The Cedar Fair theme parks this morning reported record revenue for the second quarter, driven by record per-capita guest spending.
Attendance at Cedar Fair's theme parks - which include Knott's Berry Farm, Canada's Wonderland, Cedar Point, and Kings Island - was up 4.4 million to 7.8 million guests for the three-month period ending June 26, 2022. While a strong recovery from last year, when some parks were just reopening with capacity restrictions, attendance was down 8% from the same period in 2019, before the pandemic.
Nevertheless, Cedar Fair posted an all-time revenue of $509 million for the quarter, which was up 17% from the same period in 2019. That increase was driven by a record in-park guest spending of $59.52 per visitor, combined with record out-of-park revenue of $60 million for the quarter.
Net income for the quarter was $51 million, with an Adjusted EBITDA [earnings before interest, taxes, depreciation] of $171 million. Increases in operating costs kept the net income number below 2019 levels.
"The strength and pace of our recovery post-pandemic, supported by our strong first-half operational performance, has allowed us to deliver strong financial results and advance our key strategic priorities," Cedar Fair President and CEO Richard Zimmerman said. "Since resuming full-park operations, we have generated significant free cash flow that has allowed us to pay down the equivalent of 75% of the debt we incurred during the pandemic, continue to reinvest in our parks and resort properties to further enhance the guest experience, and put in place a capital allocation strategy focused on returning capital to unitholders. This includes reinstating our distribution in the third quarter of 2022 and establishing a new unit repurchase program to opportunistically buy back units of Cedar Fair."
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As inflation continues to soar, I do wonder how much more the market can bear in terms of Per-Cap spending and how that translates into profit. As noted in this report, attendance is still lagging pre-pandemic levels, and anecdotally, I have not visited a single theme park this year that has been remotely crowded, and more often than not I've visited parks that most would consider "empty".
It's nice that Cedar Fair has been able to compensate for the lower attendance through increased Per-Cap spending, but I don't know how much longer that can sustain a chain that caters more toward the lower and middle class. Disney and Universal can probably tap more middle and upper class guests that have disposable income, but Cedar Fair, Six Flags, and Sea World still need the revenue from guests that may not be able to spend so much per visit. At some point this bubble will burst, and I would hope Cedar Fair has a plan to maintain financial performance without having to rely upon guests spending more and more in the parks.
The theme parks I’ve visited this year have, on the flip side, been rather crowded, and include a mix of Knott’s, Magic Mountain and Disneyland. I’m curious to see what Horror Nights (Hollywood) looks like this year (all with the same caveat as Russell, that this is anecdotal).
The data seems, to me, less to do with the current moment and more an extension of the previous moment: parks trying to reduce attendance while making more money. I don’t think we’ve hit the gully yet — at least not in my neck of the woods.
Honest question: has Cedar Fair followed Disney's lead and refused to hire back formally essential workers? Are they forcing everyone to use mobile ordering, etc.?
Or were they able to make these profits while still providing their pre-pandemic levels of service?
@Russell I wish I could say the same for when I visited Hersheypark, KI and CP. All of those visits were mid week, with predicted thunderstorms for both of my Ohio visits that never showed and it still was packed. I've been to US/IOA almost 6 times since April and I just can't seem to get a break with their crowds.
My experience with Cedar Fair has unfortunately been pretty negative this year. I've visited Carowinds, Kings Dominion, and Knott's Berry Farm (local park) in 2022, and at all three parks I found multiple closed attractions and dining locations, short staffing on those that were operating, and (excluding Kings Dominion) subpar operations leading to longer lines than I've seen in past visits at these parks. For example, I've rarely seen anything with more than a 20 minute wait at Carowinds, but the headliner coasters were all ~45 minutes despite running all trains on my visit in May, and Knott's has had only three of their five major coasters open since March, leading to 90 minute waits most weekends. At this point, I'm not planning to renew my pass for next year as the experience at the chain has not been great yet prices are going up. I hope Cedar Fair can figure out how to make things work again, because from what I've seen they've had the hardest time returning to pre-pandemic operation and I feel they'll start losing business soon if they can't improve the guest experience.
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Another indication of how folks are willing to spend on experiences at this time. @Robert: how do they define out-of-park revenue? Am I right to assume it’s the hotels and shopping areas outside the parks? Or something else?