Cedar Fair's recent investor presentation, aptly titled Fun Forward has given us our first really good look at where new CEO Matt Ouimet is planning on taking the company. Personally, I like what he had to say. There's a lot that came up during the presentation, so let's get started!
• Mr. Ouimet started by pointing out that no one has really found a way to digitally replicate a ride on a 420 foot roller coaster, a fair point indeed. A funny thought, but very telling about the industry - while there's lots of other entertainment options around it's hard to compare them to the physical thrill parks provide. It is pretty one of a kind.
• They're currently using a technique we saw last year to "test" out new concepts, then rolling them out across the parks. Dinosaurs Alive!, Fast Lane, and even to a degree WindSeeker are examples.
• Both Franklin and Woodstock characters will be joining the parks next year. Makes sense, if you already pay the licensing fees, why not! California's Great America, now that the park is being retained, will see some expansion soon due to that unexpected change.
• Mr. Ouimet is, frankly, a lot more revealing than Mr. Kinzel was. Take for example the graphs above of the revenue/EBITDA mix for the company broken down by park. Sure, there's no numbers on it but it's still a lot more specific (and telling) then we've seen in years.
• Gone seem to be the days of the parks being broken into Western, Northern and Southern groups. Now they're grouped by attendance: 3 million and over include Cedar Point, Knott's Berry Farm, Canada's Wonderland, and Kings Island, 1.5 million and up are Carowinds, Dorney Park, Kings Dominion, and California's Great America, followed by Worlds of Fun and Valleyfair which do around one million per year, and Michigan's Adventure which does less.
• The remaining Wildwater Kingdom park at the former Geauga Lake land is a "nice little market" but Mr. Ouimet does not see them making any big expansion plans there. Modest investment, however, makes sense.
• New marketing will be debuting this year, as they have hired a new company. Below is an example of what is being called 'emotion over promotion,' making hints at the entire family unit and how time together could be spent at a park. A new slogan will be used, Thrills Connect. There are two other example adds that follow further down.
• One goal of Mr. Ouimet's is to extend the length of stay for guests at the park. Obviously more time spent is probably more money spent, and getting people to stay past dinner and into the night certainly makes sense. In the experience of park operators this is done with "lights and fireworks," giving guests a reason to hang around. In that light, pun intended, a new experiment will debut this season.
• And that experiment is Luminosity - Ignite The Night, and it will open this Summer at Cedar Point. Described as an 'over the top nighttime spectacular' it will appeal to everyone from kids to grandparents. It can be reprogrammed, no specifics on what aspect of the show, but changed so that it is fresh, and will require the updating of park light and sound systems, something needed anyway. Sounds like a bit of a pet project for Mr. Ouimet, and if successful he wants to shift it to other parks.
• Food. They're going to start to address the quality of the food they are serving, hopefully bringing the quality up to match the price. For example, all major burger locations in the parks will use fresh, never frozen, burgers this year.
• Pointing out that several parks are at a "critical mass" with regard to rides, Mr. Ouimet is not afraid of "exiting underutilized capacity," which to me sounds like removing under-performing, older rides to avoid growing costs.
• Fast Lane will come to all parks this year. After only half a season at Kings Island it made almost $1 million. Cedar Fair went with that style to avoid sharing revenues with a third party provider and also so that it is not disruptive to guests who do not or cannot pay for it.
• Across the chain there will be a total of 25 different brand new live entertainment offerings. I'll be interested to see if any of them are different from the type of shows presented in previous years.
• Last year's focus on growing season pass sales was a success. The chain views pass holders as "goodwill ambassadors" that influence other attendance, such as group bookings and picnics.
• Cedar Fair owns excess land at several of its properties, but do not expect hotels to be built anytime soon. Mr. Ouimet looks to these open spaces to be filled with items that generate additional ticket sales, such as the sports triathlon at Cedar Point, and firefighter competitions - basically special events. Luxury campgrounds were also mentioned, since they increase the length of stay overall.
• Efforts to expand marketing partnerships are still being pursued, but at a slower pace than industry counterparts. They want to make sure partnerships do not dilute the guest experience, which makes me think of Six Flags' tendency to wrap coaster train in ads and cover midways with advertisements.
• While paying for season passes already has options of breaking it down over several months, Mr. Ouimet envisions it becoming like a "cable bill" where a part is paid each month over the whole year, making it like a subscription. This moves having to pay for a pass out of the user's mind, potentially increasing their tendency to spend while at the parks.
Accesso, but they will also try to "train" consumers to know that the best ticket price is available on the park's website. This cuts out the reliance on selling discounted tickets through other outlets, grocery stores and the like.
• The plan is for about 9% of revenues to go to new capital each year, and 9% to go to on-going maintenance. They did about a billion in revenues this year, so that's about $90 million on new rides. Expanding water parks add much value for less cost than a big ride, so they are favored. The hotels the park does own will see improvements in coming years, something that Mr. Ouimet feels is quite necessary.
• Cedar Fair is working with ride manufacturers to create attractions with new innovations that control costs. Each park will still have a 5 year plan designed to bring things to the park that attract repeat visits to check out what's new.
All in all I'm excited to follow the changes coming to the parks under the new management, there's a lot of smart moves being made right now that will play out over the next few seasons. The slides from the Fun Forward presentation are available from Cedar Fair at this link.