Dreamworld should replace Blue Lagoon with...

12 hours ago, iwerks said:

Do we think DW will play it conservatively in its future CapEx spends?

They've never not played it conservatively. There just isn't the culture at Ardent Leisure to spend big on major rides; to give it some perspective their largest investment in a standalone ride is Motocoaster, as laughable as that sounds. These days in particular Dreamworld is a cash cow that they use to fund Main Event expansion. How do you justify $10-20 million on a new ride that may see a 10-15% return when that same capital can go towards several new Main Event centres in the USA that bring 30% annual return? 

My view is it's unlikely that Dreamworld will turn a profit this financial year and the next few years will be tough. Merlin don't expect Alton Towers to be back to normal until the 2018 season; that's three years of poor trading after their non-fatal incident. It's going to be a long haul for Ardent and it's not just the (hypothetical) $50 million in profits that theyrre losing, it's the multiplier effect of not being able to reinvest a large portion of that into other higher return businesses.

There's no real secret that selling the park has been on the agenda. To me the only CapEx we'll see in the near future will be things that can't be avoided because a contract exists or it's crucial to the business, things that have a high return, or things that will improve the saleability or value of the park.