It certainly hasn't been a great start to the week for the Village Roadshow Ltd (ASX: VRL) share price.
In morning trade the entertainment company's shares have fallen a massive 11% to $3.57 following a less than impressive trading update for its theme parks.
According to the release Village Roadshow's Theme Parks division has continued to be impacted by the tragedy at Ardent Leisure Group's (ASX: AAD) Dreamworld theme park, as well as cyclonic weather conditions in March and April.
For the nine months to 31 March, total attendance for its Gold Coast theme parks has fallen 9.4%. Furthermore, the company revealed that during March its membership renewals also declined, potentially pointing to further attendance declines later this year.
As a result management expects earnings before interest, tax, depreciation and amortisation, excluding material items in the division to be between $55 million and $65 million. This will be a sharp drop from the $88 million of EBITDA the division posted in FY 2016.
But despite the short-term pain, management remains confident that in the long-term the division will return to normal thanks to key marketing campaigns and the introduction of new attractions.
Should you buy the dip?
While my turnaround pick in the space is Ardent Leisure, I do think Village Roadshow could provide strong long-term gains for patient investors.
Although it is taking time, I expect the theme park industry will recover in full in the next 12 to 24 months. Especially with inbound tourism growing strongly.
While it is worth remembering that things could still get worse before they get better, I still feel this could be an opportune time to snap up shares in Village Roadshow.
