Viad Corp, a company with diverse holdings ranging from live events to Alaskan cruises, has been making headlines with its latest Q1 2024 earnings transcript. While the strong performance of its GES segment and the successful launch of FlyOver Chicago are attracting attention, a more subtle detail lies within the Pursuit segment: Viad seems to be strategically leveraging Iceland's volatile volcanic landscape to boost its geothermal spa attraction, Sky Lagoon.

The evidence is subtle but present in both the Q4 2023 and Q1 2024 earnings transcripts. Viad repeatedly mentions the "temporary closure" of Sky Lagoon's "most notable competitor" – the iconic Blue Lagoon – due to volcanic activity. While expressing sympathy for their competitor, there's an underlying tone of opportunity when discussing the impact on Sky Lagoon. Phrases like "robust demand," "increasing operating hours," and active efforts to secure travel partners who would have otherwise booked with Blue Lagoon all point to a calculated response to the situation.

Is Viad Intentionally Capitalizing on Volcanic Activity?

It's impossible to definitively prove intent based solely on earnings transcripts. However, the financial performance of Sky Lagoon during these periods of Blue Lagoon closures is compelling. In Q4 2023, Pursuit's attraction ticket revenue saw a 34% year-over-year jump, driven significantly by Sky Lagoon's performance during Blue Lagoon's closure. Similarly, Q1 2024, typically a slower season, saw a 14% revenue growth for Pursuit, again propelled by attraction ticket revenue, strongly suggesting the trend is continuing.

Iceland's Tourism: A Dance with Nature's Fury

Iceland's unique geological landscape, marked by active volcanoes and seismic activity, is a double-edged sword for its tourism industry. Eruptions and tremors pose risks, leading to closures like those experienced by Blue Lagoon, situated near the volatile Grindavík region. However, these same forces create breathtaking natural attractions, drawing in thrill-seeking travelers. Sky Lagoon, located in Reykjavik, enjoys a strategic advantage by being geographically removed from these volatile regions.

"Infographic: While Blue Lagoon grapples with the challenges of volcanic proximity, Sky Lagoon benefits from its strategic location in Reykjavik, offering a reliable alternative for travelers seeking a geothermal spa experience."

Viad's Calculated Gamble: A Sustainable Strategy?

Viad is seemingly capitalizing on this geographical advantage, positioning Sky Lagoon as a reliable alternative during Blue Lagoon's closures. They're actively courting travel partners and increasing operational capacity to accommodate the influx of guests seeking a geothermal spa experience.

This "volcano strategy," as we might call it, is a gamble nonetheless. It hinges on unpredictable natural events and the assumption that travelers will opt for Sky Lagoon when Blue Lagoon is inaccessible. The earnings data from the past two quarters suggests this gamble is paying off, at least in the short term.

Unanswered Questions and Future Prospects

The transcripts don't reveal the extent of Viad's investment in this strategy. Are they simply adjusting operating hours and securing travel partners, or are they undertaking substantial capital investments to expand Sky Lagoon's capacity? The mention of plans to "expand the wellness ritual" at Sky Lagoon hints at a more aggressive pursuit of market share.

Pursuit Attraction Revenue Growth

The following chart shows the year-over-year growth in Pursuit's attraction ticket revenue, highlighting the impact of Blue Lagoon's closures in Q4 2023 and the continued strong performance in Q1 2024.

Only time will tell if Viad's gamble will yield long-term success. Their ability to sustain this momentum, strategically reinvest earnings to expand capacity, and adapt to the ever-changing tourism landscape will determine if this gamble ultimately pays off.

"Fun Fact: Beyond its tourism ventures, Viad Corp's GES Exhibitions segment has a hand in producing major global events, including COP28, the United Nations Climate Change Conference. It's an intriguing juxtaposition for a company simultaneously profiting from both Iceland's geothermal wonders and addressing climate change on the global stage."