How can CP maximize profits?

I love FASTPASS. Use it all the time. And, I never, ever wait long for anything at a Disney park. However, there is another big difference between FreeWay and FASTPASS---FreeWay devoted about 10% of a ride's capacity to reserved ride times. FASTPASS devotes at least 50%, and sometimes more---that grinds the standby line to a halt. In some ways, Disney's system penalizes late arriving guests even more than FreeWay did on busy days---you can arrive at the park to find no FPs for any major attraction mid-afternoon, and hour+ lines for everything.

As for maximizing profits: when last I checked, Cedar Fair had better operating margins than Paramount (when there was a Paramount) or Disney. They know what they are doing.

It doesn't affect people standing in a line at all. It makes the line go slower, but ultimately the number of people in line is the same and therefore so is the wait.

Last time I checked, their stock is near a three year low. It's not because CF doesn't know what they're doing, but it's not like things are as good as they can be, either.

Much of the recent drop in share price is the result of institutional investors worred that the partnership won't continue to meet the current quarterly distribution commitment now that they've taken on signifcant debt (and possible operational challenges) in the Paramount acquisition. It has little or nothing to do with the profitability of individual parks.

The Cedar Fair parks, pre-Paramount, are among the most profitable publicly-held amusement parks. They're already at the top of the heap, so it's not clear that there's much headroom left.

It doesn't affect people standing in a line at all. It makes the line go slower, but ultimately the number of people in line is the same and therefore so is the wait.

Huh? If the line moves more slowly, but there are the same number of people ahead of me, surely my wait goes up, right?

Jeff's avatar

lettuce said:
Why did you care to create the site if you're just a customer? I also have a small share of the company, and it would be to my advantage if they performed even better. Plus, I just want to know what's holding them back.

Um, the only thing I care about as a customer is that I get what I pay for at what I believe is a good value. I do this site because I love the place. I have no idea what the hell you're talking about them "holding back." How many businesses can show the margins and consistent distribution (dividends) that Cedar Fair can? Not many. You're making a baseless implication that the company isn't doing as well as it could.


Jeff - Advocate of Great Great Tunnels™ - Co-Publisher - PointBuzz - CoasterBuzz - Blog - Music

As for "what's holding them back"---the company is not managed as a growth stock, it's managed as an income stock. The idea isn't to increase the share price, it is to ensure consistent quarterly distributions to unitholders that grow over time.

You could argue that, with the purchase of Paramount, they've looked more to growth than income, but time will tell on that one---I think they'll manage just fine.

liebevision's avatar

Jeff said:
Why would you care about how much profit the company makes if you're a customer?

Because if you are a customer that enjoys the product, you would want the product to still be there for years to come. If that product can't turn a profit, then it won't be there.

It's like people who go online, find out the dealer price for a car and then expect to go to a dealership and pay only that price and not a penny more. If the dealer can't make a profit then why should they bother having the product? They have families to feed and bills to pay and if they can't make a fair profit on their product then they'll have to shut their doors. Same goes for any buisness, if you can't make a profit, there is no point to being in buisness.


Demon Drop 2004
Castaway Bay Lifeguard 04-05

Jeff's avatar

Thanks for the economics lesson, but don't you think it's a little obvious to anyone that a company needs to turn a profit to stay in business? He was implying they weren't doing enough, which is ludicrous.


Jeff - Advocate of Great Great Tunnels™ - Co-Publisher - PointBuzz - CoasterBuzz - Blog - Music

It's not ludicrous at all. CF is doing fairly well, but no business should ever be satisfied with how well they are doing. I think CP does a fantastic job with maintaining a fun and profitable atmosphere. Quite truthfully, I don't think I would change much if I were in charge. However, I think this system could work if operated properly and is something they should consider. I am sure they probably have considered it, which is why I initially asked for specific, detailed reasons why it hasn't happened yet.

Brian Noble said:
Much of the recent drop in share price is the result of institutional investors worred that the partnership won't continue to meet the current quarterly distribution commitment now that they've taken on signifcant debt (and possible operational challenges) in the Paramount acquisition. It has little or nothing to do with the profitability of individual parks.

The Cedar Fair parks, pre-Paramount, are among the most profitable publicly-held amusement parks. They're already at the top of the heap, so it's not clear that there's much headroom left.

I know that the price is low because of the increase in debt, and I never indicated otherwise. What I meant in my post above was that, even though the low stock price isn't caused by low profitability, the price is low enough that they shouldn't feel so comfortable that they won't change anything. Also, given the constant increase in in-park spending and their continued investment in games and shops, I'd say there is significant improvement still to be made.


Huh? If the line moves more slowly, but there are the same number of people ahead of me, surely my wait goes up, right?

The number of people in the physical line, before the vq merge point, is less than what would otherwise be there. Before the merge point, the rate of line movement is less than what it would otherwise be. However, with less people in front of you until the merge point, the amount of time in line is the same.

After the merge point, the number of people in line normalizes, as does the rate of line movement, therefore making the post-merge point queue time normal as well. The time is equal. An easier way of thinking about it is the demand for ridership on a certain ride always stays constant, as does the ride's capacity. These are the only two factors affecting line length appreciably; it has nothing to do with vq or not. *** Edited 10/9/2006 6:08:34 AM UTC by lettuce***

liebevision's avatar

Alright how about bigger profit margin= more money to re-invest in from of capitial improvements. Such as rides, paint, new landscaping, new pavement... There is always room for improvement.

Take this site for example, there used to be guidtothepoint.com and virtualmidway.com And while both sites were really good and well made, but yet you saw room for improvement, and merged the two into pointbuzz. Now pointbuzz is one of the better laid out and ran sites of it's kind, Yet even so, there is always room for improvement, ie little things like the search feature being broken.


Demon Drop 2004
Castaway Bay Lifeguard 04-05

djDaemon's avatar

It would seem to me that implying that a VQ system would increase profits is, to a certain degree, fairly presumptuous. I'd be willing to bet that many people who go into the park have either a set amount of cash, or a predetermined amount of money that they're able or willing to spend in the park that day, or that weekend. So, if John Q has $100 in his wallet, and is going to spend that money while in the park one day, allowing him more time on the midway isn't going to increase your profit. And when you're using a VQ system that costs money, its actually going to decrease profit. I suppose that its only fair to say that this scenario is equally presumptuous, and is based on my experience - most people have a limit on what they're prepared to spend in the park for a day.

Of course, there are always going to be people with heavier wallets, lower discipline, or both. But, the question is, are there enough of those people to warrant creating a costly system that has the intention of capitalizing on their frivolousness? The answer is quite obviously a big fat no, seeing as how CP already had a system, and no longer does.


Brandon

lettuce said:
...which is why I initially asked for specific, detailed reasons why it hasn't happened yet.

Maybe you should be asking this question to T&T or maybe Mr. Kinzel??

dorkdork's avatar

CP should concentrate on exploiting their core competencies.

:)


The number of people in the physical line, before the vq merge point, is less than what would otherwise be there.

This is true *only* if no one in a virtual queue is also in a real queue. Unless a park is completely at capacity (and CP is not), virtual queueing increases the average # of attractions a typical guest can experience---marginally increasing wait times in the physical queues.

Don't get me wrong. I love VQ systems. If I'm on a mission, I don't mind spending money on them. But, there certainly is a cost for those who do not participate in them.

As for why it hasn't happened at CP---I don't know, but here's my guess.

Because only 10% of ride capacity was devoted to it, FreeWay was used by very few guests. So few, that I suspect that overall guest satisfaction may have been lower with it than without it. For every person able to use the system properly, there were 100 people who wondered why so-and-so got to cut the line at Millennium Force.

Providing a larger VQ system benefitting more people---meaning placing more ride capacity in play---would probably require more fine-grained return times than consecutive hour blocks. Probably something more like Disney's 5-minute sliding window. To do that right, taking into account daily fluctuations in ride capacity, etc., requires a significant technology investment to measure and monitor return times. And, we all know how often Cedar Point invests in technology that isn't a ride system.

Added to that the fact that administering FASTPASS correctly at the merge point is harder than it was for FreeWay. FreeWay guests always had the right of way. FASTPASS guests don't because there are so many more of them; there is a different mix at every attraction, and the merge CM has to get it right or the FASTPASS line can back up, the standby line can halt, or both.

I'm not sure what the story is on how profitable these systems are when the system itself is free. Universal Florida eliminated free access to their virtual queuing system. Cedar Point did too. Six Flags has always charged for it.

Disney has kept it in their parks, but it has been cut back some. Disneyland used to have a huge number of FP-enabled attractions, and has since removed it from many of them (Pirates, Star Tours, non-Holiday Mansion...) The Florida property never deployed it quite as ubiquitously, and has removed it in a few places as well (Mansion, Lights Motors Action, ...)

I think FASTPASS was originally sold to the Disney brass as a way to increase guest per-capita spending, but I don't know that it accomplished that. However, from what I hear, guest satisfaction with FASTPASS is very high, and Disney has been known to do things to improve guest satisfaction even if there isn't a direct impact on cash flow, just to generate repeat business and good word of mouth.

Jeff's avatar

The park doesn't need a virtual queue system. It runs its rides correctly and all but Dragster push people through plenty fast enough. People are always complaining about long lines, yet I've not waited in a line longer than 45 minutes this summer.

But if what you're really suggesting is that it's another way to get money from people, I think that's a monumentally bad idea. People are pissed off enough about parking, now you want to charge them for something else? Give the customer what they want, and they come back and spend money on their own terms. See Holiday World or Schlitterbahn if you don't believe me. Don't ask them for money three times before they've even been on a ride.

lettuce said:
I know that the price is low because of the increase in debt, and I never indicated otherwise. What I meant in my post above was that, even though the low stock price isn't caused by low profitability, the price is low enough that they shouldn't feel so comfortable that they won't change anything. Also, given the constant increase in in-park spending and their continued investment in games and shops, I'd say there is significant improvement still to be made.

What's all this talk about a "low" stock price, or even attributing it to the debt incurred on the Paramount Parks purchase? You need to look at the chart a little harder. Am I the only one who remembers the units being in the teens in 2000? The PP debt will be gone in five years, mark my words.

lettuce said:
It's not ludicrous at all. CF is doing fairly well, but no business should ever be satisfied with how well they are doing.

Again, who says they are satisfied?


Jeff - Advocate of Great Great Tunnels™ - Co-Publisher - PointBuzz - CoasterBuzz - Blog - Music

MrInkspot@aol.com's avatar

"Positate the negatives!!"

~Strong Bad


Mark

Personally I don't think any VQ system would greatly improve profits. What they could do to improve profits is make the concessions more efficient. Whenever I go on a crowded day I take my own food becuase the stands are too much of a hassle. If they were more efficient I would buy more food from the park.

They could do this by setting all of the food prices so that after tax they come to an even quarter. This would make the concession lines move faster and they would not require as many registers running at each location. That would free up employees to help fill the orders. Also having an "order" line and a "pick up" line would help too.

Jeff said:
The park doesn't need a virtual queue system. It runs its rides correctly and all but Dragster push people through plenty fast enough. People are always complaining about long lines, yet I've not waited in a line longer than 45 minutes this summer.

Neither have I, but I go only before Memorial Day and after Labor Day. On an average late July day, you simply can't ride MF or Dragster without waiting in a line of at least an hour, and generally closer to two. And, I actually think that when Dragster is running properly, it has greater capacity than MF.

But if what you're really suggesting is that it's another way to get money from people, I think that's a monumentally bad idea. People are pissed off enough about parking, now you want to charge them for something else? Give the customer what they want, and they come back and spend money on their own terms. See Holiday World or Schlitterbahn if you don't believe me. Don't ask them for money three times before they've even been on a ride.

I'm not sure what you're saying. The vq system I'm proposing would be free. The goal is to keep people on the midway longer, and have greater opportunities for them to spend money in shops and on food and games. As long as these operations appear reasonable, I don't think people will mind spending more money on these things.

I agree about the price of parking. If I didn't have a parking pass, I would visit less often because of the price. However, that is something you can't get around and is exactly what they DON'T need to do. What they do need to do is stop forcing people to spend more money, and start strongly encouraging people to spend more money without their knowledge. I believe they can do this with a vq system. It's all about smoke and mirrors.


What's all this talk about a "low" stock price, or even attributing it to the debt incurred on the Paramount Parks purchase? You need to look at the chart a little harder. Am I the only one who remembers the units being in the teens in 2000? The PP debt will be gone in five years, mark my words.

I don't care about the price or the debt they've taken on. But, the price is lower because of the perceived fears about the debt. However, it's not like they can sit back, smoke a cigar and not change anything because their stock is performing so well.


Again, who says they are satisfied?

I think when you said it's ludicrous to say they are not doing enough, you were implying that they should be satisfied. *** Edited 10/9/2006 5:48:12 PM UTC by lettuce***

Jeff's avatar

lettuce said:
Neither have I, but I go only before Memorial Day and after Labor Day. On an average late July day, you simply can't ride MF or Dragster without waiting in a line of at least an hour, and generally closer to two.

So when I did that was just my imagination? You're proposing a solution for a problem that occurs a low percentage of the time. And the park has all of these metrics. They don't flush a toilet without recording it.

lettuce said:
I'm not sure what you're saying. The vq system I'm proposing would be free.

It's not free for the park.

lettuce said:
I don't care about the price or the debt they've taken on. But, the price is lower because of the perceived fears about the debt.

Says who? The price difference is in line with the market in general. It has nothing to do with the acquisition.


Jeff - Advocate of Great Great Tunnels™ - Co-Publisher - PointBuzz - CoasterBuzz - Blog - Music

e x i t english's avatar

liebevision said:
It's like people who go online, find out the dealer price for a car and then expect to go to a dealership and pay only that price and not a penny more. If the dealer can't make a profit then why should they bother having the product? They have families to feed and bills to pay and if they can't make a fair profit on their product then they'll have to shut their doors.

Someone needs to read up on the automobile business a little further. Even when they sell a car "under invoice", they're still getting the "good" end of the deal.

The salesperson might only make $100 on the sale, but you can bet the dealership got a nicer chunk than that.

You must be logged in to post

POP Forums app ©2024, POP World Media, LLC - Terms of Service