Cedar Fair Earnings and Halloween Enthusiasm

Philip: Alright, from our studios in Los Angeles and Tampa, this is Green Tagged Theme Park in 30. I'm Philip, and I'm joined by my co-host Scott Swenson of Scott Swenson Creative Development.

Scott: Yep, that's me right here in Tampa, howdy.

Philip: Well, we are back. Halloween is over for now, although really, the countdown has begun to next year.

Scott: Yeah, it's a monster. It's a monster.

Philip: So, we're back in our regular recording studios for the first time in a while, and I thought this is a good episode to kind of like take stock of what has happened, what is happening in the larger scale of the attractions and entertainment landscape. The first story we have here is, of course, that Cedar Fair released their earnings, and they were all positive. So, the earnings call on Wednesday, the CEO Richard said that he expects attendance numbers to fully improve by 2023, in part due to a planned 100 million to 200 million investments in new rides, attractions, roller coasters, and restaurants across properties. The company also welcomed 12.3 million guests and generated 843 million in revenue during the third quarter, both up from the same period in 2021. 

But there are a few caveats, so everything is positive here, for the most part, there's one interesting piece, which is that the attendance, as we just said was 12.3 million for the third quarter of 2022. So, that's up from 2021, but it's a small dip, a 7% drop from 2019. I think that that's really what we're looking at here because 2019 was kind of like a decade high for the theme park industry. So, we're looking at, how does everything compare to 2019, not 2021. So, we saw that attendance drop. But the revenue actually did increase 22% from that 2019 standpoint, and if you look at the 10-month average of visitors, then overall the attendance is up 4% from the comparable period in 2019. 

So, I think this is, I almost think everything about this is good. Like yes, their attendance dropped a little bit, but overall, the attendance is up. If you look at the 10-month period, basically year to date, and attendance is up, and revenue is also up. So, that says to me the same thing that we've been talking about. Which is that it was going to take several years for it to recover, and we were saying between 2023 and 2025 for recovery, and looks like that's a tiny bit at a schedule for now. #recession We'll see how that goes.

Scott: Well, I mean, we'll see how... This is something else that we've been talking about too for quite some time and that is, this is the lead wave of the tidal wave of returning visitors. So, this is the high watermark. It will even out, at least I kind of hope it evens out. I know there are penny pushers who are saying, "Well, no, we want it to stay at this forever and Blah blah blah." But I think it will even out. 

The thing that I think is most important is with a 7% drop in attendance, but a 22% increase in revenue, that's huge. That means we're not just turning the turnstile, that means we're putting the right people in the parks. I think that also echoes back, or harkens back, to what we've said before, and that is that people are ready to get out, they're ready to return to live entertainment, and they're willing to spend money to do it. So, again, I think that too will even out, but I don't think it's going to go back to the COVID year numbers, by any stretch of the imagination. I just think that this is a great recovery, and I think that we need to embrace it. As Philip says, it's a little earlier than I was anticipating, quite honestly, but at the same time, because it is coming back so strongly... 

I also actually kind of like the fact that when we look at the 10-month period that it's actually up. That also means that guests are naturally spreading themselves out within the operational year. That's one thing that when you work in a theme park, the head-scratcher for everybody is, "how do we even out our attendance? How do we not have shoulder seasons?" That's why, quite honestly, so many parks started doing seasonal entertainment, was so that they could fill those shoulder seasons. 

So, what this 10-month number is showing me is, that's already happening now. People are already kind of self-monitoring or self-adjusting their plans so that it's not just, "here's the Super Peak where it's not even fun to be there, and then here's the opposite end, where it's the Super Valley where there's not enough energy. You don't wait in line for anything, but there's not enough energy to really make the park seem special." So, it's perfect to kind of find that middle ground and sustain it than to have those super-high highs and those super-low lows because I think that leads to challenges a huge variety of other challenges. So, it sounds like we're both agreeing, Philip, that this is clearly a good thing, and it's a little bit earlier than we had anticipated. 

Oh, and by the way, since we are agreeing. We did get a note from one of our listeners, and the note was very simple from one of our episodes two episodes ago it. Basically, they said, "I always get upset when "Mom and Dad" argue. So, don't worry Jeffrey, Philip and I agree sometimes too. Just wanted to say that.

Philip: Oh gosh. Well, I think we look at these numbers it does kind of support, though, the tidal wave theory. Basically, they were down still for October, but if you look at the 1st 10 months they were up. What that says is that people really want to come back in the classically slow time, which is January, February, March. I mean, because that's when they were open. So, that's really, I think, the correct picture. The real question is, I think everyone is banking on, like they just said, they expect 2023 to be good. 

Well, there's a big asterisk on that, right? Which is that, as Scott said, once it evens out and people have done all of their revenge travel and they've gone through that, are they still going to have enough disposable income? How is all that going to play into their decisions for attending in 2023? So, I still think there's a big asterisk. I think that he's correct, though, in that the best way to compete is not to sit there and like look at slashing budgets or to look at like giving a bunch of money back to shareholders immediately. It is looking at how to create offerings and improve your infrastructure so that you can handle the crowd levels and handle all that kind of stuff, but also to have something to entice people in when it's going to be more competitive. As people's disposable income drops, if it continues to do so, you're going to need a more compelling reason to bring people in. 

The only other data point that I have is some of the reporting that I've been doing with smaller attractions, mainly haunted houses, as we've been doing our Hauntathon. I've also been talking to people, I won't say in confidence, so I can't give particular names about stuff, but I've been talking to a lot of people about their numbers. Again, it seems to be this weird bifurcation type of thing that we've seen for a while. I would say the brand names and the people that have long established histories in the area, that are like traditions, those people have had 10% to 30% increases of their numbers. But the smaller attractions struggled to even stay open with staffing shortages. A lot of them, by the time we got the Halloween weekend, didn't have enough staff to even stay open, had to close on Halloween. Then a lot of them saw lower numbers for the smaller attraction. 

So, we're seeing this same bifurcating thing, which to me is another kind of clue of how 2023 would go, right? Because again, it's that thing of, if you have less disposable income, you're going to do the thing that is your tradition. You're not going to do the new thing that you haven't done for 10 years. Like my dad, my dad's dad took him to Disneyland on opening day, and so it was a big piece of family history to them. So, it was important to him to go every year. So, yes, making time for Disneyland is a thing, and that's important for him still, because he remembers, he has that visceral connection to it. But trying a new thing... I'm just saying, when it came down to going to the Sea World thing or Disneyland he was like, "no, we have to choose Disney," even though it's more expensive, there's all the app nonsense, and all the like crazy headaches and all that kind of stuff. That was worth working through rather than just showing up at SeaWorld because, again, it's that tradition. I think that's what we're seeing. Even with the attractions, the smaller attractions that aren't the Disney brand, if you've been around for 10 plus years and people do go to you every year and they've wanted to go to you for two years, then yes.

Scott: Yeah, it's interesting, because what my clients have been telling me, and some of my clients are smaller, some of my clients are very independent, and some of them are mid-range. But, specifically with places like zoos and I will say some of the more non... Well, no, I'll just say it. None of my clients had a bad year, and the term record-breaking has been used by multiple clients that I work for, and record-breaking Halloween seasons specifically. So, I think that what it really comes down to is, I think tradition plays a huge part of it, and I also think that value plays a huge part of it. I realize disposable income is a huge issue, and it's going to be even more of an issue as we move forward, I think it is perceived value as well. I think that the one-offs, let's take Halloween as a microcosm, the one-off haunt attractions that are...

Philip: Yeah, that's $15 to go through a 10-minute walk-through, you can go to a movie and get 3 hours of entertainment. 

Scott: Exactly, exactly. So, I think the value is really the issue here, and what are we as the industry offering our guests? Are we offering them an evening that they can enjoy with their families? Or are we giving them 15 minutes of fun and then they go home and split up and go back to their phones and whatever else? The other thing that I think is a big asterisk moving forward because I agree with the financial things, I agree with everything that Philip has just said, the other gray area or truly undefined area to me is, what has happened to the family dynamic in the last two years? 

Anecdotally, this is not a data point, this is anecdotally, I have seen more and more families spend more and more time together, and look for more and more things to do together as a family. I mean, we can't deny the fact that some of that has to come from the fact that they were living in quarantine, under one roof, without a whole bunch of stuff to do, and they reestablished a family dynamic. Now, how long that's going to last? Nobody knows. But I think that is another factor that we have to take into consideration here. 

I honestly believe, having had to staff or be involved in staffing multiple, multiple, multiple Halloween events, and coming up multiple, multiple, multiple Christmas events, it is a challenge. In almost every situation we have done at least 50% more auditions, and in most cases, 100% more auditions, just to keep the same thing staffed. Quite often we will hear, "well, but I want to spend this time with my family. I want to spend this time with my kids. I can't work on Halloween because we're going trick-or-treating."

The power of the family, I think, has all of a sudden been energized, or re-energized. So, I think that's going to be an interesting factor too as we move forward, and how long we are able to sustain this sweet spot in the realm of attendance and spend at theme parks and attractions. So, yes, expendable income is absolutely a factor in the equation, but I also think the changing family dynamic is something that I don't think anybody really can identify yet. But if I'm going to guess, my gut tells me that families are going to be willing to spend more to do things together. I don't know, we'll see. I could be really wrong on this one, but I just think that is a gray area that, if you're smart, you'll at least take into consideration.

Philip: Well, another thing to take into consideration, of course, is that we are still not really moved on from the pandemic. Of course, we've talked about it so much, but really another supply chain story came up this week while we were celebrating Halloween. But on Monday Shanghai Disney Resort abruptly suspended operations to comply with COVID-19 prevention measures, with all visitors at the time of the announcement directed to stay in the park until they return a negative test for the virus. Some of the videos for this were insane. I mean this was definitely interesting, and I think it might have been traumatic for some of the people in it, even though Disney tried to do what they could to make it a good experience. But essentially you have 30,000 people that were stuck in the park, and they had to wait until every single person... They had them make a big line, they had security officers blocking the exit, and you had to just, get your tests and wait before you could leave. So, it was a big deal. They have since reopened with limitations. 

Again, I just want to underscore, this is something that we deal with, I would say, daily at Gantom. Which is just a continued supply chain. I mean, it's not really getting better yet. I mean really, there are some things that are getting better, like some of the port shipping and some of that kind of stuff. But it's like, everything is balancing everything out. Yes, the ports are more effective now for ocean freight, but because energy prices and gas prices have risen, it's kind of balancing it out in terms of cost, and then you have this. It's still difficult for anybody operating in Shanghai to really project out much in the future because you're not sure who's going to shut down, this or that, or what's going to happen. It's really still happening there on a weekly basis. 

Then, of course, I'm going to do this. Something that we're not thinking of, maybe, in the US or attractions industry, but we're thinking of at Gantom is Chinese New Year. We are already behind with getting stuff produced, and we're about to start entering the Chinese New Year. Some people take a month off, or more, for that, and Chinese New Year is always a thing where it's such a long break that frequently what happens is people will go home, which is going from cities into rural areas, and they don't come back, or they get a different job. You're not guaranteed to have the same staff of capacity when you get out of Chinese New Year. So, that is kind of a big... 

We're already looking at that now, and figuring out what are we going to do for this? Because we're so behind. Normally we have to put out a bunch of cash for Chinese New Year to pre-order and start preparing to make shipments for coming in. But we have so much backlog that we're already set into like the February through like April time for that. But then it could add time to that, especially if someone is gone and there's a lockdown and they can't get back. I mean, so this is going to continue to be a big issue, and while we're focused on the holiday stuff over here, by the time that we kind of wake up from our holiday stupor, supply chains are still going to be an issue, if not even worse, in January because of Chinese New Year and because of the lockdowns.

Scott: I want to take half a step back, because I think it's important to recognize too, at least in Florida, I don't know whether it's this is true throughout the United States, but in Florida, I would say about. 80% of the people think that COVID is completely done, we’ve taken care of everything, we don't have to worry about it. This is clearly not true throughout the world, and that is something that I think we all need to keep in mind too. I just think for a fleeting moment, if instead of this being Shanghai Disney, if this were Walt Disney World in Orlando, this would not have been a pretty situation. This would have resulted in riots.

Philip: Yeah gosh, can you imagine telling people you can't leave until you get a COVID test?

Scott: Terrifying. It is absolutely terrifying. So, I just think that we all need to recognize that COVID is still there, COVID has not gone away. It is better, we have better ways of controlling it, we have better ways of treating it. we have better ways of identifying It, but it has not gone away, and its impact on the industry has not gone away. So, we should all honestly still have a small part of our brains or a small part of our teams continuing to work on, "what will we do when the next shutdown happens?" Obviously, with Gantom, Philip you guys were already thinking about what's going to happen, moving into Chinese New Year, and what's going to happen with our production timeline. 

I think we all, whether we are 100% reliant on countries that have much stricter COVID regulations than the United States currently has, I think we still need to stay ready, so we don't have to get ready. You know, I'm saying? 

I mean, that's the one thing that we've been preaching on this show for at least two years, and that is, the only way to truly be prepared is to stay prepared. Look at multiple levels, multiple lines of action where you can just sort of shift lanes instead of going to a completely new highway. It's something that we can't forget, and it's something that if we're going to be successful long term, we definitely have to keep in the back of our minds. The reason I say this is because, again, people are very, very eager to get back out and experience things, and whether COVID is a factor where you are or not, we still have to also be prepared for that huge rush, or as we've used before, to stick with the same sort of metaphor, that huge tidal wave of guests coming in. Because I'm sure we've all heard about the terrible tragedy in Seoul with the Halloween event, or Halloween celebration, that killed at least 151 people, 82 of them were injured in a Halloween Stampede in Seoul's Itaewon district.

Philip: That's what I was going to do, actually, was segue into this story. So, yeah, I'm not sure, a lot of us that have been in the Halloween Hell Week, kind of heads down, working on projects, may have missed some of these stories. There was, basically from what I can tell, there was a big Halloween party happening in a nightlife district in central Seoul. Essentially there was an alley that was a little bit of a choke point and effectively people were trying to get down the alley and then it just backed up and it resulted in kind of a crowd crush which killed 151 people, as of now. As a result of that, the Halloween. Activities in all of Seoul were canceled, which impacted the local theme parks, because Everland and Lotte World, there are a few others, but there are a lot of people doing Halloween activities, which were then suspended. This wasn't on Halloween itself, it was before Halloween, so it kind of suspended it for the next week. 

So, kind of exactly what Scott was saying. I think there's still an ongoing investigation, but from what I can tell it wasn't malicious, it really was just people were excited. A lot of young people, it was a very young crowd that was there, they were excited about it, and they were just trying to get through the alleyway basically. It just happened so quickly. The one thing that stood out to me is one of the police officers, you know, they're kind of trying to defend their plan. Basically, they were like, well, they were positioned at entrances and exits, they were looking for weapons, and they were looking for malicious things. Kind of like, nobody thought to be positioned in an alleyway to tell people not to run through it, basically, was kind of their argument. They also said it happened so quickly, that they really didn't have time to react because there wasn't any police force near there, and then it happened so quickly, and then people were just stuck. It just was kind of too quickly for them to really... 

So, I think that goes exactly to your point, Scott, which is that this excitement for Halloween, this wasn't malicious, it was just people being excited, but there was too many of them trying to get through an alley. I was just thinking how easily that could have happened in something like Universal. You know when you walk in past the Pumpkin Lord and there's that big main thoroughfare for entrance and exits? Can you just imagine when you hype up the crowd on opening night that's sold out this year, and then you just open the gates and you let them all run in? You're just thinking, "oh wow." And then you throw scare actors into that, you know, who just stand there and try and block the crowd. This kind of just gives you perspective on how close you can be to it going wrong.

Scott: I have, in my career, been in a situation, it was not deadly, it was not a situation anywhere near as severe as this one, but I've been in a situation where I've been in a theme park and all of a sudden, we are in gridlock within the scenic that we've added to an area. It basically took an all-call to anybody who had the ability to come and assist in the movement of scenery in order to break up the gridlock. Once the people start feeding in, once mob mentality takes over, there's very little you can do to shift that or change that. 

I think this is, unfortunately, a very sad cautionary tale, but I think it still is a cautionary tale, and that is be prepared. Whether it's for Halloween or with upcoming Christmas event. I think that, well, at least in the States, Christmas is slightly more mellow and tame. But, if you've got a New Year's event, if you've got some other high energy events, music, events, festivals, that sort of thing, be prepared for this kind of enthusiasm that people are ready to get out. It goes back to what we were saying at the beginning, people are ready to get out, they're ready to experience this kind of thing. 

I know we're out of the Halloween season, but I think taking away some learnings from it is very very important. Halloween, I think, is more popular than it has ever been, that is anecdotal, that is not based on data. I'm sure Philip has a spreadsheet that will either prove me right or prove me wrong. Based on my experience with just my clients doing Halloween events, that popularity has not only spread in numbers, but also spread in locations. I mean, this is Seoul Korea. America kind of lays claim to Halloween as it is now. Yes, it draws from a bunch of different traditions, and we won't get into the whole history of Halloween, but the way it is celebrated now is predominantly started in the United States, but it is spreading throughout the world. There's enthusiasm there that is exciting, something that can certainly generate a great deal of revenue, can certainly generate a great deal of interest in your attraction, in your park, wherever you happen to be. But be prepared for it, because it is unique, it is unusual, and it's a bunch of people hyped up, ready to be scared, or ready to party. 

So, yes, make certain that your security team is looking for those nefarious acts, but also make sure that you have a guest movement plan so that you don't have gridlock, which then, unfortunately, ends up in a stampede situation. Reading some of the eyewitness accounts of the Seoul, I'm going to call it a disaster because it really is. It said people were falling like dominoes, and once you go down in a crowd that the surging forward, you're no longer a person, you are now something to trip over, fall upon, step on, or kick. So, you just have to be aware that enthusiasm is a great thing, but it also is a motivator that sometimes you lose control of. So, just keep that in mind, especially going into New Year's, and then as we go into 2023 looking at music festivals, because this is the same kind of frenzy you will see if you have an incredibly popular musical act.

Philip: Yes, yes. Well, speaking of enthusiasm...

Scott: Yeah, I was going to say.

Philip: In the US, right? So, Universal Horror Nights has announced their first house for 2023. Universal announced their first haunted house for the 2023 Halloween season, Chucky. The all-new haunted house will be inspired by the USA and SciFi series and will unleash the iconic killer doll at both the Orlando and Hollywood sides next Halloween season. What?

Scott: So, Philip, in your opinion...

Philip: This is so enthusiastic, I just, I'm like, "uh, we're ready!" 

Scott: Hugely enthusiastic, but it's also showing that... I mean, we know talked earlier about how Halloween events were starting earlier and earlier and earlier, now the announcements themselves are starting earlier and earlier and earlier. In your opinion, what is the advantage to announcing this early?

Philip: I wanted to ask you. The only thing that I could think of was that Halloween day and then the day after, you're still in that window. Thanksgiving hasn't taken over yet, Christmas hasn't quite taken over yet. I feel like there was like a one-day window and they hit it right on the mark. They were like, we know that you're sad about closing and everybody is depressed, it's like post-Halloween depression syndrome, nobody likes Thanksgiving. So, it's like, we're going to give the announcement so that at least you have this to look forward to next year, and we're going to give you Chucky. That's what I was thinking, but I don't know. 

Scott: I think you hit the nail on the head. I think you hit the nail exactly on the head. When Halloween is over, unlike things like Christmas, usually once Christmas is over it's like, "OK, Christmas is done. Let's move on." With Halloween, there's that lingering halo effect. It's that "oh, that was really fun. Gosh, I'm sad it's over. Look at all the posts that you see on social media about," especially the haunt geeks like myself who are like "oh, I'm so sad. It's another year gone by and blah blah blah." I think Universal recognized their core audience perfectly and we're able to capitalize on it, and not only give them a thing to look forward to for next year, but also to reinforce the IP brand itself so that now the USA and SciFi series will have another reason for people to watch, so that they can see what will Chucky be doing when he comes to Horror Nights next year? 

Again, listen up Jeffrey, we agree again, so that's good thing. So, we're going to end on agreement, that's great. We'll end on agreeing, agreeing wholeheartedly. On behalf of Philip and myself, thank you so much for being Green Tagged listeners, please spread the word to anybody you think would be interested in our show, and we will be back next week to talk more about what's happening and what's trending in the attractions industry. Until next week, have a great day.