Leland Wykoff

Interesting takes on the new Cedar Fair logo from design folks: http://www.underconsideration.com/brandnew/archives/new_logo_for_cedar_fair.php#.VVZbG5M9nIU Having helped develop a couple of visual identity programs I also feel the new logo seems like a first round draft rather than a fully crafted finished product.

The Reviews are In: Voyage to the Iron Reef is great new addition to Knott's Berry Farm. Or so multiparty experts across many disciplines including theme park design, ride development, video game technology, and former Disney Imagineers, seem to agree. Read and watch the slide show featuring the Orange County Register's blue-chip review panels findings: http://www.ocregister.com/articles/knott-661829-blue-good.html

This is the way smart money works. Pigeon Forge is in the middle of a Cal Ripken Experience development. Except Pigeon Forge taxpayers are tapped for the full cost of site prep, construction, acquisition, road improvements, parking lots, utility provisions, and it will primarily serve peak summer baseball tournaments--a time lodging facilities are already at full occupancy. Pigeon Forge will spend upwards of $60 million in public dollars before all the final costs are tallied. Calk Ripken has no skin in the game. Only the taxpayers are being skinned. But at least Pigeon Forge projects a payment of twelve thousand dollars from Ripken in the first year. No kidding.

Here is the announcement and web page. Sorry for the delay some problem getting on KICentral earlier today: http://www.visitrichmondva.com/things-to-do/vathrills/ Interesting. Worth a site visit.

Behind the Thrills is reporting a partnership between Cedar Fair's Kings Dominion and Busch Gardens Williamsburg to co-market the parks and region as a family gateway to the Northeast: http://behindthethrills.com/2015/05/kings-dominion-and-busch-gardens-williamsburg-to-announce-partnership/ Behind the Thrills indicates the official announcement is to take place tomorrow. The partnership, involving many tourism agencies, will reportedly include a combination ticket good for both parks. Will be interesting to see the details as they emerge and are expanded upon in Tuesdays announcement. As always, one should read between the lines and pay attention to what is not said.

It is not clear Cedar Fair has maximized the winter usage and occupancy at Castaway Bay. Perhaps now Hotel Breakers is rebuilt (with insulation and weatherization) management will work to extend the season for these resorts and sell rooms in the off seasons. This could be a boost to hotel revenues, and thus achieve a leveling and reduction of costs, resulting in more profitability. Considering Hotel Breakers now enjoys the largest capital investment ever made on Cedar Point is seems likely CEO Matt Ouimett will move to make the investment payoff handsomely. Ouimett knows from his time at Starwood Hotels and Resorts and Disney a hotel room is one of the most perishable items in existence. If you do not sell the room tonight you can never sell that room night in the future. The revenue opportunity spoiled and can never be recovered. Your cost of inventory is very high on the fixed cost side--think capital investment, labor, marketing, insurance, utilities--while very slim on the variable cost side--think housekeeping and some utility costs. Rates at Hotel Breakers are inline with the previous years rates. Room count is down (loss of at least a wing of rooms) offset by a greater number of suites. Suites should command higher Average Daily Revenues. The low hanging fruit to pick thus becomes renting more rooms in the off seasons. Hotel Breakers is now nice enough to attract meeting business and specialty groups in the shoulder seasons. Look for management to begin to improve yield management of Castaway Bay and Hotel Breakers. That is the ripe opportunity.

Excellent updated news on Hotel Breakers renovation and reopening. See story, video, and photos: http://www.cleveland.com/travel/index.ssf/2015/04/cedar_points_historic_hotel_br.html Story reports room count dropped to 511 from the former 650. However, many of the accommodations are now suites. Rotunda rooms are again open after many years of being closed. Rates are comparable with last seasons and are reported to range from $200.00 standard, to $500.00 for a suite. A nice (short) historic photo tour is also attached to the story. Enjoy!

Fresh Air, on NPR, with Terry Gross had an interesting interview with John Hargrove, author of Beneath The Surface. Listen to the interview and read a story here: http://www.npr.org/2015/03/23/394730076/former-orca-trainer-for-seaworld-condemns-its-practices

Of course The Interpreter is correct on the percentage gain in the original transaction. I intended to refer to the price percentage gain Apollo will take home on this deal after they close with Centerbridge Partners. Reported price to Centerbridge $1.35 billion. Apollo paid $876 million. Thus Apollo stands to gain $475 million. Had the shareholders not forced a higher payment (57% higher!) than management struck the deal for, that extra fat would have fallen to Apollo. Roughly $499 million additional dollars were returned to the shareholders. Shareholder actions returned more additional funds to the shareholders than Apollo apparently ultimately made on the deal. Shareholders thus gained roughly 2/3 of the full value rather than the roughly less than 1/3 value Apollo/GWR originally proposed. The real lesson here is why management and boards continue to support deals that return so little to the shareholders. One can also question the need to have sold the company at the time. From the results we see now--and Apollo expected all along--and management must have had an inkling of as well--great wealth and reward was directed to the folks who arrived late at the party. Remember, it is the shareholders who hosted the party. It is they who should profit.

The sale of Great Wolf Resorts to Apollo was not without its problems and issues. The proposed original merger did not come close to a fair evaluation and payment to GWR shareholders. The merger consideration was substantially increased, from the paltry $5.00 per share to the final price of $7.85 per share. As in the proposed merger of Apollo and Cedar Fair management of GWR continued to insist the original offer price of $5.00 per share was fair and fully valued the company--despite the shares surging, and remaining above, the $5 offer price virtually from the moment the proposed deal was announced. In both cases management was quite eager to be acquired at a fire sale price. That may, or may not, have had something to do with the management contracts they were offered under the proposed merger agreements. Great Wolf Resorts under Apollo Management completed two additional resorts but did not build and design them from the ground up. Those plans were already underway. In any event the GWR increased merger consideration deal was informed and shaped by many common shareholders at both the individual level and at the institutional levels. Individuals and institutional investors fought hard and waged a campaign to either sink or increase the consideration in the GWR deal. The existence of rather exotic mortgage-type bonds at GWR made that deal easier for institutions to block than the Cedar Fair boondoggle. Failing to gain bond holder approval for the change in control provision the deal could not complete. Institutions holding said bonds did not grant those change in control requests. At least until the deal was sweetened. The rather rapid turn-out of GWR within two years speaks to the great discount to actual value Apollo was able to achieve even in the face of shareholder activism. But at least the original shareholders managed to capture an additional 30% of the upside value by holding out and refusing to accept the original offer which was so far below market. The real lesson in these deals is the behavior of entrenched management. One wonders why they stick to defending such stinker deals all the while insisting employment agreements, completion bonuses, and equity in the new company played no bearing upon their recommendation in favor of the merger. Yes, telling, indeed.

Knott's Berry Farm is returning to jam and jelly Boysenberry products as part of an overall improvement of food, service, festivals, and theme improvements. Orange County Register has an interesting article and is worth the read: http://www.ocregister.com/articles/knott-655635-boysenberry-berry.html

Video promotion for the newly refreshed and renovated Hotel Breakers: https://www.youtube.com/watch?v=FdJyXI-DIMk&feature=youtu.be

The LA Times has a story from a bit of a different angle and is worth the read: http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-disney-thomas-staggs-bob-iger-ceo-20150206-story.html#page=1&track=email|escal|7||||||20150207

Disney elevates Park division head to number two corporate spot as Chief Operations Officer. Thomas Staggs has a long history at Disney and is now seen as likely to be the current CEO's successor. Full story here: http://www.nytimes.com/2015/02/06/business/media/walt-disney-company-names-thomas-staggs.html?ref=business

Kings Dominion Water Park re-branded as Soak City, New food, landscaping, cabanas, family changing areas, restroom facilities, wi-fi, televisions, and restaurant. First expansion since 2007 will transform area and open with the 2015 season. A naming contest is also underway on Facebook: https://www.facebook.com/kingsdominionva For more information on the wave of changes please see: http://money.cnn.com/news/newsfeeds/articles/prnewswire/CL24743.htm

The worm turns: Apollo Management now reported as taking steps go public with Great Wolf Resorts or engage in a sale of the company. This is a quick turn of events, as Apollo only acquired Great Wolf in 2012 after a battle royal. Recall the original Apollo offer was $5.00 per share and activist investors supported a bidding war which resulted in a final acquisition price of $7.85 per share--one of the largest gains ever in the markets for this type of merger. Seems Great Wolf was worth substantially more if Apollo can now contemplate selling for, or otherwise harvesting, a significant gain less than three years post merger. See more details here: http://www.reuters.com/article/2015/02/04/us-greatwolfresorts-m-a-exclusive-idUSKBN0L82NW20150204?nl=business&emc=edit_dlbkam_20150205

Food Announcement for Carowinds delivers superior offerings and thematic elements: http://www.4-traders.com/CEDAR-FAIR-LP-12697/news/Cedar-Fair--Carowinds--Releases-Amazing-2015-Events-Schedule-19774561/

SeaWorld is in disruption. Who would have thunk? News since December 4th has been interesting: Royal Caribbean rushed to secure, and announced purchasing, the keel rights for two new large ships from French yard STX France--taking two Russian warship keel times. RCL no doubt wished to keep these earlier keel times from market due to the announcement of Virgin Cruises plans. Had Virgin snagged these keel rights they could conceivably go to sea earlier than the "end of the decade" they projected. The entry to two additional mega-liners to the market (the ships are announced as joining the RCL Celebrity brand) may be intended to erect barriers to Virgin Groups plans. Please see: https://uk.finance.yahoo.com/news/french-shipyard-1-5-bn-030524800.html Sea World is in turmoil. The removal of the CEO and announced layoffs suggest finances at Seas are more dire than originally projected. Speculation concerning the sale of particular SeaWorld assets has already been raised. Please see: http://behindthethrills.com/2014/12/seaworld-ceo-to-step-down-as-company-enters-restructuring-period/ SeaWorld's largest parks are located near cruise ports and this reality should not be overlooked by the intrepid observer. Sir Branson announcement for Virgin Cruises is clear: “We think we can program the ship in ways that is different than what is being done today.” Additionally NY Times quotes Evan Lovell, a partner at Virgin Management Limited, “The whole point of being on a cruise ship is to be connected to the ocean, to be connected to the sun and the wind,” while giving passengers more opportunity to experience life at sea. Branson has an admired track record in entering established industries with high capital costs and loyal customer bases. He does so by imagining not what is, but what can profitably be. Massages on his Virgin Atlantic flights and at airports, limo service for fliers, showers on arrival, superior airline food quality and service, to name a few. His ideas reformed British Airways which attempted, sadly, to use regulations to restrict and limit his efforts. Virgin tends to view the product not as an airline seat (for example) but rather the total travel experience encompassing port experience, transportation, purchase ease, superior service, meaningful product additions, all delivered in a fun environment programed to appeal to profitable customers. This history makes one wonder, how could Virgin view the cruise cabin? Now Branson seeks to change and disrupt the cruise industry. It would not be wise to bet against him. Reviewing cruise industry history one can see how disruptive the "Free Style Cruising" of Norwegian Cruise Lines was. Carnival went haywire. The design of ships across the industry was immediately impacted--recently completed ships of competitors had to go into dry dock for extensive renovations to add amenities such as restaurants and flexible dining options. Ships under construction were delayed whilst significant and unexpected design changes were incorporated. Disney also disrupted the cruise industry when they entered the market. Water slides, costuming, shore and shipboard activities all had innovative aspects. Tom McAlpin, former presedent of Disney Cruise Lines, is on board with Virgin Cruises as chief executive. Branson seeks to offer new services and connection to the sea and to sea life in the cruise industry. SeaWorld went quickly from troubled to in full crisis mode. Make no mistake, Virgin plans accelerated the crisis. Goddess knows what Branson has up the sleeve. I am guessing "disruptive" would be, at the minimum, a good starting characterization.

...or Richard Kinzel and the Kinzel Kids.

Richard Branson plans to "disrupt" the cruise industry by launching a new Virgin cruise line: http://dealbook.nytimes.com/2014/12/04/richard-bransons-virgin-empire-to-offer-cruises-on-the-high-seas/ Be watching for some negative impacts on Sea World Entertainment.

Interesting. Cheap park assets may be coming to market. Sooner rather than later.

Significant news concerning hotel investments and returns were covered in the Q&A portion of the call. Steve Litt of 4010 Capital inquired about rate opportunities and possibilities of completion delays and the direct and indirect benefits associated with the renovations. CEO Matt Ouimet expressed confidence the Breakers project was progressing on or near schedule despite surprises which have been encountered when opening the walls within a 120 year old property. Ouimet reiterated the hotel project(s) were projected to have returns below the generally expected range of 15 to 20 percent. He referred to "primarily an episodic investment" and catch-up capital investment. The CEO indicated the occupancy gains would be minimal as they run near full already. He hinted any gains would come from rate increases and the gains of extended stays with additional on park time and spending. This represents a pulling back from earlier statements when Cedar Fair indicated rate increases tied to the three tiered strategy of "good, better, best." Also of note was the lack of any mention of hotel refreshment progress at any Cedar Point properties other than Hotel Breakers. Room inventory at Hotel Breakers will be reduced modestly following the renovations. Major surprise was in the answer to a question by Ray Cheesman of Anfield Capital concerning early bookings for Hotel Breakers. Ouimet indicated they do not see significant hotel bookings until spring. This may suggest rates are not yet set or are under review given the trends from this past season. The sudden pull back from dynamic, tiered, increasing, pricing is puzzling and perhaps troubling. One wonders if the extensive Hotel Breakers rebuild project was necessitated by new regulations which would not allow for the removal and replacement of the hotel on the current foot print so near shore. Cedar Fair seems intent on anchoring the underutilized mile beach front with the Breakers. No doubt additional investments will be necessary to monetize the beach given the lack of positive guidance for hotel revenue increases. Please see the Seeking Alpha transcript of the 3rd quarter conference call, page 6, for more information: http://seekingalpha.com/article/2651655-cedars-fun-ceo-matt-ouimet-on-q3-2014-results-earnings-call-transcript

Hotel Breakers Remodel Extensive, Beyond Refreshment New photos documenting the extensive interior demolition, renovation, rebuild, and restoration of Hotel Breakers at Cedar Point: https://www.cedarpoint.com/blog-article/online-fun/Hotel-Breakers-Progress Note photos of interior stripped down to framing bare bones and new space layout underway. For a good follow-up article please see: http://www.morningjournal.com/general-news/20141030/hotel-breakers-entrance-demolished-as-cedar-point-plans-renovations This article reports the rotunda will be preserved to its original glory, will restore guest rooms to the rotunda, re imaged front entrance, refrigerators, LCD terminals, new and refreshed walk-in beach style pool with hot tubs and water play areas, the lobby, reception, and rotunda areas will be restored to near original look while guest and public rooms will be realigned and receive new fixtures and furniture. All of this seems to be well beyond the originally announced "hotel refreshment" program. Having considered, in this forum, the costs per room Cedar Fair likely planned to expend the scope of the project comes as no surprise. See my post above (comment 13) from November 7, 2012.

Not all relatives are upset. Some just wish it could have been a more positive remembrance. Nice letter to the editor from one relative: http://www.mcall.com/opinion/letters/mc-dorney-park-plarr-name-weinstein-20141011-story.html

Seems the road to heck is paved with zombies and good intentions: http://www.mcall.com/news/local/mc-dorney-park-plarr-family-halloween-20141003-story.html