Cedar Fair reports "strong performance" so far for 2021

BrettV said:

Lurking over on Pointbuzz it looks like at least Cedar Point was pretty guilty of number two as well for at least the first half of the season. Food lines longer that coaster lines, bad Six Flags and SeaWorld/Busch Tampa style dispatch times on major rides, major rides opening hours late, coaster lines being cut off 2 hours before park close, etc., seemed to be the norm for at least May and June.

I think everyone in the universe gets a pass on staffing trouble for the second quarter of this year, and it's probably still very hard especially for seasonal destinations that rely heavily on short-term international labor. They answered by raising their pay (a lot) and I think that says something.

Just some notes on the discussion of numbers:

February, 2019

In 2019, season pass visits represented slightly more than 53% of our total attendance mix, up from a little more than 50% a year ago. As Richard noted, we are equally pleased to report the strong consumer response to our new attractions and events help produce a 6% increase in unique visits or just shy of 1 million visitor lift over the prior year.

https://www.fool.com/earnings/call-transcripts/2020/02/19/cedar-fai...cript.aspx

February, 2021:

With the most active period still ahead of us in the 2021 season pass sales cycle, we are pleased to report we currently have approximately 1.8 million valid season passes outstanding or roughly 70% of our 2019 full-year season pass base

(Ergo, their season pass base was north of 2.5m in 2019)

https://www.fool.com/earnings/call-transcripts/2021/02/17/cedar-fai...ranscript/

August, 2021:

third, we are driving sustained sales of advanced purchase products, such as season passes and all-season products with our total number of season passes valid for the 2021 season now exceeding the record number purchased for the 2019 season

...

The larger season pass base this year has translated into season pass visitation, representing the approximately 55% of total attendance mix through the first seven months of the year, which compares to 65% of the mix in the disruptive 2020 season and 53% of the mix in 2019.

https://www.fool.com/earnings/call-transcripts/2021/08/05/cedar-fai...ranscript/

While this doesn't speak to current sales data, I think it is fair to say they have a long-term goal in mind when it comes to the number of passes they want to sell. I don't see any evidence that these current pricing initiatives are due to disapointing sales numbers - this all seems like part of the plan. Growth is seemingly easier with passholders than single day visitors.

Even with that strategy, I feel like they would see the same growth starting a Cedar Point Gold Pass at, say, $149. Not doing that just devalues the product.

I can tell you with relative certainty that attendance at CP at least has not materially changed much in years (pandemic aside), and that park in particular has never had the same pass mix as one with a public bus line to it closer to a major city. Maybe it will increase attendance when we can look at a full "normal" year, but again, if it's not matched with overall increases in revenue, then what was the point? We've seen huge gains in per caps, but we don't have a normal attendance year to apply that to, and if the higher attendance has harmed the experience, how many people have you chased away?

Isn't the gold pass pricing for CP basically identical to what Kings Island has been doing for eons, quite successfully?

I can't speak for the rest of the Cedar Fair parks; I have no idea what their pricing has been over the years and how it's changed recently. But IIRC at least one of the current CF execs guiding these policies was at Kings Island for a number of years, and aside from the period right after initial CF takeover, KI seems to have had a fairly consistent season pass philosophy over the years that has worked out well for them.

Not saying it's necessarily in CP's best interest to pivot as they have, but isn't replicating that KI success essentially what they're trying to do?

Holiday World passes start at $145, and that one blocks out Saturdays and is only good until Labor Day. If you want to go all season, it's $175. Are Cedar Point and Kings Island worth less than Holiday World?

These cheap season passes and meal plans plus the reliance on fast lane revenue produce overcrowded parks and a poor guest experience. In the long run, they will not maintain the volume of sales needed to be profitable IMO. As people find other things to do. Personally CF parks were not a good experience for me this year and I do not plan on renewing my pass next year.

My opinion (based on nothing more than a hunch) is that the Giving Away the Gate is now considered more of a Loss Leader than anything else.

Just how a grocery store sells milk for only $2.00/gallon to get you in the store, the gold pass gets you into the online store for a cheap product and then presents you with Season Dining, Season Drink, Season Photo, and for the big spender, Season Fastlane.

Even if you purchase only the Gold Pass not planning to spend a dime in the park, a typical visitor spending a whole day may quickly see the value in adding these things on for the rest of the season.

As a guy who likes to keep his visits short, I have no need for meals, but consider the Season Drink a steal at the current price. But to be honest, I fell right into the trap. I bought Platinum Season Fastlane and will probably never again go without it. So now I'm spending Disney level money for Cedar Fair level experience. On the flip side, I may no longer buy it every year, as I did with just the regular Platinum Pass.

The cheap season passes used to be a loss leader. They used to make money with overpriced food and drinks. But now they give that away with their cheap dining and drink plans.

Tommytheduck said:

My opinion (based on nothing more than a hunch) is that the Giving Away the Gate is now considered more of a Loss Leader than anything else.

Just how a grocery store sells milk for only $2.00/gallon to get you in the store, the gold pass gets you into the online store for a cheap product and then presents you with Season Dining, Season Drink, Season Photo, and for the big spender, Season Fastlane.

Even if you purchase only the Gold Pass not planning to spend a dime in the park, a typical visitor spending a whole day may quickly see the value in adding these things on for the rest of the season.

As a guy who likes to keep his visits short, I have no need for meals, but consider the Season Drink a steal at the current price. But to be honest, I fell right into the trap. I bought Platinum Season Fastlane and will probably never again go without it. So now I'm spending Disney level money for Cedar Fair level experience. On the flip side, I may no longer buy it every year, as I did with just the regular Platinum Pass.

I think this is a bit what I'm getting at. It feels like for everyone other than Disney and Universal the business model has changed.

As much as Six Flags has been criticized and criticized over the years for their ticket/pass pricing and add-ons, there must be something coming out from it that appeals to the bottom line if the majority of the industry (or at least, the major chains) now basically follows large chunks of their business model essentially verbatim.

It just doesn't make sense to me that so many players in the industry would be using these approaches if there wasn't ultimately some financial incentive to do so. Perhaps all the financially illiterate types really do run the parks now, and there are certainly things CF is doing/has done that I'm not a fan of. And there are indeed a number of smaller parks that price their passes obscenely and that seems to work well for them. But if the key to industry success was only attainable by pricing everything at high levels, then one would think that the regional players would be doing that instead of rushing headlong into the opposite approach.

Not everyone. As I pointed out, Holiday World has gate integrity, even with "free" soda.

It's true that Holiday World hasn't moved to that pricing model. But it's also true that although Holiday World has grown and expanded quite a bit, they are still small potatoes compared to the aforementioned regional chains that are using this pricing strategy.

But quite a few of those companies with footprints larger than Holiday World but smaller than Disney/Universal/Merlin in terms of park ownership footprint have been moving towards more of a Six Flags model over time. Off the top of my head, Six Flags, Cedar Fair, Sea World, Palace/Parque Reunidos, Premier, and whatever the Indiana Beach guy's company is called are currently using variations on this model, and most of them have been using at least components of it for several years now...not saying all of these places are always paragons of competence, but if it's such a broken business model, why would it be used so widely?

The only park ownership group I can think of that has moved explicitly in the *opposite* direction over the past decade has been Herschend.

SEAS, Hershey and Herschend have higher pricing and/or don’t have the cheap dining plans. It’s not the industry standard. It’s just SIX and CF. And SIX is considered to be the low class “Wal Mart” of the industry. Why does CF want to follow down that rabbit hole?

Are "small potatoes" worth more?

If the strategy really is to drive attendance to by extension increase revenue by spending, that hasn't worked out because attendance has been pretty static. It didn't work for Burke's Six Flags for more than a couple of seasons.

Part of the issue is that parks like Holiday World, even with their high prices, are seeing attendance levels that they can barely manage. They don't need to increase attendance, they need to grow to manage the attendance that they get. Seriously my last couple of visits to Holiday World have been less than stellar because they can't manage the crowd in the dry park. Their total ride capacity just isn't there.

Meanwhile, Cedar Point would *love* to keep attendance static...attendance there has been declining, and the 'gold pass mob' has really only brought attendance back to historic levels. They're to the point where there isn't much they can do to increase attendance; they are largely saturated within the market. Their focus has to be on getting the people who do come to visit more often and to stay longer. And while $99 is less than double the gate price (anybody remember when season passes were typically 3x the gate?) it's still more than double what the target audience used to spend on single day discount tickets. Hmmm...a $39 one day ticket through a work benefit, or a $99 season pass...that's almost a no-brainer!

--Dave Althoff, Jr.

Not only is attendance static, it isn't obvious that attendance can grow a lot, at least with this pricing strategy, in the case of Cedar Point, at least. Having been there on a July Saturday a few years ago - and I will pause here to say "never again" - I don't see how the park could possibly accommodate a larger crowd. The parking lot is only so big, the midways are only so big, they can only crank out so much food.

If they had a pass that excluded weekends or Saturdays and/or priced Saturdays differently, maybe they could drive some customers to midweek visits and attract others on weekends. They don't seem to be doing that. They also don't seem to offer a different pricing model for Cedar Point vs Kings Island, despite the very different nature of the parks' locations and revenue streams. I don't understand that at all.

In the end, I wonder how many people who would pay $50-70 for the day are simply not going because the park is packed with people paying an average of, say, $30 a visit. It's not obvious their data would capture that effectively.

(And as someone who was for a while a product manager for a very large firm, with all the data we could want, and who saw the way we determined our pricing, I'm perfectly willing to believe that the folks in Sandusky are just guessing, or at least following the wrong numbers to the wrong conclusions.)

Dave brought up a great point, and the most likely explanation for why gate integrity is not seemingly important to these operators in the current environment. Group sales business has been decimated for EVERY regional park. These are the cheapest tickets possible. Those visits are going to have to be replaced by someone, and again it's easier to generate season pass visits than it is single day visits.

For me at least, I think my 2022 annual spending is almost certainly going to be going down from most seasons before. I renewed my Platinum pass, because I can't imagine a summer not going to Cedar Point. I also think that its likely I will be visiting Cedar Point fewer times next year. As such, I did not renew the dining plan. Most of my visits are half-day visits, so typically I would only use one meal per visit anyway.

With the current pricing plan, I don't see any incentive for me to spend more money at Cedar Point. As I've noted previously: before the introduction of the Gold Pass, early entry and parking alone was worth the additional cost of platinum over regular. The fact that Platinum worked at the other Cedar Fair parks was just an added bonus. Now with the gold pass, the early entry and parking are included with the lowest level pass. I don't visit Cedar Point enough times in a year to buy a season fast lane, and I don't want to spend $100-200 on a single day fast lane when I'm only there for half a day, especially when many days, the fastlane line is going to be the length the regular lines used to be.

I'm puzzled by this business model, where they used to have perks that I was more than happy to spend the extra money on. Now, they are essentially giving away those perks, and they haven't really added any new perks at all to get people to spend more. I can't imagine that I'm alone with this opinion. At a minimum, couldn't they have made it a three "good" - "better" - "best" system to try to get people to spend more?

You bring up a good point, that if everyone becomes a "benefit oriented" consumer, then no one is. Fastlane not giving you much of an advantage seems like a common complaint this year.

So I had a couple of interesting conversations that converge in a roundabout way. One was about the philosophical transition at the corporate level about the spending mix. In the Kinzel era, there were mini kingdoms in the kingdom, so you couldn't drop gate but increase food prices, because there were separate targets for each. Certainly that made group sales challenging in those days, and one person I know says this is one of the reasons that Geauga Lake was a disaster after the acquisition. That park relied on groups, and applying the Cedar Point model would obviously fail. Kinzel tried to reduce pass reliance in a lot of urban markets (the former Paramount Parks) where that didn't work. The Ouimet years seemed to take a more holistic view of guest spending, but appreciated the nuance from one market to the next, and that Cedar Point was not like any of the others.

But now it seems that the emphasis is mostly on per capita spending without any regard to the ability to service that spending. I think folks have spelled out why that's not a winning strategy. As I mentioned, in a market with increasing demand, labor shortages and inflation driven by broken supply chains, that's not the time to charge less for your base product, which is admission. As others point out, if your upcharge premium products don't demonstrably result in greater value, what's the point of buying them? If you don't have the capacity, in terms of rides, labor and goods, to service more people, how is that going to end? I just don't think you end one quarter talking about an emphasis on "business optimization" and then come back a month later to assert you have "strong performance." And remember, the company still isn't paying out a distribution.

Now, my own opinion here as a manager of things and people, is that in uncertain times you try to reduce risk by going after predictable outcomes. If I can't predict significant lift in attendance by lowering prices, or that I can deliver on a great guest experience, then I don't do those things. John Hildebrandt's book talks a bit about how attendance is surprisingly not dynamic, and mostly rests on weather, given that the population doesn't change much year to year. The only real change over the years is that attendance has become very "aft loaded" because of Halloween events. Reasonably then, they've relied on the predictability of that and done some solid discounting early in the season. In-park spending can also be adjusted as you go with discounting programs, but if you give away the gate, and then you give away the food, you have no levers to pull when you're not hitting your targets. And if you deliver a crappy experience, you aren't creating the long-term customers that you want to keep coming back every year.