Problems created by the pandemic will linger longer for the US leisure industry, forecasts Fitch Ratings of Chicago.

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The analyst said the pandemic created a "step down" in credit quality for the industry, but said theme parks and other similar locations were positioned to recover faster than other segments.

“The pace of debt paydown as cash flow improves is a key risk, given the sector’s historical shareholder-friendly posture. However, slowing vaccinations and accelerating infections could also affect the recovery in operator credit profiles.”

Fitch said theme parks benefit from a dependence upon local visitation rather than air travel, an attractive value proposition and being outdoor activities, which are seen as safer during a pandemic. Conversely, the cruise segment contends with the health-related risk of occupying close indoor quarters and travel management companies rely on corporate travel, which is expected to be slow to recover. “Credit pro0files in these segments will remain in lower speculative-grade categories in the near term due to adding debt to bolster liquidity during the pandemic.”

Theme park visitation, said Fitch, during the seasonally strong 2Q21 and 3Q21 should accelerate as the vaccine rollout continues and demand for outdoor leisure activities during the warmer months increases. “We expect regional theme park attendance to recover to 60-70 per cent of 2019 levels in 2021 and reach 100 per cent in 2022 as the broader US economy recovers and vaccine penetration expands.”

It noted that regional gaming, which would include FECs, appeared stable in outlook with a clear path to EBITDA recovery. It has the least severe top-line decline, limited impact from occupancy restrictions, localised visitation and was FEC positive.