Wednesday, December 11, 2013

Heard On... Cedar Fair UBS Media Presentation

Cedar Fair's CFO, Brian Witherow presented at the recent UBS Global Media & Communications Conference, and shared some interesting tidbits about the company - as always I like to share some of the fun stuff I noticed during the presentation.  A full broadcast of the event can be access via this link.

• After selling two California water parks, they believe they are now down to their "core" properties.  To me that could mean that Wildwater Kingdom, formerly part of Geauga Lake, might not be sold after all.

• The chain's big four parks, Knott's, Cedar Point, Canada's Wonderland, and Kings Island make up two thirds of the company's revenue, and almost 70% of their EBITDA.  That really shows just how much these properties contribute to the bottom line, and why we see large investments at them.

• The chain sees three parks as having room for significant growth, Carowinds, Valleyfair, and California's Great America.  I'm quite surprised to see Valleyfair on that list!  They will expand heavily at those parks, with the focus on Carowinds first - as has been previously announced.

• In order to increase sponsorship revenue the in-park TV media channel for next year is being developed - this will allow advertisers to have a great outlet to be represented on in the parks.  Happily, Brian pointed out that they will do it in style, and not just start hanging up ads and giving sponsors to everything in the parks (cough... Six Flags... cough).

• Season pass attendance now makes up 40% of the overall attendance, up from 30-32% just three years ago.  The push to sell passes has really paid off, especially with increased per caps instead of lowered ones as you might expect with pass holders.

• Cedar Fair seems more content with holding attendance steady and working on increasing the amount spent to enter and once in the parks, having realized that chasing attendance gains can be unproductive.  An interesting example, Cedar Point currently does several hundred thousand less guests than its record level, but the per caps have increased so much with higher economically based visitors that they would rather have the fewer visitors!  Totally in my words, not theirs, but people with more money spend more money, and people with less represent much lower per caps that they're not interested in.

• A web portal for season pass holders is currently being built, a part of continuing to build that attendance base and keep them interested.  I'm looking forward to seeing what they come up with as a loyalty program for pass holders was tried at Kings Island and subsequently cancelled.

• The two sold water parks were not because they weren't making money, instead they realize that spending capital on new rides at water parks pays off much less than using that capital at even the smaller amusement parks.  In that idea they had the chance to sell those two, and jumped on it.  In 2014 they'll use 80% of the money from those sales to add to parks that will increase their revenues incrementally (like for instance in campgrounds).

• As expanded as Halloween already is in the parks, they see that market being able to grow at many properties.  So I'd watch for even more expansions and focus on the Haunt events in the future.  Christmas events still sound like they won't happen, but they're looking to create some sort of event for the Spring.

• After really studying the capital spent at parks over the past seven years, they've learned that while it is nice to really spread out capital and put something in new at each park each year, that method really doesn't pay off.  Instead, having a couple rather large additions, some smaller, and some parks sitting 'out a year' makes the most financial sense.  Also they have learned to tie into big expansions renovations and other improvements - citing that GateKeeper could have been a $20 or $22 million ride, but then became a $25 million ride to break records, and then eventually a $30 million project to redo the front gate, too.  Overall that extra spend for a larger project pays off in their findings.

• And right along those lines, the parks that take a 'year off' don't just sit and do nothing.  Kings Dominion is a perfect example of that theme, celebrating a big anniversary with relatively cheap additions that still are worthy of marketing - and at the same time productively 'sitting out a year.'

• Do not look for Cedar Fair to try to build a new park anytime soon, if ever.  But if they could buy one they're interested in the Southwest and places like Florida, where the weather is much better than in the North.  Anything good for sale these days?


Unknown said...

Surprise, Surprise. Nothing about Michigan's Adventure. I wonder every event why Cedar Fair still owns the park.