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spk03: rescue efforts and broadcasting those to people. We'll continue to do that. We know we need to do more of that. So I'm excited about the prospects on a go-forward basis. And also, if you just think about if the population of the United States continues to grow and we take our share of that, we're largely, as you know, in markets that are, I think, very attractive from a Population growth standpoint, when you're in states like Florida and Texas and California, Pennsylvania, Virginia, we like those locations. And so we feel poised that over the long term here, we can begin to grow attendance. And our goal is obviously to not only get back to what we once did, but to do better than that.
spk01: Thanks, Mark. If I can follow up on the hotel, if you're going to open one in 25, I imagine breaking ground pretty soon is going to be important. Is there a time at which you're going to tell us about the financing side?
spk03: Thank you. What I can tell you is we will, I think when we have more to share, we will come back to you on that. Don't have anything to share right now.
spk01: Thanks again.
spk02: The next question is from James Hardiman with Citigroup. Please go ahead.
spk04: Hi, this is Sean Wagner on for James. I wonder if there's any quantification you can give on that ride timing that you called out, whether the first quarter hit from that, or is there a benefit to 2Q as well that you can quantify?
spk03: Yeah, hey, Sean. So what I would tell you, is kind of what I said in the prepared remarks. If you remember last year, a lot of the new rides were already open in Q1. This year, our ride opening is following kind of a more historically traditional opening time of right around Memorial Day or in that range into the summer, obviously. We, you know, we would expect, you know, we build rides because we expect people will find them attractive and want to come visit. So, you know, whatever, what that lift ultimately ends up being, you know, is still to be determined. But certainly, you know, I think that would be a positive for, you know, the year going forward once we get these rides open. As I mentioned, a number of them are some of the most anticipated rides out there and should be nice additions to our park.
spk07: Yeah, the only thing I would add, Mark, you know, we survey our guests periodically and know typically why they would come to our parks, and we had a very good survey results last year for those rides we opened in 2022. We don't have that same level of detail in 2023, but we have a fair estimate that there was some impact, and that's why we called that out.
spk04: Okay, understood. And is there any way we should think about operating expenses in SG&A this year, whether by growth rate or absolute numbers? Kind of what are the major pressure points there and how much of your savings that you've earmarked will come this year?
spk03: Well, let me just give you some high-level thoughts on costs. I mean, we have, as you know, a tremendous focus on costs. You heard me. mentioned that, you know, I think the team that is working on that has done a good job and is pacing well towards, you know, that 30 to 50 million that we set out, you know, we believe we're closer to the higher end of that. And that would include, you know, efforts around SG&A as well as OPEC. So, you know, we're going to, you know, I don't know that I have an exact number for you. You know, obviously, we would like to target, you know, low single-digit expense growth You know, that's a good recipe over the long term if we can grow our per caps and grow our tenants at, you know, single digits and then keep our costs in check by growing them at a low single-digit percentage as well. That generally is a good recipe in this business. So that's what we would target. Hopefully that's helpful.
spk04: Yeah, thank you very much.
spk02: The next question comes from Thomas Yeh with Morgan Stanley. Please go ahead.
spk00: Great. Thank you so much. I wanted to ask about group bookings. You mentioned some healthy recovery there from 2022 levels. Can you give us an update on where that stands relative to pre-COVID and maybe also just on international visitation compared to 2019, how that might be trending?
spk03: Yeah, I can help you there. So let me start with international. I mean, international was obviously up in Q1 versus 2022. It's still not up to 2019. So again, that is a reason to be optimistic, in my opinion, that we are still down roughly over 40% in Q1 to 2019 in international attendance. So we have more ground, obviously, to make up there. There's macro factors that you're obviously, I'm sure, aware of. There's things I'm sure we could be doing better as well. And so we'll That's something that we're clearly working on. So that's a good opportunity, I think, for us. The group business is trending very well versus 2022. We're well ahead of kind of the typical pacing we would have this time of year and ahead in units versus 2022. Versus 2019, we're in line, if you will, It was still down slightly in Q1, but it's really close to being back to 2019 levels. The good news is we're driving more revenue out of the, in most cases, the bookings we are doing.
spk00: Okay, makes sense. And then back on costs, any incremental color on just maybe overall labor hours this year? How should we think about maybe just staffing levels? and how that might look during peak season compared to last year. Is there an opportunity to kind of pull some stuff out with the tech initiatives that you're kind of putting in place?
spk07: Yeah, I would say, Jim, for overall labor hours, I think we feel comfortable that our staffing is somewhat improved in many of our areas. There's still a couple of pockets that we would like to see, especially in a few of our select locations. What is more comfortable to me is the recent labor rate from the Department of Labor said that inflationary pressures was about 4.5% year over year. Our labor rate is much less than that, measurably less. And so I think we're pleased with at least the labor expense side of the equation. Labor hours, we do have some initiatives in place to make ourselves more efficient, as mentioned last quarter. There are a couple of technology projects that we look forward to at our main entrances. We are doing some things with modifying our restaurants and the capital spend to make them more efficient. And we're also doing some very detailed labor hour analysis and making sure we've got the right labor at the right place, right time that will also moderate our labor hour growth year over year to support our expected attendance.
spk02: The next question comes from Eric Wold with B. Riley Securities. Please go ahead.
spk06: Thank you. Two questions, I guess. One, just to follow up kind of on the last comment or last topic. You mentioned that you're at about 70% of the planned restaurants for mobile ordering. Can you get to 100% this season? Is that a 24 or maybe later plan? And then... What is kind of the ultimate goal around that? Is the goal to actually drive reduced labor staffing in those restaurants when it's fully implemented, or is the goal more on driving the higher basket sizes and purchases from consumers?
spk03: Hey, Eric, let me give you just some high-level comments, and then Jim can fill in maybe on the timing that you talked about. Look, the goal with the mobile ordering and the app in general is, you know, several fold. I mean, one is we want it to be a better experience for our guests. So certainly that's a key component of better guest experience with an app, whether it's being able to order food or a quick queue or buy a reserved seat or, you know, have a map, download, you know, whatever it may be. we like that from a guest satisfaction standpoint. We know clearly that people spend more when they're buying through the app, so that's another advantage. And then, you know, I guess the third thing would be obviously some of these mobile order, you know, locations we believe we can staff, you know, more efficiently and ultimately so we have lower costs. So it's a combination of all those things that I think are kind of the goal of the app. And then as far as how we're thinking about the target and the timing of that. You want to talk about that?
spk07: Yeah, sure, Mark. So, you know, as part of our capital spend that I mentioned, we do have a significant amount of that dedicated to changing our service style of our restaurants. And as part of that, installing mobile ordering and retrofitting on those legacy restaurants. We'll, of course, design new ones in the future to incorporate that. But that's going to be a multi-year project. You know, we've got some very major restaurants and we're approaching the busy season. So we're somewhat limited in the ability to take down restaurants all at the same time to do some of these retrofits. So we'll do it methodically over 2023, 2024 is our goal for that. As far as the labor, I would only add that while we are going to be more efficient, a lot of times when we're in constrained labor environments, we're able to take the labor and move them to other locations, other revenue generating areas so that it also helps us to maximize revenue there.
spk06: Thank you. And then just a follow-up question, the same question. Obviously, you've been repurchasing a lot of shares over recent years. Obviously, the interest rates have moved higher. What point does the focus of excess capital shift towards reducing the debt? What would you see as the optimal leverage ratio over the coming years?
spk03: Yeah. Hey, Eric. I mean, what I would tell you is, I mean, we're obviously – comfortable where we are with the ratio we have now. We're at 2.7 times. Not that we wouldn't be comfortable lower than that or even higher than that, but we don't really guide to a target. What we do is work with our board on what's the best use of cash, and so we'll continue to do that going forward.
spk06: Thank you.
spk02: The next question comes from Ben Chaiken with Credit Suisse. Please go ahead.
spk09: Hey, how's it going? Last year, you highlighted a bucket of transitory inflation costs. When you're looking at the operating environment today, are those kind of transitory items you highlighted in 22 rolling off, or is it pretty sticky versus what you were seeing last year? Thanks.
spk07: Yeah, Ben, I would say that we continue to be mindful of the cost pressures. We have seen moderation in many areas, like I mentioned already about the labor. I think we're very pleased at our ability to manage labor rate, either through a reduction in overtime hours of being more efficient or being more targeted at our labor rate growth allowance than a broad shotgun approach. We're very targeted on that. The others with cost of sales, we've had very dedicated negotiations with our vendor partners to ensure we're getting the best pricing on that. So we've seen moderation there. I think going forward, we've sort of reset or very close to that. We continue to look at some of our inflationary pressures. But in general, I think we're at a new, fairly good baseline.
spk09: That's helpful. And then I think if I heard you correctly, I think you said you saw a nice step up in past sales between March and April. Is it a fair assumption that this kind of correlates with some of the attendance trends you're seeing, or was there something else? Thanks.
spk03: Well, yeah, I think what I would tell you is, you know, without commenting on attendance, I think as we get closer to opening our rides and things like that, you know, that's a driver a lot of times of people buying past products. And so, you know, we have those rides ahead of us, obviously.
spk09: Okay, thanks.
spk02: The next question comes from Chris Waronka with Deutsche Bank. Please go ahead.
spk05: Hey, good morning, guys. Thanks for all the details so far. I was hoping we could maybe drill down a little bit into the customer buckets or the segmentation, and if we – think about your visitation as, you know, local and then group and then international. And we're probably talking a little bit more about the Florida parks. Have you noticed any, is there any delineation in, I guess I would say kind of in, in park spend among those groups or any change over the past, you know, three, six, nine months?
spk03: Look, I don't know that we're going to, you know, break that out or, or provide any more detail. I think what, what, you can read into is obviously our per caps have been growing and for quarter over quarter for some time now. And that's with different SOR levels visiting our park throughout the year. So I think we're generally pleased with the spending that we're seeing across our parks and from the folks coming to visit our parks. There's a number of new things in our parks, specifically here in Orlando, that I think are compelling to people when they do visit, whether they're a local or a tourist.
spk05: Okay, fair enough. Thanks, Mark. And then as a follow-up, with Abu Dhabi now opening, is the licensing or perhaps you know, joint venture thing, is that something that could be on the table domestically, whether it's, you know, for a larger park or even a smaller kind of sesame-sized thing? Is that something you'd ever look at?
spk03: Well, look, without, you know, getting into specifics, I think what I can tell you is we certainly entertain a lot of different things, and so we will continue to do that. So, yeah, I mean, the right opportunity, the right we would certainly look at it, whether it's domestic or international.
spk05: Okay. Very good. Thanks.
spk02: The last question today comes from Barton Crockett with Rosenblatt Securities. Please go ahead.
spk08: Okay. Thanks for squeaking me in. I was curious about the description of the cadence of ride construction and you know, a little bit of explanation about why things are starting later this year than last year. Is that by design? In other words, this is the optimal time to, you know, build and, you know, launch your new rides for best impact on the season? Or does this reflect maybe kind of labor markets and construction markets just not being, you know, quite as efficient or as open as they were last year when you were able to get things out sooner?
spk03: Yeah, so Barton, I can take that one. And if you remember, most of the rides we opened in 2022, we had under construction kind of during the COVID time period. So they were in a lot of cases, you know, fairly far along when COVID hit. You remember a lot of them were going to open in 2020 and got delayed due to COVID. So there was less kind of runway to have to complete those rides, which was a pretty big advantage and why we were able to open them earlier. Obviously, we're opening them now in many cases here in the coming weeks, and that is a more, like you said, kind of historically more traditional time to open new rides. I mean, just like any construction project, we certainly have our challenges. in certain rides with construction delays, whether it's weather impacted or, you know, labor, whatever it may be. So, you know, but, you know, you have that on a lot of different things. So we'll work through that, and I'm excited that we're going to be delivering a compelling lineup for guests to enjoy as we move into the summer.
spk08: Okay. That's it. Thank you.
spk02: This concludes our question and answer session. I would now like to turn the call back to CEO Mark Swanson for any closing remarks.
spk03: 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 and we look forward to speaking with you next quarter.
spk02: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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