Cedar Fair Q3 Record Revenue & Records Continue into Oct(start of Q4)

https://www.cedarfair.com/blog/2021/cedar-fair-reports-record-net-r...rd-quarter

Conference Call Q&A Tidbits:

-looking to start paying down debt 2.96B to goal of 2B, quicker than anticipated recovery in the business

-looking to reinstate dividend by the latest Q1 2023

-Hotel/resort room rates up 6% to 25% day dependent

-175 to 200M Capex calendar year 2022

-had some J1 visa people in Q3, expect to have J1 program in 2022

-1/2 of increases expenses was labor, taking steps to address labor costs(23M increase in Q3) by automation/technology, work management system, process redesign to improve efficiency, decrease hours, increase prices admit & products, expand out of park revenue streams

-paid admissions up $8.86 by reduced discount channels

The issue of wages is one I'm interested in seeing play out. When you raise your hourly wage substantially for this past season...and those kids come back...I doubt they are interested in going back to the old, lower wage. So, has the floor been forever reset or do they roll it back and face the inevitable backlash?

According to a friend who worked at the Point this year, they signed a contract for a lower hourly rate ($12 -$15) and then received an hourly bonus to bring it up to $20. It will be interesting to see how they handle it next year.

CF said they don't anticipate the need to make meaningful increases, again, next year on wages. They however don't expect them to go down & are trying to come up with ways to reduce or offset the increased expenses

CF essentially said paying up to get properly staffed allowed them to produce the record revenue results in Q3 & October.

Love how automation is one way they are looking to combat labor expenses. Because Cedar Point already does so well with technology roll outs. 🙄

As long as Intamin isn't involved, they'll be fine.

On closing day I overheard some guests talking to a cast member about this very thing. He said, "I'm certainly not going to come back if they offer me $5 less next year." So there's your answer. I know that's only one person but still I think they've dug a hole here unless the labor market improves. They'll likely be able to staff more internationals next year though so that should help.

djDaemon said:

As long as Intamin isn't involved, they'll be fine.

I see you’ve forgotten the self-service kiosk fiasco…

They haven't dug a hole. Every business that has had to offer increased wages is not going to be able to take them back, they might not & will try not to increase them more in 2022. Wage inflation is rarely transitory & especially not in how this has occurred across all industries in the US. Workers are not settling for poor wages, no benefits, etc... There is a shortage of workers. This imbalance was going to happen eventually, it was just sped up by the pandemic. US population dynamics are skewed, the retirements of Boomers & the smaller generations afterwards was going to make this imbalance be evident eventually. It may get worse in 20-25 yrs as US is at the lowest birth rate in history, This lower potential work force will be offset some by automation, technology, etc...but there are some jobs, in certain industries that you can't automate or solve completely by tech. To get people to do them you're going to have to "pay up". Businesses will try to use less workers, but the ones they need, they are going to have to pay better.

I wouldn't at all be surprised to CF not use as many workers per ride. Six Flags & SEAS often use less workers per ride than CF. Also, things like drinks might be automated more. Hershey has a drink plan auto fill stations by scanning the pass & you have 25 seconds to select & fill the cup. Mobile dining will be finally be implemented where CF can possibly save on a few workers.

Yea - and Six Flags and SEAS are known for some of the worst ride operations efficiency in the industry...

I'm all for better processes/technology in foods and maybe a few other departments, but if they go cheap on ride staffing without doing things like switching to visual checks instead of physical, that's going to suck big time.

I could see any returning seasonals continuing with the automatic $20/hour and new for 2022 and beyond getting a lower hourly rate with a possible bonus that could bring them to what would total to $20/hour if they agree to work until closing day and don't tap out early.

Perhaps initially they will not offer the bonus whatsoever, all will get $12.00. They will see how hiring progresses (or doesn't) and then have that bonus available to entice hires. It was mentioned that 2021 had a small number of foreign workers with 2022 expected to have many more, so there's that to boost it. Likely will need to offer Screamsters the bonus next year to properly staff haunts as that is a "unique" group of individuals.

I think they absolutely should offer $20 for Haunt season. Dealing with those crowds, the long and late hours, the bad weather, and doing it all while school is in session absolutely warrants a good wage.

As for summer season, I'm honestly not sure if $20/hour is sustainable or not. If it is, by all means do it. Be that good employer. If it's not, you have to find a way to make it appealing. Long gone are the days where you can run your seasonals ragged working six day weeks, five of them 12+ hour O-C shifts for pennies.

I just don't see them offering all that initially, they can keep the "bonus" in their back pocket to offer if warranted. $20.00 per hour is not the actual wage, they label the difference as bonus or incentive. Actually many companies are using this tactic these days to get employees on staff.

The service/retail industry workers have sort of unionized in a way.

The bonus in the "back pocket" might not be a good strategy when people can get guarantees at many places at a higher price point.

$20 is sustainable & parks can over a period of time become more selective in whom they employ. Cedar Fair can/should raise prices to offset the labor. IN fact they should have been raising prices even before Covid. Platinum renewals were $192 this year, it was like $187 5 years ago. They can do more than $1/yr avg increases. Platinum passes are under priced for years to start with & Gold at CP too. The big parks in the chain need to use their pricing power, they do it with Knotts. Gold passes were $139 (sale price) & they just moved that to $145, that doesn't include parking. Cedar Point, Wonderland, Kings Island also should be able to price more aggressively.

Not only are they underpacing inflation, they're going in the opposite direction. It makes no sense.

A Michigan's Adventure pass and a Cedar Point pass should not only have a $20 price difference.

The last time Cedar Point pre-sold a regular season pass it was $137 (price in October 2018). Adjusted for inflation, this would be about $150 today. Today (Nov 2021) the Gold Pass is $129. Why is Cedar Point selling the Gold pass with all the perks for less in absolute dollars, not even inflation adjusted, than the regular pass was three years ago?

jimmyburke said:

Perhaps initially they will not offer the bonus whatsoever, all will get $12.00. They will see how hiring progresses (or doesn't) and then have that bonus available to entice hires. It was mentioned that 2021 had a small number of foreign workers with 2022 expected to have many more, so there's that to boost it. Likely will need to offer Screamsters the bonus next year to properly staff haunts as that is a "unique" group of individuals.

No chance they offer $12 at parks like CP, they had issues staffing Pre-Covid at that wage level, they know it's impossible to go back to that with the labor market now, . Listen to the conf call, they said paying up to properly staff was key to them producing the record revenue & per caps in Q3 & October. CF is going to pay what they need to staff & look to offset other ways...ie...reduced hours at some parks(especially traditionally slow days like weekdays at small parks). Would not be surprised to see them closing 1hr earlier than pre-Covid.