Second Sunday with Richard Kinzel: Cedar Fair CEO says market will thaw
From the Sandusky Register…
As amusement park companies go, Cedar Fair is the industry’s juggernaut — it owns 11 amusement parks and six water parks throughout the U.S. and Canada.
Even in Sandusky, home of Cedar Point amusement park, news coverage in recent months has concentrated on Cedar Fair as it mulled an acquisition by New York private equity firm Apollo Global Management.
The deal fell through, leaving Cedar Fair to battle the recession and debt problems.
Which leaves everyone wondering: How is Cedar Point doing?
When Richard “Dick” Kinzel, 69, president, CEO and chairman of Cedar Fair sat down for a “Second Sunday” interview after months of requests, the Register concentrated questions on the local amusement park — Cedar Point, rated “the best amusement park in the world” for 12 years in a row by Amusement Today.
Q: How does Cedar Point fit in your mind in the Cedar Fair empire? Do you still see Cedar Point as the crown jewel, or realistically, is the attention shifting to those parks in the southern U.S., where you have a growing population?
A: No, Cedar Point is our crown jewel and always will be. This is our biggest entity. We have 1,400 hotel rooms. We have four hotels here. Two marinas. We have the largest amusement park in the world here — 17 roller coasters, over 70 rides.
Our top season was 1994. We did 3.6 million (annual visitors). Now we do about 3 million.
We can be a profitable company if we manage our expenses. If we can manage our expenses, and keep our hotels full and give the customer good value, this will always be our crown jewel.
No other park has what we have — Lake Erie, the beach, 1905, Knute Rockne, John Phillips Sousa, the history, the tradition. People have been coming here for years.
Our worst enemy that I worry about is ourselves. We have to keep the quality that people expect to be here.
Q: How disappointing is it to you that Shoot the Rapids opened late? Do you feel the availability of a new ride plays a lot in people’s decisions on coming out, or is it more of a minor blip?
A: It’s a major blip. It was a minor blip until we got to Memorial Day weekend. At that point, the weather’s a little chilly, and a flume ride didn’t have that much appeal. But certainly, once it got delayed and then it got delayed again, that was a major disappointment. As you know, we’ve had some problems with it, from electrical (since the ride launched June 26).
This is not new technology. We’ve had flumes at Cedar Point since 1964. The engineering was done wrong in Germany. We’re trying to correct it. And I got e-mail today from our manufacturer, Intamin, that the problem has been corrected. Hopefully it’s done now, and it’s going to be running correctly the rest of the summer.
Q: What problems have you had?
A: Some of the things we had to compromise with. We intended to have the height restriction at 42 inches. And we raised that to 46 inches. We intended to have more capacity. We had a 10-passenger boat. And because of the problems with the boat, we had to make that an eight-passenger boat. That cuts 20 percent of your capacity. And we’ve had electrical problems.
It certainly has not been because our maintenance department or our people have not worked 24-7 to get this thing in operation. Basically, it’s an engineering problem the manufacturer has had. They’ve assured us they’re going to get it worked out.
It’s very disappointing. You spend $11 million on something; you’re only open 140 days. It’s only been open nine days, and we’ve had a lot of down time.
Q: How has the rise in indoor water parks such as Kalahari and Great Wolf affected you? Is it an overall plus?
A: You know, I think it is. Certainly it hurt Castaway Bay. Because (Kalahari owner) Todd (Nelson) did a really good job with that. They’ve got everything you want in an indoor water park. We’re sort of more of a boutique facility. What we can offer is what they can’t offer — we have early entry into the park and coupons to get into the park and things like that.
They’ve certainly hurt us as far as our occupancy goes (at Castaway Bay). But on the other hand, if people come to stay in Kalahari, they’re certainly going to visit the best amusement park in the world. Along with going to the water park, they’ll still go to Cedar Point.
We welcome all competition in Sandusky. If we can get them into Sandusky, we feel pretty certain our entertainment package is such that they’ll come to Cedar Point.
Q: This is one of my few Cedar Fair questions: Where do you stand on the effort to refinance debt? Is that still on hold until the markets settle down?
A: It really is. Peter Crage and I, our chief financial officer, we hit the road three weeks ago. We were told by our bankers at that time, there was money. The bond markets had loosened up. The money was very reasonable. I’m not exaggerating. The minute we got in to start the road show, within 20 seconds, it was on a Thursday, they told us that the markets had crashed. At that (time), if you remember, Korea, and Israel, and the oil spill was hitting its peak. The markets just went berserk on us. What our advisers are telling us is just to wait, just be patient. We still have until 2012, so we still have time …. We can be patient and we will be patient, because every interest point is a lot of money.
Q: What is Cedar Point’s most successful ride ever? I don’t mean tallest or fastest or scariest — what’s the ride that was such a huge success that you guys said, “Boy, we’re sure glad we put that ride in.”
A: Probably the Magnum XL 200, in 1989, when we put the first 200-foot coaster in. The other one was in 1976, when we put the Corkscrew, the first coaster that did a helix and the 360.
The one that people really talk about is that first 200 foot. Nobody had really done that before …. The Magnum is the one that really made Cedar Point the coaster capital of the world.
When you go back to 1976 when we put the Corkscrew in, that changed the whole dynamics of the amusement park industry.
Q: How does Cedar Point decide what its next new ride is going to be?
A: We visit other parks. We see what’s new in the industry. We talk to other manufacturers. We try to get a feel for what people like, what they don’t like.
All the parks are different. Cedar Point, for example, we mix a family ride in for every other time or every third time. We go for a thrill ride probably two out of three rides. We put a thrill ride in, that really turns the turnstiles.
Q: So I guess the recession sort of slowed down that thrill-ride timetable. What can you tell us about next year’s thrill ride, and when is it likely to be announced?
A: Just backing up a little bit, the flume ride (Shoot the Rapids) was really due to be introduced last year, but the economy turned. Remember that in November of 2008 the banks crashed. We had a pretty good feeling it was going to be a bad year … so we put that off for a year.
It’s going to be a great ride. All thrill rides aren’t coasters. It’s going to be something that I think the teen market is really going to like.
We really plan on announcing that in the middle of August. That’s when we have our season passes for next year. Not especially Cedar Point, but in other parks, the season pass business is so big, we try to get a jump.
This entry was posted by Andrew on July 13, 2010 at 12:23 AM, and is filed under Behind the Scenes, Cedar Fair, Ride Construction, Ride Watch, Rides, RollerCoasters, Thrill Rides, Water Rides. Follow any responses to this post through RSS 2.0.You can leave a response or trackback from your own site.