14 Feb 2019
Cedar Fair eyes out-of-park investments as operator reports record revenues in 2018
BY Tom Anstey
Cedar Fair has revealed plans to grow and expand its external revenue streams through new developments attached to its existing parks portfolio.
Speaking during an earnings call, Richard Zimmerman, president and CEO of Cedar Fair, revealed the plans, which include a focus on resort accommodation to extend stays, as well as a range of other leisure opportunities.
"There's an opportunity to expand our out-of-park revenue streams and maximise the value of our existing portfolio through development adjacent to our parks," he said.
"We currently have more than 1,300 acres of undeveloped land that can be utilised for resort expansion, amateur sports facilities and other entertainment concepts."
Projects currently in the works for the company include a 129 bedroom hotel adjacent to Carowinds in Charlotte, North Carolina, and a new 150,000sq ft (14,000sq m) indoor amateur sports facility overlooking Cedar Point in Sandusky, Ohio. Both developments are scheduled to open at the end of 2019.
"We increased out-of-park revenues in 2018 largely attributable to our resort properties which achieve higher occupancy rates and higher average daily room rates. The great appeal and convenience of our resort locations generate strong demand, extends our guest length of stay and allows us to market both our parks and our resort properties more broadly as vacation destinations," said Cedar Fair's executive vice president and chief financial officer, Brian Witherow.
"For 2019, we'll be investing approximately US$140m (€124m, £109m) in infrastructure and attractions. We anticipate investing another US$30m (€26.6m, £23.4m) to US$40m (€26.6m, £23.4m) in incremental development projects including the Charlotte hotel, the Sandusky Indoor Sports Center and additional employee housing facilities at several of our parks.
In its latest earnings report, Cedar Fair produced record full-year net revenues of US$1.35bn (€1.2bn, £1.05bn), up 2 per cent from 2017. Higher occupancy rates at the companies resort properties resulted in record out-of-park revenues of US$152m (€134.7m, £118.4m) a 6 per cent increase from the prior year.
"Our financial position is strong," said Witherow. "We delivered record net revenues in 2018 and our strong momentum is continuing in 2019. We’ve got a financial structure that affords us the flexibility to pursue attractive market opportunities should they arise and our business model continues to generate significant cash flow, which allows us to invest in our assets to drive sustainable value creation for our unitholders."
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