Cineworld Group PLC (LON:CINE) and Accesso Technology Group PLC (LON:ACSO) have both issued optimistic statements on Tuesday as they reckon trading will be driven by pent-up demand this year.
After a tough 2020 when both companies were forced to halt operations during widespread lockdowns or found trading hampered by social distancing measures, they are counting on consumers excited to finally seeing the world again and spending all the savings accumulated while stuck at home.
READ: Accesso says huge pent-up demand as venues start to re-open
Cineworld announced the phased reopening of its venues, starting next week in the US with screenings of ‘Godzilla vs. Kong’ on April 2 and going wider with ‘Mortal Kombat’ on April 16.
Chief executive Mooky Greidinger said the firm will be able to operate profitably as capacity restrictions expand to 50% or more across most US states.
UK cinemas, instead, will resume screenings in May, in line with current government guidance.
Meanwhile, virtual queueing and ticketing technology provider Accesso posted a 19% drop in revenues during January and February, which it deemed a strong performance considering the ongoing restrictions in many of its markets.
Online trading indicates that pent-up demand is also strong, it added, with eCommerce ticket volumes in the Asia-Pacific region 15% above this time in 2020.
North American venues are even better with volumes up 54% and 28% over the same periods while the majority now either opened or scheduled to by May. The largest clients such as Six Flags and Merlin intend to reopen all parks by the summer.
Analysts at Peel Hunt noted that enough films are sitting on the digital shelf to bring back audiences, even if they were produced a while ago.
“However, cinemas are not a ‘reopening play’ in the same way as pubs and restaurants. We expect leisure consumers will prioritise social activities over high-frequency cinema attendance,” the broker commented.
In this sense, one may think that Accesso is well placed to benefit from a return to the aforementioned social activities at large-scale locations, since it caters to sports arenas, amusement parks and festivals among others.
Back to cinemas, Peel Hunt said that ticket sales depend on the flow of content, which is unlikely to be abnormally high, in turn implying that levels of attendance will be ‘normal’ too.
“Cinema ticket pricing could, perhaps, be increased. But, as tickets are commodities, where price discovery is straightforward for the consumer, we do not see sharply higher ticket prices as a route to supernormal revenue either,” analysts stated.
AJ Bell said that the challenge now is whether consumers will want to go back to the cinema, which may depend on the appeal of the films being shown and people's willingness to mix in public again.
“One would think visiting a cinema is essentially mirroring what people have been doing for the past year, namely sitting in a seat and staring at a screen. But there is still something magical about sharing the experience of the cinema with an audience and seeing films on a very large screen," said AJ Bell investment director Russ Mould.
“It seems wrong to declare COVID-19 being the final nail in the coffin for cinemas. However, how long certain cinema operators will stay alive is a separate matter. Cineworld is drowning in debt and it needs people to be devouring pick 'n mix and buying lots of tickets to revive its earnings.”
Accesso jumped 8% to 560.3p while Cineworld shed 4% to 107.15p on Tuesday at noon.