Cedar Fair Coaster Riders Buy on Credit in Disney Shadow
After years of reining in spending, Aney Salas was ready to spring a bit for her kids to have some fun. So they headed to Knott’s Berry Farm, a 73-year-old amusement park near Los Angeles. The draw, other than nine terrifying roller coasters: annual passes that cost $72 each, payable in six monthly installments of $12.
“A payment plan really helps,” the 31-year-old mother of four said while shepherding her flock out of the car. “It makes it really affordable.”
Matthew Ouimet, chairman and chief executive officer of Cedar Fair LP (FUN), which owns 16 amusement and water parks including Knott’s, expects attendance and sales at the company to exceed last year’s records in part due to pricing initiatives such as the payment plan introduced in February 2012.
Knott’s, operating in the shadow of Disneyland just six miles away, also offers a discount of as much as 38 percent off the $60 single-day ticket to people who buy in advance online. Customers who hate waiting can pay $35 extra to cut to the front on 12 popular rides such as Montezooma’s Revenge, which sends riders “zooming” forward and backward through a seven-story loop.
“We’re seeing a barbell economy,” Ouimet said over the screams of roller-coaster riders in the park. Some consumers are willing to pay extra for perks such as cutting lines, while others require “a more benefit-oriented” pitch.
Even on vacation, some travelers remain cost-conscious. Visits to Orlando, Florida, the theme-park capital of the U.S., reached a record 56.8 million last year, according to the local tourism authority. But air travel to Orlando was down, according to local airport data, suggesting growth came from travelers piling into cars instead of paying for plane tickets.
Cedar Fair, based in Sandusky, Ohio, owns Kings Island in Cincinnati, Canada’s Wonderland in Toronto and Dorney Park in Allentown, Pennsylvania. Two-thirds of guests live within 100 miles of the parks they visit, making them more likely to purchase season passes, Ouimet said.
Sales of passes climbed 10 percent last year with the introduction of the payment plan, Ouimet said. Customers using passes accounted for almost 40 percent of the 23 million visits to Cedar Fair parks last year, up from one-third the year before. The loyalists become salespeople, he said, convincing friends and family to buy passes, too. The company raised the price by 7.4 percent in January.
Walt Disney Co. (DIS) raised the price of its premium annual pass to Disneyland and California Adventure in Anaheim by 30 percent last year, to $649. The increase follows a $1.1 billion remodeling of California Adventure that included the introduction of the Cars Land attraction.
“They put a significant investment in to change the character of that park,” said Matthew Earnest, a principal at theme-park consultant Entertainment & Culture Advisors in Beverly Hills, California. “That helps justify the higher price.”
Attendance at Disney’s domestic parks rose 3 percent in the year ended Sept. 29, the company said in its annual report. Operating income climbed 22 percent to $1.9 billion, the company said. Its shares are up 26 percent this year. Disney also sells Southern California residents passes good for less than half the days in a year for $269.
At Cedar Fair, net income rose 43 percent in 2012 to $101 million, or $1.81 a share, on a 3.9 percent gain in revenue to $1.07 billion. Profit was still below the $161 million peak in 2005. Shares of Cedar Fair tripled from 2010 to 2012 and have also gained 26 percent this year.
Southern California has long supported a variety of theme parks, from premium-priced Disneyland and its elaborate attractions to Universal Studios, Six Flags Magic Mountain and Knott’s. All offer season passes and payment options.
Sales at Six Flags Entertainment Corp. (SIX), based in Grand Prairie, Texas, rose 5.6 percent to $1.07 billion last year as attendance increased 6 percent. Its shares have risen 19 percent this year. SeaWorld Entertainment Inc. (SEAS), controlled by Blackstone Group LP (BX), sold stock in an April 19 initial public offering at the top of its proposed range. Shares of the Orlando-based company are up 24 percent since then.
Ouimet, a 17-year Disney veteran who led the company’s Anaheim resort before departing in 2006, has been adding attractions on a more limited budget since he joined Cedar Fair two years ago.
He’s dusting off an old ride called the Wilderness Scrambler that was in storage and reintroducing it as part of a remodeling of Knott’s family-oriented Boardwalk area opening May 25. He’s also restoring old models of California’s Spanish missions, Catholic outposts dating from 1760s to 1830s, that were a feature of Knott’s in the 1950s, for display in the park’s Western-themed Ghost Town.
Cedar Fair plans to spend about $100 million on capital improvements this year, the company said. That includes the GateKeeper, a winged roller coaster opening May 11 at its Cedar Point park in Sandusky.
The ride got its name because it roars over the front gate where admission booths once stood. The gates are less crowded these days since more visitors are buying in advance or flashing season passes to get in, Ouimet said. That doesn’t mean they don’t stop to look at the cars roaring down the track overhead.
“Coasters,” he said, “are easy to market.”
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