If your objective is to find a career in the amusement park industry, no matter what role you seek it will serve you well to become a student of the business model. This post is for you. At least once every couple of weeks I get a request to provide consulting advice to “interested parties” examining the regional amusement park business. I will give them credit for tenacity as it is rare that my initial denial isn’t followed by at least two more requests with generous hourly rates. I have declined one hundred percent of those requests. Here is a freebee. As of late last year, I no longer own any interest in regional amusement parks. With that potential conflict eliminated I feel more comfortable writing about my perspective on the business. The business model has traditionally had several favorable attributes: · It has high margins and generates a healthy amount of free cash flow · Barriers to competitive entries are high · It has proven to be recession resilient · Excess cash was distributed to investors Traditional challenges have included: · The vagaries of weather are uncontrollable · Profitability is concentrated in one-third of the portfolio · Significant recurring capital is required · Revenue is concentrated within 4-6 months What has changed: · Two of the biggest players have merged · The merger provides the advantages of scale and some mitigation to concentrated weather and park risk · Inflation has significantly impacted the largest costs – labor and cap-x · Distributions/dividends have been suspended indefinitely in favor of reducing debt leverage and incremental cap-x · Forecasted returns are dependent upon the achievement of cost synergies, potentially pressuring the simultaneous goal of improved guest value perceptions. · Returning to high-water attendance levels may be hindered by elevated pricing · Elevating brand and park reputations requires a long-term, sustained commitment to an enhanced guest experience, including incremental cap-x What will be the keys going forward? The same things that have always driven incremental growth, innovation (in every area) and disciplined execution (in every area). Not just incremental innovation, but needle moving innovation. Things that make the experience worth more and, importantly, the marketing messages more compelling. And finally, one last key to success - something that is in short supply in publicly owned companies - patience.
Paul Draper
1mo
Great insight! Direct, compelling, and deep.
Zach Horvath
1mo
So interesting that profit is concentrated in one-third of the portfolio. Is there any gain to holding on to the other two-thirds?
Tay Mauro
1mo
"Returning to high-water attendance levels may be hindered by elevated pricing" This is a key point I'm glad was called out because I think "the street" has long looked at attendance as a key metric to success Q over Q. At ~4 years out from COVID, many regional players are still not at 2019 levels which could mean it's the new norm and we're not going to be returning to once what was. This shifts the strategy from getting people through the gate to getting people who are going through the gate to pay more. Maybe 2025 will be the year that bucks the trend on pressed visitation but I'm not holding my breath...
Jeff Kurtti
1mo
I believe an important element that is "obvious when absent" is cultural curation, strategy, and synergy. It ties directly to your last note about patience, and also to a focus on knowledge about and passion for the people and ideas that created the successes in the first place. (Jim Cora fundamentals 😉 )
Don Decker
1mo
I assume CP has studied the impacts but it will be interesting to see what happens to seasonal staffing as they’ve now rolled back the hourly rate by $5 and hour (25% decrease). When they initiated that Covid inspired increase I knew this day would come…but it might be a rollercoaster of a season for HR.
I think your final comment applies to all aspects of life
Julian Manriquez
1mo
In my personal experience, I also believe innovation and disciplined execution in the realm of interpersonal service is dramatically understated as a way to move the needle in the amusement park industry.
Rick Allen
1mo
Man that is one valuable post! I am printing this one!
KC Sanders
1mo
👏😃
Developing immersive digital experiences & technologies for hospitality, retail and entertainment projects | Innovation process leader | TEA & IAAPA member
1moIt would be very interesting to hear your thoughts on the growing LBE and FEC markets. Have the destination resorts priced themselves into once in a lifetime "bucket list" territory? Have the regionals priced themselves into "once a year" territory? Will the void be filled by stuff like Great Wolf, the various branded properties, local stuff in the 50k-100k sqft size? What do you think of Uni's Frisco Kids scale?