Coronavirus: Impact on Theme Parks

[Hyde]

In actual roller coaster related Covid news, Cedar Fair has just released a new Covid response plan: https://ir.cedarfair.com/news/news-...es-Taken-in-Response-to-COVID-19/default.aspx

Since closing its parks in March 2020 in response to COVID-19 health recommendations, the Company has taken the following proactive measures to reduce operating expenses and cash outflows:

• Eliminated nearly all of its seasonal and part-time labor costs until its parks prepare to reopen,
• Suspended all advertising and marketing expenses, and reduced general and administrative expenses and other park-level operating expenses to better align with the disruption in operations while still remaining in readiness position to reopen parks,
• Reduced the CEO’s base salary by 40% and the base salaries of all other executives by 25%, effective April 27, 2020,
• Deferred base salaries for all other salaried employees by 25%, subject to minimum thresholds or other statutory limitations,
• Reduced scheduled hours for full-time hourly employees by 25% to 30 hours per week, and
• Suspended cash retainer fees for its Board of Directors until business conditions improve.

To provide incremental liquidity and enhanced financial flexibility, the Company has taken proactive steps to reduce its capital spending for calendar year 2020, including the suspension of at least $75-100 million of non-essential capital projects planned for the 2020 and 2021 operating seasons. The Company now anticipates spending $85-100 million on capital improvements in calendar year 2020.

TL;DR expect delays in 2021 projects, such as getting bumped to 2022 or later. (Think Gold Striker at CGA)

 

[Professor]

Sounds like Cedar Fair are taking good steps and being very humble with the pay cuts at the top (unlike other entertainment industries).
But you can quickly see that such steps will indeed have a knock on effect to other parts of the economy: advertisers, marketers, ride builders, steel suppliers etc.

The parks must do what they can to survive but as many have been pointing out a slowing in the economy is definitely going to happen. I think it is going to be very painful over the next few years for many people in different industries.

As soon as we can get back to theme parks (which I definitely hope / think will be later / late this year) I'm going to be a bit more appreciative of the rides there already rather than worry too much about what could be there. That's for sure.

 

[rob666]

The slowing in the economy started last year, before coronavirus.
This is the year the economy drops off the cliff edge.
Expect large numbers of bancrupcies in the industry, parks and manufacturers.

 

[Ben]

Wonder also what the massive increase in UK banks' overdraft charges was about end of last year / beginning of this year. I never use it but noticed on one account my overdraft allowance decreased over a thousand pounds without much warning. Seemed as if they knew a storm was coming. I know some of that has been frozen etc but considering how much they were given for bailouts themselves their attitude during this just seems to be quite parasitic to me. I expect many businesses including some theme parks will not survive if this continues for months and banks will not help as much as they could.

The FCA introduced those changes wayyyy before the virus even had its first case, and they’re specifically designed to be cheaper and easier for the majority of customers.

You’ll also find virtually all banks are now waiving overdraft interest and fees, as well as offering payment holidays for most products.

If you’re talking about your overdraft limit in thousands rather than hundreds of pounds, you’re not using the product correctly - overdrafts are supposed to be a small safety net, not a long term, or high value, lending solution. Though if you’re not using it I don’t see the issue in them reducing your limit? That’s literally what a responsible lender should do to prevent you issues in the future.

Remember, bank employees are key workers too - and they’re working as hard as they can to do the right thing for as many people as they can. They, like everyone else, are in totally unprecedented times, and it is not a conspiracy theory to allow them to make more money.

 

[Professor]

The slowing in the economy started last year, before coronavirus.
This is the year the economy drops off the cliff edge.
Expect large numbers of bancrupcies in the industry, parks and manufacturers.

A slowing in growth is however not the same as contraction. Job figures in the UK and USA were excellent. Most of the recovery over the last 10 years will be undone within a year. It could be temporary, it could be not.
I agree many bankruptcies are coming. Many zoos already seem to be on edge and almost all asking for donations. It is probably sadder than theme parks I think considering they are homes to so many animals and some very unique.

The FCA introduced those changes wayyyy before the virus even had its first case, and they’re specifically designed to be cheaper and easier for the majority of customers.

You’ll also find virtually all banks are now waiving overdraft interest and fees, as well as offering payment holidays for most products.

If you’re talking about your overdraft limit in thousands rather than hundreds of pounds, you’re not using the product correctly - overdrafts are supposed to be a small safety net, not a long term, or high value, lending solution. Though if you’re not using it I don’t see the issue in them reducing your limit? That’s literally what a responsible lender should do to prevent you issues in the future.

Remember, bank employees are key workers too - and they’re working as hard as they can to do the right thing for as many people as they can. They, like everyone else, are in totally unprecedented times, and it is not a conspiracy theory to allow them to make more money.

I wrote over one thousAND pounds, not thousands.

I never attacked workers at a bank. I've worked at a bank myself.

Point is the Bank of England has reduced interest rates to near zero yet many people do not see that reflected in mortgage payments and especially loans, mostly in their saving accounts. Never said they can't make money, I don't believe in socialism but profiteering out of a pandemic doesn't seem right.

 

[SimonProD]

In Germany the impact on the workforce is until now quite minimal as the state pays 60% of the income for workers who are unable to work now so they don't get fired. Small business owners get up to € 30.000 one-time dpending on the number of employees. Many criticized Germany for crunching its debt the last years - but now the state can implement massive support programs for workers and businesses - so it was a good thing after all.

 

[Nicky Borrill]

In Germany the impact on the workforce is until now quite minimal as the state pays 60% of the income for workers who are unable to work now so they don't get fired. Small business owners get up to € 30.000 one-time dpending on the number of employees. Many criticized Germany for crunching its debt the last years - but now the state can implement massive support programs for workers and businesses - so it was a good thing after all.

Similar here in the UK... Our employees are being paid 80% by the government and small businesses have received a grant of up to £25,000

It’s really helped and gives us hope that we can continue to trade, as long as lockdown doesn’t last too much longer than 12 weeks.

 

[Matt N]

Similar here in the UK... Our employees are being paid 80% by the government and small businesses have received a grant of up to £25,000

It’s really helped and gives us hope that we can continue to trade, as long as lockdown doesn’t last too much longer than 12 weeks.

In all honesty, I don't see lockdown lasting any longer than what the government has funded you for. They want businesses like yours to survive, and if lockdown continues for too long, then the economic consequences will likely become greater than those of the virus itself, which the government surely wants to avoid.

I also think that the steps taken by Cedar Fair are a good decision for the long term. But I've said it before and I'll say it again; could the next couple of years produce the first years in many decades where no new rides are built at all (the first year since 1944, according to RCDB)? Businesses will not have the money they would once have had, and while banks may discount the lockdowns as a temporary disruption, will parks want to take the risk?

 

[Nicky Borrill]

In all honesty, I don't see lockdown lasting any longer than what the government has funded you for. They want businesses like yours to survive, and if lockdown continues for too long, then the economic consequences will likely become greater than those of the virus itself, which the government surely wants to avoid.

I agree Matt, I think we’ll be forced to stay closed for 10-12 weeks. The main concerns now though are...

1) How many people will be put off from visiting places like ours even after lockdown is lifted?

2) What will social distancing guidelines do to our capacity? Will it still be profitable if this is hugely reduced!

These first 2 we can adapt to, for example we can diversify, and continue our takeaway service.

3) How much warning will the industry get? Beer is not being barrelled, if we get no forewarnings, the process of production, packaging and distribution could take weeks in itself!!! This is down to the gov to lay out an unlock strategy, which I am expecting will be laid out (not necessarily implemented) in 3 weeks, fingers crossed!

But yeh... Rollercoasters... Yey ??

I really hope that they unlock theme parks before pubs... I really need that escapism ?

 

[Matt N]

I agree Matt, I think we’ll be forced to stay closed for 10-12 weeks. The main concerns now though are...

1) How many people will be put off from visiting places like ours even after lockdown is lifted?

2) What will social distancing guidelines do to our capacity? Will it still be profitable if this is hugely reduced!

These first 2 we can adapt to, for example we can diversify, and continue our takeaway service.

3) How much warning will the industry get? Beer is not being barrelled, if we get no forewarnings, the process of production, packaging and distribution could take weeks in itself!!! This is down to the gov to lay out an unlock strategy, which I am expecting will be laid out (not necessarily implemented) in 3 weeks, fingers crossed!

But yeh... Rollercoasters... Yey ??

I really hope that they unlock theme parks before pubs... I really need that escapism ?

I wouldn't worry too much; the amount of posts I've seen from friends on Facebook talking about planning big nights out after this is all over would suggest that people won't be deterred too much!

As for theme parks, maybe this whole experience and an upcoming drought (or at least, an implied reduction) in terms of investment will make us appreciate what we have a little more as opposed to constantly yearning for something new.

 

[Nicky Borrill]

I wouldn't worry too much; the amount of posts I've seen from friends on Facebook talking about planning big nights out after this is all over would suggest that people won't be deterred too much!

As for theme parks, maybe this whole experience and an upcoming drought (or at least, an implied reduction) in terms of investment will make us appreciate what we have a little more as opposed to constantly yearning for something new.

Hopefully they will... We do tend to give local parks a harder time... I’ve always loved Alton Towers, Thorpe and Pleasure Beach... ??? I’m tough on Drayton Manor, but that’s born more of disappointment really... At one time that park was on course to be a serious thrill contender in the UK.

 

[Matt N]

Interestingly, from watching the Amusement Insiders video, Cedar Fair still plans to spend $85-100m on 2021 projects, from what he's saying, down from around $190m in a usual season. So even though 2021 will see less than originally planned being built, we will still see things getting built, albeit to a far lesser degree.

So which parks do we think will still get investment? I'd predict that Kings Dominion's S&S Free Spin is most probably still going ahead, as they have already started construction, and for some reason, he seems intent that Cedar Point is getting some sort of $40-50m coaster in 2021, even though there have been no rumours or permits filed. The only thing I remember hearing was about those markers a couple of weeks back, which covered a pretty large area. Also, $40-50m seems like a huge proportion to spend on one park out of $85-100m for the whole company; is that something Cedar Fair would do?

 

[JoshC.]

Tulleys have confirmed that their 11th attraction for this year was due to be Wastelands Infirmary, an extension to their newly built Wastelands area. Due to the theme, they have postponed / potentially-cancelled that project:

https://www.facebook.com/ScareTOUR/posts/3187389474638859

(see comments for comment from the owner)

They've also said they'll make a decision whether to run Shocktoberfest at all at the start of August. Sensible move (which I expect many other larger Halloween events are also doing).

 

[Matt N]

Tulleys have confirmed that their 11th attraction for this year was due to be Wastelands Infirmary, an extension to their newly built Wastelands area. Due to the theme, they have postponed / potentially-cancelled that project:

https://www.facebook.com/ScareTOUR/posts/3187389474638859

(see comments for comment from the owner)

They've also said they'll make a decision whether to run Shocktoberfest at all at the start of August. Sensible move (which I expect many other larger Halloween events are also doing).

I think whether it goes ahead or not could be indicated by whether things like theme parks are back open by August (or at the very least, showing signs of reopening). I think they could be back open with measures in place by June/July, but it's whether or not these measures are applicable to a scare attraction that I think will decide it, dependant on what these measures are.

As for cancelling the attraction, that's definitely a wise move. Having an attraction themed to a hospital might hit a bit close to home for some just after a deadly pandemic has spread across the world.

 

[Pokemaniac]

Also, $40-50m seems like a huge proportion to spend on one park out of $85-100m for the whole company; is that something Cedar Fair would do?

Neglecting most of their regional parks in order to pour tens of millions into Cedar Point? It's not only something Cedar Fair would do, it's what they have consistently been doing for the last decade or so.

 

[JammyH]

They've also said they'll make a decision whether to run Shocktoberfest at all at the start of August. Sensible move (which I expect many other larger Halloween events are also doing).

I don't think any halloween events will be running this year. I fully expect the parks to be reopen by October/November time, but I imagine heavy social distancing rules will still be in place and parks will be operating on limited capacity. Opening scare mazes in a confined space, with poor ventilation, lots of people cramped together and actors coming up close to you/touching you literally won't be happening this year.

Such a shame as I was so excited to go back to toverland for halloween nights this year, but guess I'll push it back to 2021. Unless there is a miracle widespread vaccine or treatment by September, it's really impossible for scare events like Tulley's to run. I imagine for halloween this year the parks will simply have decorations around the park and horror themed music etc.

 

[Matt N]

Well, there is the Oxford University researcher who is developing a vaccine in Italy and is 80% confident that it will be ready by September for front line health workers. That would be absolutely fantastic if it were to happen, and I think it could happen, but I think it will be some point in 2021 by the time a vaccine is widely available to everyone. The Oxford timeline makes me think that it could be early 2021, but you can never really tell. Quite a few vaccines are already onto human testing, so I think that a COVID-19 vaccine will be ready sooner than we think.

In conclusion, I think that this will be bad for the industry in the short to mid term, but I think the industry will ride it out in the long term. By 2025 at the latest (probably more like 2022-2023), I see things having returned to a relative normality for the theme park industry.

 

[Professor]

Well, there is the Oxford University researcher who is developing a vaccine in Italy and is 80% confident that it will be ready by September for front line health workers. That would be absolutely fantastic if it were to happen, and I think it could happen, but I think it will be some point in 2021 by the time a vaccine is widely available to everyone. The Oxford timeline makes me think that it could be early 2021, but you can never really tell. Quite a few vaccines are already onto human testing, so I think that a COVID-19 vaccine will be ready sooner than we think.

In conclusion, I think that this will be bad for the industry in the short to mid term, but I think the industry will ride it out in the long term. By 2025 at the latest (probably more like 2022-2023), I see things having returned to a relative normality for the theme park industry.

Researches have also said that a vaccine for HIV/Aids is just around the corner for almost 40 years. Sars and Mers never had a vaccine that was rolled out due to several reasons.

There are so many reports in the news surrounding vaccines or immunity I just think the only thing we do know should be the focus for most healthy people in the mean time to avoid succumbing to this virus: increase Vitamin D intake so you are never deficient, try to maintain a healthy BMI and more importantly wash your hands / practice good hygiene.

 

[Matt N]

Researches have also said that a vaccine for HIV/Aids is just around the corner for almost 40 years. Sars and Mers never had a vaccine that was rolled out due to several reasons.

There are so many reports in the news surrounding vaccines or immunity I just think the only thing we do know should be the focus for most healthy people in the mean time to avoid succumbing to this virus: increase Vitamin D intake so you are never deficient, try to maintain a healthy BMI and more importantly wash your hands / practice good hygiene.

The reason I'm more optimistic for this vaccine is because a number of candidates have now hit the human testing stages, so they must surely be working so far.

 

[JoshC.]

I don't think any halloween events will be running this year. I fully expect the parks to be reopen by October/November time, but I imagine heavy social distancing rules will still be in place and parks will be operating on limited capacity. Opening scare mazes in a confined space, with poor ventilation, lots of people cramped together and actors coming up close to you/touching you literally won't be happening this year.

Such a shame as I was so excited to go back to toverland for halloween nights this year, but guess I'll push it back to 2021. Unless there is a miracle widespread vaccine or treatment by September, it's really impossible for scare events like Tulley's to run. I imagine for halloween this year the parks will simply have decorations around the park and horror themed music etc.

Whilst I admit it's difficult to seeing most Halloween events returning as things stand, there's two things I'm clinging onto:
1. A blind sense of hope that since the situation is ever-changing, things could improve enough that we have *some* sort of good progress by then.
2. It opens the door for a new wave of creativity.

To expand on the second point, some events could be in a position to design attractions which take place outdoors, in small groups (ie only people you are with), where actors are away from them. It would be difficult to pull off, and I'm not sure how realistic it is to achieve, but I don't think it's out of the realm of possibility.

Well, there is the Oxford University researcher who is developing a vaccine in Italy and is 80% confident that it will be ready by September for front line health workers. That would be absolutely fantastic if it were to happen, and I think it could happen, but I think it will be some point in 2021 by the time a vaccine is widely available to everyone. The Oxford timeline makes me think that it could be early 2021, but you can never really tell. Quite a few vaccines are already onto human testing, so I think that a COVID-19 vaccine will be ready sooner than we think.

The issues with vaccines if that even if they're being tested on humans now, you still have to observe any side effects, which could take place months after the vaccine. And even if you find the right one, you have to mass produce (which usually is easier said than done), and try and get it out to the masses (a very complicated process). It's nice to think that one could be ready by then, but it really isn't anything to bank on.

In my personal opinion, anyone working on a vaccine knows of all the bumps in the road they face whilst developing one. If someone says to the masses they're "80% confident" or whatever of hitting a deadline, it feels more like they're looking for attention and praise than anything else.