Shapiro at it again?
Even though I don't spend hundreds of dollars per visit, I feel that I am a classy person. I buy nice clothes and am very smart. I am not a trashy person, as some people have been suggesting.
And what does it say about SF when they have so much trouble competing with other large parks within the same State? HP, SFGAdv's close competitor, charges something like $40 admission, while SF charges $60. If only someone would build a nice park in NJ...
Spelling *** Edited 1/22/2007 7:55:45 PM UTC by dexter***
If we are looking at Six Flags prices, we need to compare them to other comparable parks.
I say you have it exactly backwards. You don't look at comparable parks, you look at other parks in the same area. In fact, that was kind of the whole poine of the size/location rule.
What is a comparable park to SFGAdv? One with a dozen coasters catering to one of the largest metropolitan areas in the world. There is no comparison. And even if you stretch it, there is no *good* comparison.
There is a point, however where the food prices get so high that not only do they reduce food sales volume substantially but they also cause many people to avoid the park altogether.
Yeah, I know. I've been saying it ad naseum lately. The opposite end of the spectrum is a price point so low that you're leaving money on the table. The key is to find the most effeicient number between those two points.
By the way, some park owners show in other ways that they care about more than the bottom line. Once Premier Parks wanted to buy Kennywood and offered a very good price. The KW owners said no... Do you really believe that the Knoebels and Kochs would sell out if they were given such an offer? I sincerely doubt it because of the love affair that they have with their parks.
Yeah, but you've named three operators/parks. (and do so repeatedly :) )
We all know those parks represent the pinnacle of small park, family owned fun. Here's the catch - those parks are far and away the exception to the rule. There's a couple of hundred parks in the US alone. At best these three parks represent 1% of the US industry. You don't define the exception as the rule.
Using the same numbers SF represents around 10% and caters to 20 times the guests of those three parks combined each year.
Based on that coverage, what do you think the average person expects when they go to an amusement park?
Even though I don't spend hundreds of dollars per visit, I feel that I am a classy person. I buy nice cloths and am very smart. I am not a trashy person, as some people have been suggesting.
Yeah, drawing that parallel bugs me too, Dex and it seems to be happening more and more.
Six Flags seems to be wooing the guest who spends money. That has nothing to do with the character of the person. It's not like they want to be a "suit & tie" park. Hell, I'm sure they're be ok with missing teeth, B.O. and torn, soiled overalls for all if people were spending.
HP, SFGAdv's close competitor, charges something like $40 admission, while SF charges $60.
And SFGAdv has consistently outdrawn HP over the years based on the attendance figures that trickle down to us peons. I'm not sure that qualifies as having "trouble competing."
dexter said:
I believe that SF charged more "than what people are willing to pay" even before the recent price hikes, and that's why they are in this mess.
And again, maybe I'm just splitting hairs here but I really don't think, looking at the big picture, it's the price point that's screwed up, it's the product.
People are clearly willing to pay $60 to get into SFGAdv because the park is still packing them in. People just aren't willing to spend *more* because the food sucks, the service sucks, the employees suck, and the unnecessarily long lines suck.
It's not that I'm cheap. When I go to EPCOT I full expect to drop $50+ personally on food alone. Would I eat more if the product was cheaper? Probably not, because I already stuff myself silly when I'm there.
If the product is good you can literally jack up the price all you want (Disney!), the real meat of the problem is that SF's product is still screwed, and the biggest reason I freak when I hear the potential for things like removing the re-entry policy is it's bypassing the real issues.
Fixing cultural problems within the parks is really hard, though. Potentially not letting people go out to their cars is like slapping a band-aid on a gaping flesh wound.
Arthur Bahl said:Do you really believe that the Knoebels and Kochs would sell out if they were given such an offer? I sincerely doubt it because of the love affair that they have with their parks.
I can't speak for DK...but Pat Koch spoke for herself and her family when she said, quite plainly, that the Kochs DID in fact get a "surprisingly generous offer" for their park....
HW is still family-owned and operated... :)
SFA to HP is a fair comparison and HP wins because of it's service, and there maintainence. It's operators are just as bad as SFA's.
I believe that SF charged more "than what people are willing to pay" even before the recent price hikes, and that's why they are in this mess.
I'm not sure about that. As far as we know, all of the parks (with maybe one or two exceptions) are profitable---they earn more than they spend. The problem is that Six Flags took on way way more debt than they can effectively discharge given the profit streams they have. They just grew too fast. That's true in individual parks (c.f. Geauga Lake), as well as for the company as a whole.
That said, they are not a particularly effective operator. Their margin in 2005 (operating income/revenue) was 16.8%. That compares poorly to Cedar Fair, which was over 24% in 2005---this is their operating income number, not the EBITDA number. Disney is harder to figure, because they lump parks and resorts, but that segment was 17.9% in 2006.
(All of these numbers come from each company's annual report: '05 for PKS and FUN, '06 for TWDC.)
So, Six Flags is not ridiculously far away from the competition in terms of profitability. What's killing them is their crushing debt; debt service alone more than wipes out all of their operating income, and that's before taxes, etc.
Even though I don't spend hundreds of dollars per visit, I feel that I am a classy person. I buy nice clothes and am very smart. I am not a trashy person, as some people have been suggesting.
I fear I might be one of those people, and so I want to make it clear: that's not at all what I'm trying to say. It's not that SF wants a certain "class" of person. It's that they want to attract people willing to spend a certain amount of money. Those two things are not necessarily the same, at all.
In fact, most of the people on this board are probably willing to spend significantly more money on parks than others making approximately the same as we do each year.
In other words, SF doesn't so much care about how much money you have. They care about how much you are willing to spend with them in a day.
Edited to more clearly identify the numbers I'm using.
*** Edited 1/22/2007 8:36:54 PM UTC by Brian Noble***
matt. said:
Just to clarify, you think HP's ops are as bad as SFA's?
HP's ride ops are just as bad as SFA, Great Bear, Wildcat, Comet, SR, and Sidewinder crews were just as slow or slower than SFA crews. LR and Wild ones 2006 crews were the only two that could usualy get there trains out in any where near when the should have. The GB crew was so bad they didn't even know how to check seats correctly the three times I rode all they did was grab the seatbelt when they checked the seat. *** Edited 1/22/2007 8:48:01 PM UTC by TSC 2007***
People are clearly willing to pay $60 to get into SFGAdv because the park is still packing them in. People just aren't willing to spend *more* because the food sucks, the service sucks, the employees suck, and the unnecessarily long lines suck.
I'm not even sure that's completely true, but there is some merit in it. SF's per-capita in-park spending (revenue/attendance) in 2005 was a little bit less than $15. Admissions revenue contributed the rest, for a total of $32.37.
Cedar Fair's in-park per-capita spending was quite a bit better, at almost $19.50. Total was $39.46. So, CF gets about $4.50 more per patron inside the park, and about $2 more per patron in admissions. I can not find a comparable number in Disney's annual report.
My pet theory for the differences: SF's cheap season pass. That pulls down their admissions revenue (and 28% of their '05 attendance is from passholders.) Plus, discounting begets discounting---cheap season passes encourage people to be cheap elsewhere too.
Cedar Fair, on the other hand, has been talking a lot lately about using geographical diversity to hedge against weather problems. They aren't as concerned with any individual region getting slammed with rain, as long as someone else in the chain can make up for it.
Very different perspectives. *** Edited 1/22/2007 8:58:16 PM UTC by Brian Noble***
Six Flags praised their season pass program as a way to build a pre-sold attendance base as a hedge against bad weather.
That explains a lot. Now with the park portfolio shrinking this probably means even more to them than before.
Maybe if we'd just find the info available to us, some of their decisions would at least have reasoning behind it.
Good stuff, Brian. :)
I don't know what KWs percaps are (they are a private company so they don't have to release them) but I would expect them to be around $35 or maybe a little more. The average admission is probably around $20 with some paying around $30 (full price) others paying the senior and night rider rates which are less than the average. There are no season passes to dilute the per capita admission revenue. The rest of the money comes from in-park spending. Some guests spend very little in the park (they bring their own food, etc) but others spend considerably more on food, drinks, games, merchandise, and upcharge attractions. The prices are reasonable within the park and that does encourage some people to spend money even with the parks permissive policy on outside food.
Arthur Bahl
It's only 60 bucks, about the cost of going twice so why not?
Lord Gonchar said:
Anyone know how they did it at the Mexico park?
I think the problem was people left the park in Mexico and re-entered at Fiesta Texas. :)
Honestly, from a PURE economics base, the guests AND the park should be happiest where revenue is maximized...the "pareto-optimal" solution... ;)
Brian Noble said:
People are clearly willing to pay $60 to get into SFGAdv because the park is still packing them in. People just aren't willing to spend *more* because the food sucks, the service sucks, the employees suck, and the unnecessarily long lines suck.
I'm not even sure that's completely true, but there is some merit in it. SF's per-capita in-park spending (revenue/attendance) in 2005 was a little bit less than $15. Admissions revenue contributed the rest, for a total of $32.37.Cedar Fair's in-park per-capita spending was quite a bit better, at almost $19.50. Total was $39.46. So, CF gets about $4.50 more per patron inside the park, and about $2 more per patron in admissions. I can not find a comparable number in Disney's annual report.
My pet theory for the differences: SF's cheap season pass. That pulls down their admissions revenue (and 28% of their '05 attendance is from passholders.) Plus, discounting begets discounting---cheap season passes encourage people to be cheap elsewhere too.
Can you explain that for me? How is admission getting only about $15.00 for per cap, and $15.00 for the rest of stuff. How is that possible? Is that the revenue minus all the other stuff in the park (rides operating, employees, and so on)?
(PS: this was 2005, before the large gate increases.)
For starters, let's say there's an average of 3.75 people per car. at $15 parking, that's $4 towards the per cap (Not $15). Now let's say that 10% of the people that make up that figure are a part of the Six Flags Babysitting Service (since 28% of their attendance is from the SP, that's not unreasonable). They get dropped off, so SFI isn't even getting revenue from a parking pass, much less parking. You're now down to 3.60/person. Now factor in the people who have a parking pass. Yes, it's more than $15 toward raising the figure, but most of the people who get those go a few more times than the break-even point. It doesn't take a math genius to see that it brings that down even further.
That's just parking. Let's take a look at getting in to the park. For purposes of calculation, let's assume $50 admission, $75 season pass. If you assume that everyone pays full price, going with a sample set of 1000, and 28% season pass holder makeup of the attendance, that means 720 full-price admissions, or $36,000. The piece of data missing here is how many visits per season pass, but for sake of argument, let's low-ball that at 2-per-passholder. That means that of the 280 visits remaining in our sample set, it's 140 season passes.. at 75/each: $10,500. Total of $46,500. Now with a sample set of 1000, it's easy to see the admission per cap would be $46.50. Raise the number of visits per passholder to 3 and it changes to $43.00, at 4 it's $41.25. Given the Six Flags babysitting service, I'd say that's a better estimate. We've already "lost" almost $10 in percap off the best-case scenario, just in figuring season passes!
Keep in mind, this is also assuming FULL price admission for everyone. Pre-season discounts on season passes drag per-cap for admission down further (same number of visits, less $$ in the equation). Group discounts drag this down quite a bit further. Coke-can discounts on one day admission drag it down further. 2-day combo tickets drag it down further. Child admission drags it down further. Twilight admission drags it down further. Fast-food restaurant coupons for discounted admission drag it down further. Online discounts drag it down further. Heck, even free-admission-trade agreements with other local amusement parks drag down that per-cap admission figure. (Even if they spend in the park, it STILL negatively affects the admission per-cap figure since they aren't paying anything and count as a "visit") Six Flags also likes to give out coupons for free/reduced tickets at guest services as compensation for poor service. If these are used, they bring down the admission per-cap further.
That's 10 "furthers" that bring down the admission portion of the per-cap figure. $15-$20 sounds like it's in a good range all of a sudden, no?
Granted, most of these discounts result in additional sales that would not be there otherwise, and for the most part are a good thing for the overall bottom line, but the PER CAP is what suffers, and why it is (and makes logical sense) in the ballpark of 1/3 the cost of full-price, adult, 1-day admission.
I mean, how many people out there actually pay full price, adult, 1-day admission without a discount of any kind?
As for in-park spending, yes the prices are high, but don't forget all the people, season pass or not, who don't buy anything. That figure seems about right to me.
Oh, and somewhat unrelated to per-caps, but about the pricing in the park in general... the next time you're in line waiting 30 minutes for food at Six Flags, I want to hear you say again that the prices should be lower "so they can sell more food to more people." Seems like they're already running at capacity on their foodservice most days-- why would I want to wait an EXTRA 30 minutes (total of 60 minutes) just to save $4 off my meal? That's $8/hr, and according to my employer, they say my time is worth more than twice that. I'll pay the extra $4 and go on another coaster, thank you!
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