Wonderla Holidays Ltd is favouring a greenfield strategy for expanding its amusement park portfolio rather than acquiring existing assets, while planning to fund most of its capital expenditure through internal cash flows without further equity dilution.
The company’s resorts business has also emerged as an increasingly important growth driver, recording its best-ever second-quarter performance with 57% year-on-year growth. Spend per guest increased 11% during the quarter and 16% in the first half, reflecting higher adoption of value-added services and premium offerings.
Speaking about the company’s expansion strategy at the earnings call, Wonderla Holidays Ltd Managing Director Arun Chittilappilly said the company preferred setting up new parks at separate locations rather than taking over existing facilities.
He indicated that acquiring an existing amusement park would not necessarily offer a significant advantage over developing a new facility, although a greenfield project could take one or two years longer to become operational.
Greenfield expansion preferred over acquisitions
On the possibility of acquiring EsselWorld, the amusement park in Mumbai, Chittilappilly said he did not believe the property was available for sale, adding that the company appeared to have other issues and had shut its operations.
Wonderla’s preference remains to develop parks independently rather than take over another operator’s assets.
The company is receiving proposals from various state governments for setting up new parks. However, it is assessing these opportunities against its internal investment parameters, including revenue potential and project viability.
Chittilappilly said the company was negotiating with state governments but would proceed only when the commercial propositions made financial sense.
Land acquisition and government-related processes, however, remain significant constraints affecting the pace of expansion. Chittilappilly said delays associated with land acquisition and government clearances were not unusual and that the company would move forward with projects once these issues were resolved.
Resorts business gains momentum
The resorts business recorded its strongest-ever second-quarter performance, growing 57% year-on-year, indicating the increasing contribution of hospitality to Wonderla’s overall
business.
Spend per guest rose 11% during the quarter and 16% during the first half, supported by increased uptake of value-added services and premium offerings.
The improvement in guest spending suggests that the company is seeing opportunities to enhance revenue not merely through higher footfalls but also by increasing monetisation of its existing customer base.
The growing contribution from resorts also provides Wonderla with an additional revenue stream beyond its core amusement park operations.
No further equity dilution planned
On funding requirements for expansion, Chittilappilly ruled out further equity dilution, saying the company had already completed the equity dilution it needed.
He said the company expected to finance most of its capital expenditure through internally generated cash flows, although it could consider debt financing at some point.
The funding strategy indicates that Wonderla intends to balance its expansion ambitions with financial discipline while avoiding further dilution of existing shareholders’ stakes.
With resorts gaining traction, higher spending per guest and a preference for greenfield development, the company is looking to expand its footprint while retaining control over project selection, investment returns and financing