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Cedar Fair sees revenue increase 3% through July 4th weekend

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Economy's been roaring, too. I'm almost surprised revenues are only up 3%, but they might see an even greater uptick as the year progresses.

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Part of that might be due to the fact that we had so much rain early in the season. It'll be interesting to see what figures look like later in the year, now that the monsoon season seems to be over

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19 hours ago, bjcolglazier said:

Economy's been roaring, too. I'm almost surprised revenues are only up 3%, but they might see an even greater uptick as the year progresses.

Kings Island held them down with lower than expected attendance.  If any of the 3-4MM parks lose, the whole chain feels it.  Fortunately it had nothing to do with any kind of gaff - it was all weather related.  That causes an elastic uptick in the second half of the season - which really is the busier part of the season.   

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I think these extra events will add significance to the bottom line. Typically, I'll spend money on a blue ice cream cone or a t-shirt once or twice a year. But for both Winterfests, I have spent quite a bit of money. And for Grand Carnivale, I bought a good tasting card and a International Restaurant Buffet. Food can have a very high profit margin.

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The reported "flat attendance" must be questioned.  Since Cedar Fair added a weeks worth of attendance over the Fourth of July holiday weekend at the two new Schlitterbahn Water Parks and Resort in Texas, attendance should have shown a jump.  Rather flat is reported.  Unless Cedar Fair was including the previous years attendance figures from Schlitterbahns in the year over year comparison (FUN made no indication in the press release they had adjusted the comparison to reflect past attendance at the newly acquired parks) attendance across the legacy parks has actually fallen.

This raises the troubling prospect Cedar Fair is not effectively converting marketable capital investments in rides, attractions, place making, cuisine, and guest services into significantly sufficient increased revenues, earnings, or attendance.  The increase in Out-Of-Park, and On-Park, revenues is certainly seems to be a bright spot.  However, we need an better understanding of where the increases are coming from and how the accounting is working.  Schlitterbahn includes a resort hotel.  If those hotel revenues are lumped into the OOP and OP revenues then it is possible this additional revenue is masking poor performance at other Cedar Fair accommodations.

Likewise, locker, cabana rents, food and beverage, towel rentals, etc. at the newly acquired Schlitterbahn parks may be contributing significant enough revenues to mask deeper problems or sluggish revenue being generated by legacy parks.  

Cedar Fair may be looking at a period of slower growth in traditional revenues as hotel and resort revenues increase.  Those revenues may not necessarily enjoy as high margins as the legacy parks and operations.  Additionally Cedar Fair may have some revenue leakage or loss if the Schlitterbahn parks are brought into the season pass system of the legacy parks.  Schlitterbahn season passes are currently reported to be more expensive than a Cedar Fair all-park access season pass.  Maintaining the premium Schlitterbahn gate and season pass pricing my present difficult challenges.  Knowledge as to the cross-over use of legacy Cedar Fair Parks by Schlitterbahn customers would be analysis which could predict the possible revenue leakages or opportunities.  We simply do not know. 

As the summer season moves along time will tell if FUN is experiencing broad based issues with sluggish attendance.  The next quarterly conference call should provide more guidance.  With careful analyst questions the source of increasing OOP and OP revenues should become more transparent.  Expanding seasonal events and attractions has a risk of negative impacts from sever weather issues.  The increasing sale of season passes can provide some cushion as revenues are pre-collected whether the guest actually makes a wintertime or springtime visit to the parks.  But if actual attendance falls, so does the OP revenues.  

Historically marketable capital investments in signature rides has resulted in observable, measurable, obvious revenue increases.  It is troubling he last few years have exhibited a decoupling of healthy revenues from park investments.  Watch for more possible issues with revenue generation at Cedar Fair.  Otherwise it may not all be FUN and games.        

 

 

            

 

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On 7/21/2019 at 5:57 PM, Leland Wykoff said:

The reported "flat attendance" must be questioned.  Since Cedar Fair added a weeks worth of attendance over the Fourth of July holiday weekend at the two new Schlitterbahn Water Parks and Resort in Texas, attendance should have shown a jump.  Rather flat is reported.  Unless Cedar Fair was including the previous years attendance figures from Schlitterbahns in the year over year comparison (FUN made no indication in the press release they had adjusted the comparison to reflect past attendance at the newly acquired parks) attendance across the legacy parks has actually fallen.

This raises the troubling prospect Cedar Fair is not effectively converting marketable capital investments in rides, attractions, place making, cuisine, and guest services into significantly sufficient increased revenues, earnings, or attendance.  The increase in Out-Of-Park, and On-Park, revenues is certainly seems to be a bright spot.  However, we need an better understanding of where the increases are coming from and how the accounting is working.  Schlitterbahn includes a resort hotel.  If those hotel revenues are lumped into the OOP and OP revenues then it is possible this additional revenue is masking poor performance at other Cedar Fair accommodations.

Likewise, locker, cabana rents, food and beverage, towel rentals, etc. at the newly acquired Schlitterbahn parks may be contributing significant enough revenues to mask deeper problems or sluggish revenue being generated by legacy parks.  

Cedar Fair may be looking at a period of slower growth in traditional revenues as hotel and resort revenues increase.  Those revenues may not necessarily enjoy as high margins as the legacy parks and operations.  Additionally Cedar Fair may have some revenue leakage or loss if the Schlitterbahn parks are brought into the season pass system of the legacy parks.  Schlitterbahn season passes are currently reported to be more expensive than a Cedar Fair all-park access season pass.  Maintaining the premium Schlitterbahn gate and season pass pricing my present difficult challenges.  Knowledge as to the cross-over use of legacy Cedar Fair Parks by Schlitterbahn customers would be analysis which could predict the possible revenue leakages or opportunities.  We simply do not know. 

As the summer season moves along time will tell if FUN is experiencing broad based issues with sluggish attendance.  The next quarterly conference call should provide more guidance.  With careful analyst questions the source of increasing OOP and OP revenues should become more transparent.  Expanding seasonal events and attractions has a risk of negative impacts from sever weather issues.  The increasing sale of season passes can provide some cushion as revenues are pre-collected whether the guest actually makes a wintertime or springtime visit to the parks.  But if actual attendance falls, so does the OP revenues.  

Historically marketable capital investments in signature rides has resulted in observable, measurable, obvious revenue increases.  It is troubling he last few years have exhibited a decoupling of healthy revenues from park investments.  Watch for more possible issues with revenue generation at Cedar Fair.  Otherwise it may not all be FUN and games.        

 

 

            

 

Okay, so I looked into your post.  The press release proclaiming the closing of the acquisition was dated 7/1/19, these results are through the July 4th holiday.  Even if those days are counted into the total I do not think it would have had a measurable impact.  

Also, I asked an employee if a Platinum Pass will get you into Schlitterbahn.  They said they didn't know (in their defense, the did offer to find out).  Looking on CF's corporate web site, there is no mention of ownership of any parks in Texas, which leads me to believe that Platinum acceptance will be a next year thing (assuming they will be included with the entitlement, which would be ludicrous to think otherwise).  Does anyone have any insight on this?

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I am kind of surprised that there is no mention of the Schlitterbahn parks on Cedar Fair`s website.  On the flip side, there is no mention of Cedar Fair on the Schlitterbahn park` websites either.  

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Thank you BoddaH1994 and CoastersRZ for your followup comments.  Here are additional observations and information to consider.

A Platinum Season Pass to the Texas Schlitterbahn water parks is listed at $275.00.  A Platinum Season Pass to all Cedar Fair parks is listed at $222.00. 

Thus we can see Schlitterbahn has excessive season pass pricing power of $53.00 annually over Cedar Fair's legacy park system.  This is quite a wide gap when one considers the CF system is composed of almost three times the number of parks as Schlitterbahn.

The absence of Schlitterbahn parks from the CF website--and vice versa--suggests season passes are not being cross honored at legacy parks this year.  Which would make sense.

But what of next year?  Pricing must change or Schlitterbahn pass holders could save a bundle of money by purchasing a cheaper CF Platinum Pass rather than a Schlitterbahn pass.  This, of course, assumes the Schlitterbahn Parks join the unified CF Platinum Pass benefits next year.

Thus revenue is at risk.  Will Schlitterbahn pass costs be reduced to bring it line with the legacy parks pass?  Or will CF pass prices take the substantial jump of over $53.00?  Will such a steep price price jump be accepted by the legacy CF pass holders?

Given the distance of the Schlitterbahn parks from other CF properties does it even make sense to include them in the legacy Platinum Pass product?  And are they even the same type of product?  Schlitterbahn is a water park.  CF legacy properties are amusement parks with water parks attached (only a few of which are operated as seperate gates).

If Cedar Fair believes it can entice a significant number of Schlitterbahn guests to travel the thousand or so miles to legacy CF parks season pass revenues could see positive impacts.  Likewise if CF believes legacy giests will travel to Texas for a water park experience they could maintain the premium pricing power of Schlitterbahn's superior Platinum Pass.

However, this seems like a stretch to me.  Why pay hundreds of dollars more across a family purchase of CF season passes simply because it includes Texas waterparks you are unlikely to visit?

The report by CF of revenues thru the holiday period likely include a weeks operation of the two acquired Schlitterbahn parks rather than just two to three days.  This uptick in attendance is masking falling attendance at legacy parks.  The gain is offsetting a loss.

Recall CF exited the stand alone water park business some years ago when it sold off properties not attached or adjacent to amusement parks.  Specific business reasons were clearly outlined by CEO Matt Ouimett for eliminating non-core operations.  

 

Cedar Fair's dive back into stand alone water parks is puzzling from this perspective.  It suggests FUN sees limited growth opportunities elsewhere. 

CF has suffered a decade long acquisions drought.  Let us hope the Schlitterbahn purchase is not a wet move.

 

 

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I wonder if it would make sense to introduce a "Platinum Pass Plus" tier where, for an additional $53, you can visit their premium waterparks in Texas. Disney does something similar with their ticketing. But perhaps that would get confusing with how many Cedar Fair waterparks are not separate gates.

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It could be very interesting to see what Cedar Fair would do with the KC park if they purchase it. In my head, the park is so tied to the Verruckt incident that no rebranding is going to clear its name. I'd sooner expect to see them purchase it IF its individual assets can be sold off at a profit. It feels like it has too many parallels to Son of Beast (the name and physical presence is associated with danger) to continue as an operating waterpark.

I also wonder if Kansas waterpark regulation has changed since the park last operated. Given the park's alleged issues with most of the slides not being approved by the state on opening day 2017, I'm wondering if there are elements of the park that would need to change in order for it to even operate.

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