offerings. In regards to the mobile app, we are pleased it is being used by an increasing number of guests in our parks to improve their in-park experience. The app has now been downloaded more than 6.3 million times, up from five million times at the end of Q1. Total revenue generated on the app is up over 200% compared to the prior year. And we are now seeing a 20% plus increase in average transaction value for food and beverage purchases made through the app compared to point-of-sale orders. Mobile ordering has been expanded to additional restaurants and is now operating at approximately 75% of our target restaurants. We are excited about the potential of the app and its ability to improve the in-park guest experience, drive increases in revenue and decreases in cost. We are continuing to refine current capabilities and develop additional capabilities to further increase engagement and optimize the experience. Third, as you know, we have strategically increased our park-specific ROI investments this year in an effort to drive incremental revenue and/or decrease costs through expanding, enhancing and improving our food and beverage and retail offering, park infrastructure and aesthetics and generally improving the guest experience and journey around our parks and facilities. As noted some of these refurbishments and upgrades have taken longer than planned which negatively affected in-park per caps in the second quarter. While we are disappointed with the delays and disruption of these capital projects, we are excited to realize the full benefit of these investments as they come online over the remainder of the year. We are well on our way planning for additional projects in 2024 that will further enhance the guest experience and are expected to yield attractive ROI. Fourth, on the international front SeaWorld Abu Dhabi opened in late May and attendance has been meaningfully above expectations. We are pleased to see how strong this park is and look forward to its growing contributions over time. We continue to make progress on discussions related to other international opportunities and expect to have more to share in coming quarters. Fifth, on the hotel front we also continue to make progress on our plans. We are currently refining our design planning on our first hotels and we expect to begin opening in 2026. We continue to work on site selection for additional hotels across our park portfolio. We hope to share more specifics in future quarters on what we expect to be really exciting and value-creating projects. Overall, I'm very excited about the significant investments we are making and in many initiatives we have underway across our business that we expect will improve the guest experience, allow us to generate more revenue and make us a more efficient and more profitable enterprise. We are building an even stronger and more resilient business that we are confident will deliver substantially improved operational and financial results and meaningful increases in shareholder value. Let me briefly comment on our balance sheet, which continues to be strong. Our June 30, 2023 net total leverage ratio is 2.61 times and we had approximately $518 million of total available liquidity including over $146 million of cash on the balance sheet. This strong balance sheet gives us flexibility to continue to invest in and grow our business and to opportunistically allocate capital with the goal to maximize long-term value for shareholders. Let me also comment on our debt repricing activity last week. Last week we launched an opportunistic debt repricing on the back of strong credit markets and tightening credit spreads. As you know, right after we launched our repricing activity, Fitch downgraded the US government credit rating, which among other factors negatively impacted credit markets. While we have the ability to reprice our loan to a lower interest cost, it was not at the level where we and our Board expect our pricing to be and as such, we have canceled the opportunistic repricing and plan to wait for better timing and market conditions to reprice our debt. Looking ahead, we are excited about our events planned for the remainder of the summer over the next few weeks and our incredibly popular Halloween and Holiday events, which as I said have grown bigger and bigger over the years and based on what we have planned we expect this year to be our best events yet. We have also already launched 2024 passes in one park and plan to launch 2024 passes including fund cards across the remainder of our parks over the coming weeks. Our 2024 passes will continue to provide great value to our passholders, with exciting benefits and reasons to visit. We are also in the middle of planning for 2024, and are extremely excited about the new investments and initiatives we have in store for next year that we expect will improve guest experience, increase revenue and drive further efficiencies and margin expansion. We are also excited about our lineup of 2024 rides, attractions, events and other experiences, where we have something new planned for every park. We will have more to say about 2024 in the coming weeks, as we begin to announce more specifics for each park. With that, Jim will discuss our financial results in more detail. Jim?

Jim Forrester, Interim Chief Financial Officer and Treasurer

Thank you, Marc and good morning, everyone. It's good to be back with you for another quarter. During the second quarter, we generated total revenue of $496.0 million, a decrease of $8.8 million or 1.7% when compared to the second quarter of 2022. The decrease in revenue was due to a decrease in attendance of 2.0%, partially offset by an increase in total revenue per capita of 0.3%. The decrease in attendance was primarily due to significantly adverse weather including some combination of unusually hot and cold weather, rain and the fallout from Canadian wildfires across most of our markets including during peak visitation periods. Attendance was also impacted unfavorably by the timing of new ride openings in 2023 compared with 2022. As a reminder in 2022, most of our rides opened in the first quarter whereas in 2023, many of the rides opened later in the second quarter. Our pricing and product strategies continue to drive higher realized pricing resulting in record total revenue per capita in the quarter of $80.80 compared to $80.59 in the second quarter of 2022. Admission per capita was essentially flat at $43.96, while in-park per capita spending increased by 0.6% to a record $36.84 in the second quarter of 2023 compared to the second quarter of 2022. The decrease in admission per capita was primarily due to the net impact of the admissions product mix, partially offset by the realization of higher prices in our admissions products resulting from our strategic pricing efforts when compared to the prior year quarter. In-park per capita spending improved primarily due to pricing initiatives when compared to the second quarter of 2022. In-park per capita spending was impacted negatively by factors including weather, closures and disruption related to construction delays at certain in-park locations. Operating expenses increased $5.2 million or 2.7% when compared to the second quarter of 2022. The increase in operating expenses is primarily due to noncash increases in self-insurance reserve adjustments, and an increase in nonrecurring contractual liabilities and legal costs resulting from the previously disclosed temporary COVID-19 park closures, partially offset by the impact of implemented structural cost savings initiatives when compared to the second quarter of 2022. Selling, general and administrative expenses increased $12.0 million or 21.4% compared to the second quarter of 2022. The increase in selling, general and administrative expenses is primarily due to a $7.1 million increase in nonrecurring third-party consulting costs for strategic initiatives along with an increase in marketing costs partially offset by the impact of implemented cost savings and efficiency initiatives when compared to the second quarter of 2022. We generated net income of $87.1 million for the second quarter compared to net income of $116.6 million in the second quarter of 2022. The decline in net income is primarily related to the increase in interest expense when compared to prior year. We generated adjusted EBITDA of $224.2 million, a decrease of $10.2 million when compared to the second quarter of 2022. The decline in adjusted EBITDA for the second quarter of 2023 was primarily driven by a decrease in revenue when compared to the second quarter of 2022. Looking at our results for the first half of 2023 compared to 2022, total record revenue was $789.4 million, an increase of $13.9 million or 1.8%. Total attendance was 9.5 million guests, a decrease of 149,000 guests or 1.5%. Net income for the period was $70.6 million, a decline of $37.0 million and adjusted EBITDA was $296.7 million, a decrease of $3.7 million or 1.2%. Now turning to our balance sheet. Our current deferred revenue balance as of the end of the second quarter was $222.7 million, a decrease of approximately 5.5% when compared to June of 2022. At the end of June 2023, our pass base including all pass products was at a record level for this time of the year, and up approximately 1% compared to June 30, 2022. We're also quite pleased that we continue to realize double-digit price increases on our pass products compared to prior year. As Marc mentioned, we have a very strong balance sheet position. As of June 30, 2023, our total available liquidity was $518.3 million including $146.7 million of cash and cash equivalents on our balance sheet and $371.6 million available on our revolving credit facility. We spent $75.8 million on CapEx in the second quarter of 2023, of which approximately $49.2 million was on core CapEx, and approximately $26.6 million was on expansion and/or ROI projects. For 2023, we expect to spend approximately $160 million to $180 million on core CapEx and we plan to spend approximately $100 million on CapEx on high conviction growth and ROI projects. In total, we expect to spend approximately $260 million to $280 million in CapEx for 2023. We're excited about our ability to make these high confidence ROI investments and sincerely look forward to the benefits and returns from these investments flowing through to our financial results. Now, let me turn the call back to Marc, who will share some final thoughts. Marc?

Marc Swanson, Chief Executive Officer

Thank you, Jim. Before we open the call to your questions I have some closing comments. In the second quarter of 2023, we came to the aid of 96 animals in need. Over our history, we have helped over 40,000 animals including dolphins, manatees, sea lions, seals, sea turtles, sharks, birds and more. I'm really proud of the team's hard work and their continued dedication to these important rescue efforts. I want to thank them, and all our ambassadors for all that they do to operate our parks. We are excited about the remainder of 2023, as we finish out the summer and head into our fall and winter events. Our increasingly popular Halloween events are starting next month, at our SeaWorld, Busch Gardens and Sesame Place parks. You may recall that in 2022 SeaWorld's Halloween event was voted one of the 10 best theme park Halloween events by USA TODAY's 10Best Readers' Choice Awards. The Halloween events will be followed by our Christmas events that start in November. As a reminder SeaWorld Orlando's Christmas Celebration was voted number one best theme park holiday event by USA TODAY's 10Best Readers' Choice Awards. We are proud of these events and the recognition we have received from our guests and we expect this year to be our most exciting events yet. We continue to strongly believe there are significant additional opportunities to improve our execution, take advantage of clear growth opportunities and continue to drive meaningful long-term growth in both revenue and adjusted EBITDA. We continue to have high confidence in our long-term strategy and our ability to deliver significantly improved operating and financial results that we expect to lead to meaningfully increased value for stakeholders. Now let's take your questions.

Operator, Operator

We will now begin the question-and-answer session. Today's first question comes from Steven Wieczynski with Stifel. Please go ahead.

Steve Wieczynski, Analyst

Yes. Hey, guys. Good morning. So, obviously, weather was — seems like it was super impactful during the quarter and we've heard similar comments from some of your peers actually including Disney. So I guess the question is, do you have a ballpark idea of what the weather impact actually was on your attendance in the quarter? And maybe can you help us think about what the parks have looked like on days where weather wasn't impactful. Just trying to understand how the underlying demand for the parks and spend levels look like at this point? Thanks.

Marc Swanson, Chief Executive Officer

Yes. Hey, Steve I can take that question. So, look, there's obviously a lot of factors that we look at on attendance. I would say, in addition to weather one of the other things that we isolated this quarter was the timing of the ride openings. And again, why that's important is if you remember last year we had things opening earlier in the year. And this year they opened later in the year. So we did not have as many rides open in April and May primarily as we did last year. So when you look at the combination of weather and the timing of those ride openings, if you adjust for those — and look it's an estimate obviously — but if you adjust for those our attendance would have been up a little bit in the quarter. And then on your second question on like-for-like days, when we look at like the month of June that is when we had the rides open, we did see a small increase in attendance on like-for-like days.

Steve Wieczynski, Analyst

Okay. Got you. And then second question is that in the previous couple of earnings releases you've talked about 2023 potentially being a record for revenues and EBITDA and that language was, at least, I missed, it was kind of removed this time around. I assume a lot of that is because of the weather impact you encountered during the second quarter. But is there anything else that is kind of making you take that language out? And I'm not sure if you have comment on this, but any color around how July trends were. And it looked like weather might have been somewhat of a headwind in July as well. Thanks, Marc.

Marc Swanson, Chief Executive Officer

Sure. I can try to help you out there. So on your question about July, obviously, you kind of nailed that the weather continues to be a significant impact. We saw a significant increase in the number of what we call weather-impacted days. Having said that, revenue was down about 3.4% in July. So we did as well as we could given the weather impacts in the month of July. I will tell you also that per caps were up in July. So that's a little color on July. As far as how we think about the rest of the year, we have not called it out simply because we've been a little cautious this year given the amount of weather impacts as we've noted here and then some of the other factors we called out. What gives me some optimism as I think about the rest of the year is we're coming into popular events. So we know our Halloween and Christmas events are popular with a lot of our guests. And then if you remember last year in Q3 and Q4, we did have pretty meaningful weather impacts from a combination of hurricane/tropical storms, and then also poor weather around some of the holiday periods especially in November and December. So, who knows if that will repeat. Hopefully that doesn't repeat. And I think if that doesn't repeat that would be a good thing. But our events and our lineup, I think are strong. We're going to get some of these things that have been delayed in our parks opened, which should be good for us. The in-park venues that we talked about that have been delayed, we expect to get some of them open as well. So there are some tailwinds but we'll just have to see where that shakes out.

Operator, Operator

The next question comes from Michael Swartz with Truist. Please go ahead.

Michael Swartz, Analyst

Hey. Good morning, guys. Marc, maybe I think you laid out commentary that you're now expecting $60 million in cost savings, which is up I think $10 million or so versus your prior commentary. Maybe just give us a little sense of where those incremental cost savings are coming from and the timing in which you expect to achieve them?

Marc Swanson, Chief Executive Officer

Yes. Hey, Mike. Just to reiterate I think what I said was $60 million, up from $50 million, so just clarifying that. Look, what I'll say is we have a continual focus on driving efficiencies in the business. We have a lot of work going on. A couple of months ago we promoted two of our most senior leaders to help oversee our park operations. And I think they're doing a great job of finding labor efficiencies in our parks and other efficiencies in how we operate. So those are the type of things that we're going to continue to find in the business. And I can tell you we work on it on a regular basis. Based on what I saw in July, I saw some of that come through. We'll see the exact timing going forward. I don't know that I'm going to comment on that. But, obviously, we feel good about the plans and feel good about the work we're doing there.

Jim Forrester, Interim Chief Financial Officer and Treasurer

I might just add, Mike, you're starting to see some of the results of our strategic initiatives, including our sourcing one that we referenced in the call. When you look at our cost of sales for example for food that's down significantly for the three months and we're seeing the benefit of those types of investments materializing in cost reductions throughout the company.

Michael Swartz, Analyst

Got you. And then just a follow-up on SeaWorld Abu Dhabi. Maybe a little more color on what you've seen today and I know it's very early. And then, if I'm not mistaken you see the benefit from the licensing fees, I think in the in-park per caps. What did that add to the quarter?

Marc Swanson, Chief Executive Officer

Sure. We're pleased with the opening of SeaWorld Abu Dhabi. If you get a chance I highly recommend you take a visit to it. It's really a one-of-a-kind park and just a really exciting place to visit. Attendance there is above expectations and it's an exciting product. Still very early on — it didn't even open until May — so the impact for the quarter is probably around $700,000. It's not a super huge amount. And we'll see where that ends up over time. It is a licensing deal and we share in royalty and whatnot. But we're excited about what it does for the brand and what it demonstrates about what's possible with our brand. I think as people see that park and understand the know-how and the experience we can bring to helping construct, set up and operate a park, that will help us as we think about other international opportunities.

Operator, Operator

The next question comes from James Hardiman of Citi. Please go ahead.

James Hardiman, Analyst

Hey good morning. Thanks for taking my call. So, Marc just wanted to clarify a couple of things you said. It sounded like as some of the delayed rides opened up June was maybe a better month in terms of visitation. But then I think you said that July revenues were down 3.4% with per caps up. So, presumably attendance was down something more than that 3.4%. Are we just looking at weather, or are there any other — I guess is that sort of right that maybe things got better and then a little bit worse from an attendance perspective. And if so anything else outside of weather worth calling out here?

Marc Swanson, Chief Executive Officer

Hey James, so I would say the weather was a meaningful significant factor in July. It's been widely reported. When we look at the number of weather-impacted days it was up meaningfully versus last year. And then over the last 13 to 14 years it's among the highest if not the highest. So it's definitely a big driver in July.

James Hardiman, Analyst

Okay, that's helpful. And then maybe how do we think about season passes. So, you said season pass base is at record levels. I think you said pricing is up but deferred revenues are down 5%. Maybe help us bridge the gap there? And then it sounds like your pass I think you mentioned one park is already selling 2024s. Help us understand how that timing compares to normal. And how we should think about season pass timing for the 2024 pricing?

Marc Swanson, Chief Executive Officer

Sure. On timing of season passes, we launched the season pass at our Sesame Place park in Langhorne outside of Philadelphia. That park is more traditional in that it largely opens in the spring and closes around Christmas, so it makes sense that you would launch that pass now. That's pretty consistent with prior years. In general you'll see most of our launches are very much largely in line or pretty close to what we've done in prior years. We typically would look to start launching around this time into the next few weeks through September. On deferred revenue there's multiple things besides passes in our deferred revenue. When you have weather impacts it's harder to estimate but we're sure we lost some pass sales when the weather wasn't good, and that can have an impact on that number. Single-day tickets and other advance purchases are also included in deferred revenue, so there are a number of factors at play.

Operator, Operator

The next question comes from Thomas Yeh with Morgan Stanley. Please go ahead.

Thomas Yeh, Analyst

Thanks so much. Yes, just following up on your point related to the construction timing delays, it sounds like not all of that has fully normalized either in July. Is that right? And when do you think everything kind of comes back online and when does that ease?

Marc Swanson, Chief Executive Officer

Yes. You're right. Unfortunately, we still have a couple of things still closed. In particular one of our biggest restaurants at our SeaWorld Park in California remains closed. We expect it to open hopefully any time now. Some of the others I expect will open this year, though I don't know the exact timing. There have been delays we're not proud of and we're working as quickly as we can to get those open. But a number of things were still not open in July. As I mentioned, per caps were up in July even with those closures, so hopefully that's going to be a tailwind when these things open. We target attractive returns when we do these refreshes and new venues so we're excited once they get open and we just have to get there.

Thomas Yeh, Analyst

Okay. Makes sense. And then on group booking trends already being above 2019. Is that a pacing number for revenues yet to be recognized, or are we talking about the six months revenues that have already been booked? Maybe just provide some additional visibility into the second half and what you're seeing in terms of demand there that would be really helpful? Thank you.

Marc Swanson, Chief Executive Officer

The way I think about it is sales that are on the books. Not all of those people have shown up. We have bookings for the full year that are more than what we saw in 2019. Some people have come already and some are still to come.

Operator, Operator

The next question comes from Chris Woronka with Deutsche Bank. Please go ahead.

Chris Woronka, Analyst

Hey, good morning, guys. I know you're not ready to share all the details of the hotel plans yet, but is there any way for us to think about balance sheet commitment and kind of structure those deals in terms of — is it going to be all on balance sheet, or are you going to consider joint ventures or things like that with potential brand partners?

Marc Swanson, Chief Executive Officer

Hey Chris, I don't have anything specific to share. We've looked at a number of different options. We feel really good about operating the hotel. As far as how we finance that and how that looks, we'll come back to you. There's multiple ways we could do that and we want to make sure we do what's best for shareholders and opportunistic.

Chris Woronka, Analyst

Okay. Fair enough. And then just a quick follow-up on some of the delays on the rides and attractions that you mentioned in Q2. Were those also all weather-related issues, or was there some kind of a supply chain issue or labor or anything like that besides weather?

Marc Swanson, Chief Executive Officer

Depending on what you're talking about, there are multiple factors. We've got to do a better job, but there are things with vendors and supply chains. Permitting and inspections can cause delays as municipalities have a lot going on and sometimes processing is delayed. It's a myriad of factors. Weather never helps. Weather probably has less to do with in-park indoor things, but certainly on outdoor rides weather can have an impact.

Operator, Operator

The next question comes from Eric Wold with B. Riley Securities. Please go ahead.

Eric Wold, Analyst

Thank you. Good morning. So you mentioned the weather also likely impacted season pass sales, right? Even though the pass base was up in the quarter. I know it's difficult to always know why someone doesn't purchase or renew. But anything you glean from renewal rates kind of in the face of the higher pass prices? Any pushback? Anything surprising positively or negatively around those trends?

Marc Swanson, Chief Executive Officer

What I'd say is we offer a really attractive pass product and it gives you a number of benefits and the ability to visit throughout the year. When you couple that with the investments we're making in the parks, whether it's rides, new venues or events, that is a compelling reason to buy and to visit. It's a very good relative value, especially compared to other entertainment options. If rides or refurbishments get delayed or the weather is bad it's hard to estimate exactly the impact, but if things go better in those areas you'd expect more sales. Regardless, what we can control is offering a good product and continuing to invest in our parks and giving people a reason to visit.

Eric Wold, Analyst

Got it. And then kind of a follow-up. Appears on what you're seeing with hourly wage rates kind of around the system. Any pockets of more difficulty in terms of wage pressures or anything you're seeing regions where it's still maybe difficult to getting everyone you want to have in the park?

Marc Swanson, Chief Executive Officer

Overall, there are still pockets of labor that are challenging. Year-over-year it's in a better spot and we're in a better position than last year, but you still have pockets especially for trade positions and lifeguards that are challenging. We feel better this year than last year.

Jim Forrester, Interim Chief Financial Officer and Treasurer

In the wake of the Bureau of Labor Statistics report that leisure and hospitality wage rates are up 5.4% year-over-year, we're pleased that our wage rates are very moderate. In fact they're actually down year-over-year overall for hourly labor. So I think we're in a very good position with our labor management on this topic.

Operator, Operator

The next question comes from Phil Cusick with JPMorgan. Please go ahead.

Phil Cusick, Analyst

Hi, guys. A little bit of a follow-up on the spending side. You ticked up CapEx again. Is this due to the delays, or can you dig into the incremental projects either maintenance or new projects that you're doing? And how quickly can that extra capital impact the business? And then second of all, can you discuss competition in the theme park market especially in Orlando what are you seeing from a pricing and promotion standpoint among your peers? Thank you.

Marc Swanson, Chief Executive Officer

Hey Phil, on competition in Orlando, we've been in Orlando since 1973. A lot of parks have opened since then. We have great competitors in the area. Disney and Universal have very strong products. We like our product — it's differentiated and offers tremendous value and a somewhat different experience. We've added Aquatica and Discovery Cove historically and we like our ability to compete in Orlando. Competitors are rational and we all benefit from more people coming to the area. Long-term Orlando remains a desired destination.

Jim Forrester, Interim Chief Financial Officer and Treasurer

On the capital front, we continue to focus on spending about $150 million on average in core CapEx over a period of years. We're refining plans for 2024 to 2026 as we refine our attractions menu. We also had some delays in our ROI projects. We've learned to start design and prep work earlier and are making allowances so projects for 2024 are ready to go much sooner next year.

Operator, Operator

The next question comes from Lizzie Dove with Goldman Sachs. Please go ahead.

Lizzie Dove, Analyst

Hi, there. Thank you for taking my question. I wanted to start by asking on capital allocation. I know there's not much more you can say on the hotel side of things. But it does seem like you're also reaching kind of critical mass in terms of your buyback from an ownership perspective but still a lot of cash flow generation. So, I'm curious how you're thinking about capital allocation priorities going forward, whether that'd be paying down debt or potentially a dividend or anything else?

Marc Swanson, Chief Executive Officer

Hey Lizzie. We put capital allocation into a couple of buckets. One priority is to invest in the business — new things in our parks every year. That will continue to be a hallmark of our capital allocation. We talked about higher-conviction ROI initiatives and we'll continue to invest where those opportunities remain attractive. Beyond that, whether it's paying down debt, buying back shares, paying a dividend or other strategic alternatives, we continue to work with our Board on what's the best use of cash. Our Board is focused on maximizing value for shareholders and we'll continue to evaluate the best options.

Lizzie Dove, Analyst

That makes sense. Thank you. And I just wanted to follow up on Phil's question on Orlando, but slightly different focus. There's been a lot of headlines this quarter about Disney and Universal attendance. It sounds like reading between the lines they were down maybe mid-single digits year-on-year on attendance and they called out some impact of international travel up actually happening. I'm curious if that's something that you think you've been seeing and whether that might be an impact that might continue into 3Q if travel kind of continues to ramp up in that quarter.

Marc Swanson, Chief Executive Officer

I won't comment specifically on our Orlando parks beyond what I've said. It has been reported that U.S. residents are traveling more internationally. We'll continue to invest in our parks and provide reasons to visit. Our Christmas event in Orlando is well done and gives people a reason to come out. We'll continue to compete in the market.

Operator, Operator

The next question comes from Robert Aurand with KeyBanc Capital Markets. Please go ahead.

Robert Aurand, Analyst

Hi. Thanks for taking my question. As we look at attendance in the second quarter, is there any way you can kind of break it out between group versus international versus domestic non-group attendance trends?

Marc Swanson, Chief Executive Officer

Let me give a couple comments. International relative to 2019 continues to be down; it's down in the roughly 50% range. On an annual run-rate basis that's over one million people. At least one competitor has also talked about international being down. The group business bookings are strong as we discussed earlier. Domestic attendance across all our parks is up a little bit, and what's down is more of your local same-day visitors, who can react to weather and delay visits.

Robert Aurand, Analyst

Understood. And then just a quick follow-up on Abu Dhabi. I think you mentioned $700,000 in the quarter. I think last call you were talking about a low to mid-single-digit millions EBITDA impact for the year. Are there any updates there given attendance is trending better than you expected?

Marc Swanson, Chief Executive Officer

I would still use that low-to-mid-single-digit millions estimate for the year. The park is very new and we're excited about it, but stick with the guidance we gave last quarter.

Operator, Operator

The next question comes from Barton Crockett with Rosenblatt. Please go ahead.

Barton Crockett, Analyst

Hi. Thanks for taking the question. I was interested in hearing if you are detecting any impact on the attitude of your customer base from all of the experience that we've had and all of the media reporting around climate change — consumers being asked to buy a season pass which is a financial commitment that exposes them to weather. Weather was pretty bad this year, a lot of media reporting about this being kind of a new normal. Is this impacting people's desire to buy a season pass? And what do you see from your customer base?

Marc Swanson, Chief Executive Officer

I can try to answer that. Weather certainly impacted the quarter and impacted July, and we know because of weather there are people who likely did not buy a pass or a ticket or come to visit. I don't know what that means over the long term. I'd like to think weather will normalize over a longer period of time. We have to be cognizant in years of difficult weather and try to give people reasons to come visit and make the park more comfortable on hot days. We may have to think about some things differently, but it's too early to say if there's a seismic shift in how people think about buying passes.

Barton Crockett, Analyst

Okay. That's it. Thank you.

Operator, Operator

This concludes our question-and-answer session. I would now like to turn the floor back to Marc Swanson for closing remarks.

Marc Swanson, Chief Executive Officer

Thank you, MJ. On behalf of Jim and the rest of the management team at SeaWorld Entertainment, we want to thank you for joining us this morning. As you heard today, we are confident in our long-term strategy, which we believe will drive improved operating and financial results and long-term value for stakeholders. Thank you. We look forward to speaking with you next quarter.

Operator, Operator

The conference has now concluded. Thank you for your participation. You may now disconnect your lines.