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Six Flags has seen staff costs more than double since the pandemic with cost-cutting measures taking place elsewhere in the business to accommodate the sharp rise in labour expenses
Tom Anstey | Planet Attractions | 28 Oct 2021
An increase in labour costs during the pandemic has seen Six Flags make cuts to other areas of the business Credit: Six Flags
Increases in labour costs have seen the Six Flags wage budget skyrocket, with staff expenses doubling from US$20m (€17.2m, £14.5m) in 2019 to an estimated US$40m (€34,3m, £29m) in 2021.
Speaking during the company’s Q3 Earnings Call, Mike Spanos, president and CEO of Six Flags, said that the “tight” labour market and ongoing supply chain constraints are leading to additional costs.
“While demand trends are encouraging, we continue to face a tight labour market, and we continue to incur additional costs while operating in this unprecedented environment,” said Spanos.
“Looking back on the past two quarters, the speed and magnitude of the resurgence of demand was even stronger than we expected which exasperated the stress on our costs and operations. We’re working on several initiatives to alleviate some of these cost pressures.”
Adding to Spanos’ comments, Sandeep Reddy, EVP and CFO of Six Flags, added that increased costs, in general, are expected to level out post-pandemic. Wage inflation, however, is here to stay.
“We believe that approximately half of the additional costs we are incurring are transitory and will normalise over time. However, some of these costs, particularly wage inflation may prove to be more permanent,” said Reddy.
“In terms of labour, if current wage rates were to persist, we would incur additional labour expenses of US$40m annually compared to 2019 inclusive of the US$20m we called out in the EBITDA baseline we gave during our fourth quarter 2019 earnings call.”
Despite the rise in costs, Six Flags reported a very promising quarter, with the operator welcoming nearly 12 million visitors across its theme park portfolio, while reporting increased revenues of US$638m (€550.3m, £464.8m).
The cost increases, says Six Flags, have been offset by cost savings measures driven by the company’s transformation plan, lower advertising costs, and the change in the company’s fiscal reporting calendar.
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