Firm to invest $60M to restore old hotels and beach properties at Cedar Point

12/2/2012
BY JON CHAVEZ
BLADE BUSINESS WRITER
Hotel Breakers opened more than 100 years ago and has 650 rooms and suites. It sits in a prime location on the Cedar Point beach.
Hotel Breakers opened more than 100 years ago and has 650 rooms and suites. It sits in a prime location on the Cedar Point beach.

A century ago, Cedar Point in Sandusky was the place to vacation in Ohio.

With its sprawling Breakers Hotel, pristine nationally-known beach, Atlantic City-style boardwalk “roller chairs,” and shoreline rides like the Water Toboggan, the Cedar Point peninsula was crowded every summer with visitors anxious to spend lots of days and nights at the Erie County resort.

Matt Ouimet thinks Cedar Point can be that way again.

The Cedar Fair LP president and chief executive officer recently green-lighted a $60 million three-year reinvestment of hotel properties at the Sandusky-based amusement park chain’s flagship Cedar Point property. If successful, the move could convince more visitors to  plan multi-day stays at Cedar Point rather than one-day visits.

The trio of company-owned hotels — the historic Breakers Hotel, upscale Sandcastle Suites, and 12-year-old Breakers Express hotel — at Cedar Point must become “more than a room for the night,” Mr. Ouimet said.

The former Walt Disney Co. executive said the importance of Cedar Point to its parent company is obvious.

“It’s more a destination resort or super regional park than any of the other parks we have. Its resorts play a much bigger role here than we would see at any of our other parks,” Mr. Ouimet said.

“I was talking to some of our guests earlier about what they would like to see. They said they would like to see the resorts more refreshed and the beach enhanced,” he said.

Sandcastle Suites at Cedar Point has 187 suites with flat-panel TVs and screened in balconies. Each suite comes with a microwave oven, coffee maker, hair dryer, iron and refrigerator.
Sandcastle Suites at Cedar Point has 187 suites with flat-panel TVs and screened in balconies. Each suite comes with a microwave oven, coffee maker, hair dryer, iron and refrigerator.

After 18 months at Cedar Fair’s headquarters, which is nestled between Cedar Point’s nostalgic buildings and beach and is but a short walk from the park’s midway, Mr. Ouimet agrees with those customers who want a restoration of the park’s hotel and beach properties.

“I’ve become enamored with this place,” he said of the 106-year-old park. “This is a very important asset not only to our company, but to the state of Ohio.”

Mr. Ouimet envisions hotels with greater ambience — an aspect he may have learned from running Disney’s Cruise Ship lines — and a beach where families can play, stroll, and bathe in the Lake Erie waters during breaks from the amusement park or nearby Soak City water park.

To make that vision reality, two weeks ago Cedar Fair announced it would sell its Knott’s Soak City water park in the San Diego suburb of Chula Vista to SeaWorld Parks & Entertainment. Cedar Fair will use the sale’s proceeds to help fund makeovers at its Cedar Point hotels.

The water park’s sale price wasn’t disclosed, but Cedar Fair paid $11.6 million for it in 1999. Mr. Ouimet said the park’s value has increased since then.

SeaWorld approached Cedar Fair about buying the water park, Mr. Ouimet said. But the CEO acknowledged he immediately saw the deal as a good way to pay for hotel upgrades — which are slated to start in late 2013 and cost $15-$20 million annually through 2015 — without disrupting Cedar Fair’s annual capital expenditures budget that funds new rides and attractions at the company’s 11 amusement parks, three remaining outdoor water parks, and one indoor water park.

“We see it as supplemental cap-ex budget for the $15 to $20 million a year. It’s supplemental to the rides and attraction budget, as we didn’t want to steal from that,” Mr. Ouimet said.

Rick Munarriz, an analyst for the Motley Fool online investor Web site, said a reinvestment in the hotels is probably a good move because staying in them at times feels like “the resorts that time forgot.”

An aeriel view of the Breakers Express Hotel, which is the closest hotel to the Cedar Point peninsula.
An aeriel view of the Breakers Express Hotel, which is the closest hotel to the Cedar Point peninsula.

The historic Breakers, he said, is very conveniently located next Cedar Point, “But for the most part, it’s as much a throwback hotel as when they had Abbot and Costello stay there and all the other old celebrities who used to come there,” Mr. Munarriz said.

“It can be kind of freaky in halls with no elevators and the old A/C units on the windows. … It makes you think that it is a regional operator and not a Disney World type of park,” he said.

Mr. Munarriz said spending up to $60 million to improve the hotels isn’t likely to pay off right away for Cedar Fair. “But it’s something that needs to get done even though it won’t be major driver of their income,” he said.

“It’s a smart move in theory and one what will pay off in time, I believe,” he said.

Details of the makeovers are only now being discussed internally but general plans call for a refreshment in some areas of the hotels, and a repositioning and refurbishment in others. Consumers will be solicited for ideas, and some of the changes could be dramatic, Mr. Ouimet said.

Overall, the goal is to create a pricing tier of good-better-best so that there will be nice accommodations for every visitor’s budget, from high-end spenders to budget-conscious families.

“I probably learned that originally at Disney but the hotel industry is also segmented that way. It’s a good-better-best philosophy,” Mr. Ouimet said.

“I think we have a real opportunity to create a room inventory like that. And like a cruise ship, no matter what level of room you choose, everyone can enjoy all the amenities in the same way. You can enjoy Cedar Point the same way or you can enjoy Soak City the same way no matter what level of hotel you choose,” he added.

Customers could even find good-better-best room pricing levels all at one hotel, the CEO said.

Once the hotel properties are upgraded, Mr. Ouimet said, Cedar Point will be in position to do two things: offer customers new vacation packages that include lodging and park admissions, and create more nighttime entertainment, such as the Luminosity light and dance show that debuted this past season.

Amusement industry consultant Dennis Speigel, head of International Theme Park Services Inc., in Cincinnati, said Cedar Point’s hotels are probably an area where Cedar Fair does need to spend more money.

“We’re seeing in Orlando that when you adopt a higher quality room standard, people will spend. It will increase the length of stay,” Mr. Speigel said.

Cedar Point already faces strong competition for overnight stays in Sandusky from the Kalahari Resort and the Great Wolf Lodge, the consultant said. Giving customers better reasons to stay at Cedar Point is a good investment, he added.

“Sandusky is already a destination. If you’re going to Sandusky, you’re not going anywhere else. So the more people you can put on [your property] the more you can draw them back into the park,” Mr. Speigel said.

Cedar Point has done an adequate job with its hotel properties, but, “I’d say the hotel aspect has been under-managed over last 10 to 15 years,” he said.

Mr. Ouimet said that in his estimation, the hotels at Cedar Point, which includes its Castaway Bay resort with an indoor water park, have performed “very well” financially, making it hard to change things too much.

“But it’s the right long-term investment for our combined assets,” he said.

Contact Jon Chavez at:
jchavez@theblade.com
or 419-724-6128.