Cedar Fair takes hit through three quarters, will suspend distribution in 2010

If LD is the worst Platinum Pass holder, we have to be second. Over 15 trps to Cedar Point, a weekend at Kings Island, and a WWK trip our total in-park spending was about $12.00 for a small pizza and 2 bottles of water at Soak City. That's it.

This is also the first year we did not stay in a CP hotel. I just can't justify the cost for the convienience. With our Platinum Passes the early entry for resort guests, or free parking at Breakers doesn't apply anymore. We can stay at the Econo Lodge at the top of the causeway for about $50 to $60 per night, plus I get points for free nights.

Edited for spacing

I agree about the summer weather. I can't recall a more temperate one.

Per cap spending is only down 1.5% (55 cents) - I'm not convinced in-park pricing is the problem. I do believe you can still push price in this economy...but you have to offer some sort of value.

I don't think the answer is to lower the prices on crap, it's to make the current products less crappy for the price.

I'm pretty sure less customers at higher margins can still work in a bad economy.

I think Breakers is getting a bad rap. Now, the rooms in the Bon Air section of the hotel certainly don't live up to the rest of the property (or in the Main/Twin section) and I suspect if we hadn't seen the economy start tanking a couple of years ago there might have been an announcement by now that Bon Air was being torn down to get the Breakers East/Tower treatment.

In lieu of tearing down Bon Air I think they should look at retrofitting that section of the hotel. Take out every other room and turn every three suites into one, two bedroom/two bath suite. Living room area in the middle, parent suite on one side and children suite (with bunkbeds or whatnot) on the other side. As much as I like the suites in East and the Tower what keeps them from being perfect for my family of 4 is that a louvered door doesn't really make it a suite. I need the kids to be AWAY from me.

That would be an ideal location for "family suites". Close walking distance to Soak City, Challenge Park and the Magnum entrance.

My thoughts on the Main section is that they should let John Taylor go to town. Don't ignore the history of that section of the hotel. Embrace it. There I would dig through the archives to see what the rooms looked like in the 20s and 30s. Go with that theme in today's materials and then showcase the nostalgia of that time with artwork, historical pieces of the park, etc.

They could even take a few of the rooms on the first floor (there is one very nice parlor sized suite) and further showcase the historical nature of the hotel and the park.

They could open up those rooms into larger suites as well and, with John's touch, make them very desirable.

Who the heck is John Taylor?

I do like the idea though. A retro-modern take on the hotel. So it'd be kind of like what Ford did with the Mustang a few years ago, take a classic design and bring it into the 21st century.

John works in Planning and Design. If there is an successful use of "theme" in a Cedar Fair park, John was likely behind it. As great as his realized designs are...it is the stuff that Dick axed that really take the cake.

John Taylor, as said already, is Director of Planning & Design at CP. He's also the King of Halloweekends. All that work, is his.

That would not be bad idea. Kind of how Disney did the Grand Floridian to be designed after the Victorian Era, but with all the modern amenities.

I wonder what the original design theme would be considered for the Breakers. The old section reminds me of the movie Titanic. Actually vice versa, since that reincarnation of the movie came out after my first ten times at Breakers.

Lots of wicker back in the day. The rotunda area is inspired by the older style of the hotel but again, I think they should just dive into it and really embrace the history of the place.

John Taylor's home was once featured on one of those HGTV type "Extreme Home" shows. He purchased a former garage and reinvented the place with that in mind. Lots of raw materials (like a diamond plate coffee table). I don't know if he still lives in the home but it is/was outstanding.

I also don't think they need to redo the newer sections of Breakers entirely. The underlying construction seems sound (vs. Sandcastle), but the furishings---both hard and soft goods---scream low-budget property.

Get higher thread-count sheets. Pillowtop mattresses. Quality pillows (and more than just two per bed). Towels that aren't threadbare. Furniture that can hold up to more than a few months use without looking dinged up. Curving shower curtains and rain-storm shower heads. Flat panel TVs. And, my favorite Resorts pet peeve: drinking glasses made out of glass, and mugs rather than (or at least in addition to) styrofoam.

It's not that hard.

Even compared to a mid-range resort property, like a Wyndham, Cedar Point "Resorts" aren't resorts.

Six Flags' profit was actually up slightly in the third quarter, despite lower revenue. So the nearly flat attendance for them to me says they at least maintained the status quo in an uber crappy market.

It's funny how the comments together here really put together a bigger picture for me. Value is absolutely the key, and it's absolutely lacking. The hotel example is definitely one of the most extreme, and I think Dave nailed it when he said that you can't deliver a $60 room when you paid $200 for it.

And hotels are usually for people coming from a greater distance. Someone mentioned that they said in the conference call that discounting wasn't as well received outside of the immediate markets. Huh. That hardly seems like a coincidence. If you're coming from a distance, the competition is a lot more broad, so when people cite Universal as having less expensive and far superior (four-diamond) hotels, which will people choose? I've said time and time again how I was done with Cedar Point resorts in the fall, because the value proposition from Orlando is so much better.

I stayed in Breakers Tower last weekend, only because I'm moving and wanted one last hit, and another couple offered to share. At $182 after tax, it was not what I'd describe as a good value. The beds are crappy, the furniture is worn, the TV's are vintage and static prone and the front desk staff absolutely sucks. If the only real value is staying on-property, frankly that's not enough.

What's so frustrating is that you can't really blame the general managers and all of the folks below them, because they're given far too many directives, the worst being "do it like Cedar Point," which is almost never the right way for any park other than Cedar Point. So when they're not able to shape their businesses appropriately for their market, who do you blame? The decision maker of course. He's gotta go.

We went to CP only twice this year, early in the season. We didn't even make it to Halloweekends---and we always made a point of going in prior years, skipping events in town that this year, we decided to stay for. We haven't renewed our Cedar Fair passes, and I don't think we are going to. Part of that is just that we're busy, and we're a little burned out on the place. Even in 2008, the kids weren't really that into it, and we've been passholders for something like 6-7 straight years at this point. But, we're the sort of people you should be bummed to lose. We used to spend 3-4+ nights a year in the hotels, we always eat a meal on the peninsula when we visit, (often at a sit-down place), etc.

I'm thinking after a year or two off, we'll come back. We'll see.

According to the earnings release, SF's interest expense decreased by $28.7 because they stopped accruing interest on debt because of the bankruptcy. Had they accrued that interest, the results from operations would have decreased by roughly the same percentage as the 11% decrease in adjusted EBITDA.

From the release:

"The Company's results from continuing operations in the third quarter of 2009 decreased to $165.8 million compared to $166.5 million in the prior-year quarter. The decrease of $0.7 million was driven by a $21.3 million reduction in income from operations due primarily to reduced revenues partially offset by lower expenses, as well as a $28.7 million decrease in interest expense reflecting the cessation of interest accruals on the Company's debt subject to compromise as a result of the chapter 11 filing on June 13, 2009 (see Recent Developments below) and lower effective rates, partially offset by $7.0 million in reorganization costs associated with the chapter 11 filing."

Brian & Wahoo:

Now I get what you're driving at. It sounds like all the new sections would need is just a "new suit" so to speak.

The only issue I see with doing this is how to make parts of the hotel ADA complient without breaking the bank. To do this, Breakers is going to need at least two new elevators, anf those aren't cheap.

Jeff said:
The hotel example is definitely one of the most extreme, and I think Dave nailed it when he said that you can't deliver a $60 room when you paid $200 for it.

For a long time they got by doing that because of convenience/location - and that's fine, they have some leeway there.

But over the years I think they leaned too far in that direction and continued cutting every corner they could in the hotels banking on the idea that being on property sells the rooms and they've finally crossed the line (in part - but not entirely - due to the current economic situation and people's changing priorities and tolerances).

Seems like for too long the answer has been to burn the candle at both ends (so to speak) to show growth - raising prices while reducing costs - and after years and years of that, it's finally caught up with them.

Fine. tear down the hotel and put in another coaster.

The hotels make money at 80% occupancy vs the 90-95% occupancy they are used to. Just not as much money obviously. Certainly more than what a coaster would make in its place.

Service at the Cedar Point hotels (at least those operated seasonally) is never going to match what you might get at other properties because nearly the entire staff is seasonal. No matter how much they try to push training...by the time the staff "gets it" the season is nearly over.

80% occupany is still pretty darn good in the industry. Because the hotels have done so well over time Kinzel has been able to resist changing out amenities such at televisions and bedding as often as you might find at typical resorts. Disney is changing out bedding all over property, but particularly at Convention hotels because the meeting planners are hearing from their people that they want X type of bedding and other amenities. And, they are seeing a drop off in business.

If Cedar Fair doesn't experience a painful drop off in business, where is there an incentive for them to make costly changes?

I do believe the elevators is the main obstacle to significant improvements in the Main section of the Breakers. There is no sense in adding elevators to Bon Air. There is no real historical significance to that section of the hotel and certainly no architectual significance. They should just give it the Breakers East/Tower treatment and I suspect they will at some point.

But, the Main section of the hotel (lobby, rotunda and so forth) is worth saving for a number of reasons. I suspect we will see a new addition for Bon Air before we see any real work down at the Main section.

But, to go back to the topic I think the resorts are a significant part of the business model at Cedar Point and can be at the other park properties in the future. Prior to the Paramount purchase that is where most of the real growth had been occuring. Had Dick not pulled that trigger I think things would be different for Cedar Point resorts.

If Cedar Fair doesn't experience a painful drop off in business, where is there an incentive for them to make costly changes?

For better or worse (IMO, worse) that's exactly right.

I suspect that nothing substantive will change before the economy in the area recovers, and the problem will be viewed as "solved".

Jeff said:
What's so frustrating is that you can't really blame the general managers and all of the folks below them, because they're given far too many directives, the worst being "do it like Cedar Point," which is almost never the right way for any park other than Cedar Point.

You know Jeff this reminds me of a similar situation when I was working for Movie Galley a few years ago. MG is based down in Alabama, and I worked at a store in NH. New England and the Deep South are two different worlds in terms of attitude and customer service. Corperate tried cramming all these new progams down our throat to attempt to increase out numbers.

Let's just say New Englanders are a bit differnt than those on the Gulf Coast.

My boss and I joked "What works in Birmingham DOES NOT work in Boston."

That may be what went wrong here. You've got corperate running a large park in the heart of the Rust Belt trying to make thing the same in a small park in Minnesota, and medium park in Cali, and two parks in the Deep South.

Heck, even McDonalds offers some flexability in what items are stocked in different countries, states, even different stores in the same city!