Motley Fool: Six Flags problems easy to identify and fix

Posted Wednesday, February 9, 2005 9:39 AM | Contributed by supermandl

The Motley Fool investment columnist Rick Aristotle Munarriz says the issues of pricing and customer service are obvious for Six Flags.

Read more from The Motley Fool.

Wednesday, February 9, 2005 10:09 AM
I have been saying for years that the passes were too damn cheap.
Ever notice that when the passes went down, food and souveniers went up? They have to compensate for that somewhere.
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Wednesday, February 9, 2005 10:14 AM
"Six Flags has banked on a cheap gate to get butts in the door and hopes that they'll spend like crazy once inside the parks," says Jeff Putz

I don't know if I'm more amazed at the rightness of Jeff's quote, or the fact that Motley Fool printed "butts" in their article. Hopefully SF listens and makes the changes.

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Wednesday, February 9, 2005 10:43 AM
Depending on Kingda Ka/The Golden Kingdom's success, I wont be surprised if SFI increased admission prices on SFGadv next season.
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Wednesday, February 9, 2005 1:14 PM
I think it'd be funny if one of their execs read this and had a light bulb pop off or something. Then our very own Jeff Putz might have a hand in the amusement park comeback of century (even though our century isn't all that old yet). ;)

Or better yet, Jeff receives an offer to work as a park consultant. ;)

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Wednesday, February 9, 2005 1:16 PM
I doubt Jeff will ever move away from the beautiful winters here in Ohio (unless he were to freelance for SF)
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Wednesday, February 9, 2005 1:35 PM
Responding to coy's comment, the real issue isn't the standard general admission price. The problem is they keep giving away the gate for general admission through numerous get in free specials and discounted admissions that last a bulk of the season. Season passes are, in my opinion, also too cheap. If you visit twice with a Six Flags pass, you've basically more than paid for it already.

I think that if Six Flags dropped the promotions on the gate, increased season tix prices, and stopped giving their waterparks away, that they would be able to drop some of the food prices and souvineer prices and still be okay as far as the bottom line.

The problem is that Six Flags focuses on the holy attendance figure to gauge their success. They figure if they can increase attendance that it will boost their profits. Unfortunately, they've already crossed the line of diminishing returns in that avenue. What they need to do is get the guest's money up front and work off attendance figures from there.

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Wednesday, February 9, 2005 2:16 PM
As soon as Stephanie is done at Kent, we're out of here for a warmer climate. Hawaii would be ideal.

Oh, and you don't need to be that clever to see what's wrong with Six Flags.

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Wednesday, February 9, 2005 2:35 PM
The problem that I see is that, regardless of price, the *perception of value* is lacking...if people feel like they've gotten more than their money's worth out of a day at the park, they leave happy, and come back, and bring friends...

The admission price to the park is but a small part of this "perception of value" concept, the *nickel-and-dime mentality* is adversarial at best...

When the perception is that the customer (GUEST!) got a good deal on a great time, then they buy souvies....and THAT, my friends, is "better than free" advertising for the park...

Of course, I'm insane, so I rarely if ever leave a park without ANY souvenirs, but the ones I display proudly, and most often, those are from the HWs, KGs, and the Silverwoods...the SF stuff I display most frequently is from their best parks...SFoG, SFoT, SFStL, etc...

Hospitality and value, THOSE are going to be the salvation, or the demise, of SF...

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Wednesday, February 9, 2005 4:56 PM
Wow, the master of a coaster enthusiast site interested in living in a coasterless land? Having said that, Hawaii is wonderful. I'm partial to the big island myself. ;)

Oh, and it wasn't necessarily what you said but how you said it. Business can use a little frank talk now and again even at the expense of ruffling some feathers. And if feathers get ruffled that easily, perhaps they are in the wrong biz.*** This post was edited by janfrederick 2/9/2005 4:58:04 PM ***

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Wednesday, February 9, 2005 6:02 PM
You may not need to be clever to see Six Flags problems, but it sure was nice to see "the obvious" stated somewhere other than on a CB forum. Even if it took the CB founder to do it. It can be nothing but positive to have "the obvious" stated in a non-biased forum like The Fool. I know investment advisors are a dime a dozen, but these guys are quite respected. I can't help but think management at Six Flags is not at least aware of the comments at some level. I doubt they'll make needed changes, but that is another story...

P.S. I guess I'm in the minority that actually enjoys Six Flags multiple failures across the chain. I still think the best hope for unique and exciting experiences (I'm being a selfish enthusiast here) is a break-up/sell-off of most, if not all, of the parts.

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Wednesday, February 9, 2005 6:05 PM
jan:

Sadly, I'd give up all the coasters to live in Hawaii. Scuba diving is one of the only activities I enjoy more than a good ride on a wooden coaster...

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Wednesday, February 9, 2005 6:54 PM
Jeff, Just out of curiousity what would you consider a reasonable price for a Season Pass for a park such as SFGAm? I was thinking along the line of $100-125.
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Wednesday, February 9, 2005 7:45 PM

I'm partial to the big island myself.
Kauai. Poipu Beach is nice, but honestly I didn't get to see the north and east sides of the island enough. All I need is to figure out how to make that first million...
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Wednesday, February 9, 2005 9:05 PM
The Disney season pass price quoted by the fool is a little misleading. He used the out of state season pass price. The season pass price for Florida residents is probably a more legitimate comparison to use for a local market which is what most SF season passes go to. The in state price is $209. It is still higher than most at about the price of 4 single admissions. Most parks seem to run 2-3 times the single day admission for a season pass, Most of the ones with higher multipliers are also parks that have lower admission prices.
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Wednesday, February 9, 2005 10:41 PM
Then there is the argument that the Disney pass is for 4 parks...

Not that I do not agree that Six Flags is crazy low...

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Thursday, February 10, 2005 1:44 AM

Kick The Sky said:
The problem is that Six Flags focuses on the holy attendance figure to gauge their success. They figure if they can increase attendance that it will boost their profits. Unfortunately, they've already crossed the line of diminishing returns in that avenue. What they need to do is get the guest's money up front and work off attendance figures from there.

Is that really the problem? With per caps going up every year, it doesn't seem like it's in-park spending the chain needs to be worrying about. On the contrary, the numbers that are falling are the attendance numbers, so I find it difficult to really fault Six Flags for currently focusing on the "holly attendance figure."

Obviously, Six Flags thinks cheap gate prices (including season pass pricing) is the way to get attendance to increase. Maybe it works for them and there's something I'm missing, but strictly judging from past performance it doesn't seem to have helped much. What the chain needs to do, then, is to continue focusing on attendance and coming up with a way that's actually going to cause that to increase (without hurting per caps). Personally, I think improved customer service would be the biggest thing they could do right now, but it may not result in a very quick return, and that's obviously what they're looking for.

-Nate

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Thursday, February 10, 2005 9:15 AM
"Six Flags has banked on a cheap gate to get butts in the door and hopes that they'll spend like crazy once inside the parks," says Jeff Putz

I didn't know Jeff's last name matched his personality. J/k

/I know not original

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Thursday, February 10, 2005 9:32 AM
My Family was employed in Management by SF for years. I can tell you that back in the Mid 70's when season passes came into existence at SF- it was a money making proposition. Season pass holders attended the Park an average of 2 visits. That means that they were giving a 10 or 15 dollar discount on the second gate and had people in the Park at least twice.

How do you justify the thought that the gate is too cheap ? Take DCA for example. Disney charges the same gate for DCA as they do for Disneyland. DCA is very poorly attended. Why ? Funny, when Disney gives the gate away DCA begins to have decent crowds. I believe that SF's real problem was their ill-conceived expansion plans. Somebody (Gary Story or ? ) thought small picture. When the chain had 4 or 5 Parks the situation was musch better. There was more management talent for each Park. More Synergy. The "Go wide and cheap" idea just will not work in my opinion.

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Thursday, February 10, 2005 9:34 AM
Nate, if attendance goes up on low park entry fees and season passholders, it negatively affects the per capita revenue.

Examples:

2 million guests total attendance,
20% guests (400,000) pay full price, $45 each
55% guests (1,100,000) pay disc Price, $35 ea
25% season passholders who each go 5x per season accounting for 100,00 holders at $90 apiece
Total gate revenue - $65.5million
Per Cap - just on gate - 32.75

Now keep full and disc level, but change the number of times SP holders come to 7, meaning that that 25% is now only 71.5k holders, gate per cap drops to $31.46 on gate revenue of just under $63million - a LOSS of $2.5 million dollars!

Conversely,
2 million guests total attendance,
25% guests (500,000) pay full price, $50 each
50% guests (1,00,000) pay disc Price, $39 ea
25% season passholders who each go 5x per season accounting for 100,00 holders at $120 apiece
Gate revenue - $76 million
Per Cap - just on gate - $38

Now you might argue that with increased prices, attendance would drop. OK, let's assume a 10% drop in attendance (1.8million guests), except for season passholders who still make up 500,000 guests (100k passes).
1.8 million guests total attendance,
25% guests (433,000) pay full price, $50 each
50% guests (866,000) pay disc Price, $39 ea
500k season passholders guests who each go 5x per season accounting for 100,00 holders at $120 apiece
Gate revenue - $67.5 million
Per Cap - just on gate - $37.5

With this theoretical solution, even with an attendance DROP, Gate revenue went up $2million and gate per cap went up $3.75.

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