Family Culture or Central Control? Herschend’s Acquisition & Six Flags’ Silo Smash

0:00 Okay from our studios this week in Los Angeles and Tampa. This is green Tag Theme Park and thirty. I'm Philip. I'm joined as always by my co host Scott Swinston of Scott Swinson Crety Development. On Green Tag, we break down the top theme part news for each week and explain why it matters to professionals. And this week we're going to talk about the Hershind finalizing its acquisition. Exciting. I don't know why I made that sound. That's not a Hershein sound at all. I don't know. Well, God, there's hirsh and hands. Those are like jazz hands. I don't know. Okay, So just a little bit recap. We did talk about this news when it was first announced, but it's now been officially completed, and Hershind is officially completed its acquisition of Palace Entertainment's twenty four US attractions, solidifying plans first shared in March. As of today or the recording previously this week, hershend operates forty nine properties with twenty two thousand hosts serving nearling twenty million guests annually. This milestone moment also coincides with Hershein's seventy fifth anniversary to defining moments that underscore Hershian's commitment to innovation and strategic growth, aligning with its purpose of bringing families closer together by creating memories worth repeating trademark, So.

1:13 They did mention that sentence, Philip, that would have been a tough one for you. I know sentence is worth repeating anyway, Memories worth repeating. Okay. The press release says this season will be all about listening, learning, and building relationships. Guests can expect the same familiar attractions and hospitality they've come to know and love. Hershan's current focus is supporting its hosts and empowering them to deliver exceptional guest experiences. So yet again they're underscoring that nothing is going to change, which we talked about last time, but is important because some of the brands have very different approaches to specific things, like to me, I always sent course about Halloween, and like some of the brands are family friendly only and some are spooky, And I think they're emphasizing nothing's gonna change this year, so don't freak out, and this is a more long term strategy versus well, just a long term strategy. So they can figure out what to do.

2:11 I also think it's important to recognize that many of the Palace Entertainment parks are operating as from a from a guest facing standpoint, they appear to be quote unquote independent parks or family parks, or parks that have been around for quite some time, which have a great deal of tradition. So it makes it makes sense that they're not going to come in and just say, yes, we're gonna you know, we're gonna whitewash everything with with with Dollywood or whatever their you know, whatever their big brands are, which I think is Dollywood, but Hershend. So Hershen though has an interesting history though, and the fact that they have they do they have a similar approach. They have a lot of different things. Because when we say Hershend, if you're not in the industry, people would go who you know, they they or they may they may think of Dollywood, they may think of you know, one or two of the larger properties, but they wouldn't think of Hershand as a key player certainly, or recognize them by name, nor would they have recognized Palace Entertainment by name. They recognize Six Flags, Disney Universal, maybe SeaWorld, probably.

3:17 Not as. United parks and resorts yet, but they recognize they recognize big players by the names that the big players have put forward. Hershand has not really done that. So it seems like a pretty good match to be able to operate a bunch like for example, I mean, this is a weird it's a weird analogy, but they're not too far from us. I was just walking the dog and not too far from us. There as a ghost Kitchen now Ghost Kitchen. It is a basically a depot for door Dash and Uber eats to pick up from. These restaurants that they're picking up from do not exist. They only exist. They're all part of a company called Ghost Brands.

4:03 And so if you order from a place called a place called Maddie Meltz, Maddie Meltz is a grilled cheese place that only delivers. There is no Maddie Meltz restaurant. It's just this ghost kitchen. So they come and pick it up. They've got a logo, they've got the whole line there. That's kind of what HERSCHEANDT has done. You know, they've been the they've been the operator, they've been the owner of all of these different brands, these different parks that have a different guest facing approach, and so has Palace, So it kind of makes sense. I mean, if Palace was going to be purchased I'm sorry, if the US parks that Palace had, we're going to be purchased by someone Hershean seems to be like a really good choice.

4:44 I agree, And I also think that it helps them secure a position kind of in this consolidation of the top brands that we're seeing. I mean, you listed all. Of them, but basically that puts them up there, maybe in a close third or fourth when compared to you United Parks, right, so it kind of they're overall attendance. I think the biggest challenge is the integration. But as you just said, right like, it's the fit in terms of the fit wise like it fits in that all of these were celebrated as local places, local parks, and local things, and that's what they're good at. The Financially, there's a big challenge too. It's a one point one billion dollar leveraged loan and it kind of triggered an S and P downgrade in their credit rating to B plus, which basically just means that the near term, leverage is high, like they've leveraged assets pretty high up, so the leverage ratio is pretty high. And right now, since they haven't really put out a strategic plan or any sort of you know, they're they're listening this year for which is good.

5:46 But in the short term, the big risks are like, you've increased the debt that you owe and your attendance and your revenue is not necessarily increasing, so you've taken on more debt but not necessarily anymore attendance or revenue. And because there's no plan, that's why it's been downgraded. But we assume that they're, you know, next year, they will release a plan in the way that Six Flags did after a while, and they will adjust projections, or they'll say this is how we're going to increase attendance or do this or that, or because their family owned, maybe they won't like That's the other side of this is maybe they're just gonna say, we're going to focus on making each one local and keep you know, keep the local presidents in place, unlike Six Flags getting rid of all of them, and just kind of make sure that each park independently can be profitable. And we will slowly pay back this thing. That could also be an approach.

6:40 You Yeah, I you know, it's funny because I almost hope that that is the approach. Yeah, I hope that. You know, these these more more regional parks, I mean, that's what the vast majority of them are, you know, like like compounds. For example, that's that's a form Palace Park, which is now a Hershand Park, is a started as a you know, a trolley stop park. They were the they were the local, the only local game in town really, and they had a unique, you know, a unique way of approaching it. So I'm hoping that that we can maintain some of that charm, some of that historical content, and some of that unique way of doing business because I think that we'll make a more diverse product for them.

7:28 I let me let me put it this way. If I were going to run, if I were going to say, okay, if Herschand all of a sudden came and said, hey, Scott, run our conglomerate for me, would you I don't think they would, So I'm really not holding my breath. But and if they did, probably shouldn't. But if they if they were to come to me, I'd say, yeah, let's see how much we can maintain of the individual uniqueness and and charm of each park while giving it a much stronger UH position within the world, so that they can have we can give them, you know, ordering leverage, we can give them supply leverage. It's you know, how can we how can we make them still unique to the guest with a much stronger support team from behind.

8:13 Yep. Well, like you said, there there are I think you're saying too, there's also synergy. Like it's that balance between like there are synergy possibilities where like you're saying, with the consolidated hiring, leveraged buying, all that kind of stuff, But there's also synergy and that they have a portfolio, and they have things that are not just the parks. I mean, it's a wider portfolio. They have, you know, the globetrotters, they have the festivals that they differentiate all of that. So it's possible too that there's some thing that they could incorporate. They have ips, they have access ips. And and they have and to to homogenize all of those ips under one name may or may not be beneficial at this point, because again, no one says hey let's they'll say let's go to They won't say, hey, let's go to herscheld.

9:02 You know. So I think it's important to maintain those ips, maintain the integrity of some of those parks. It's the same reason that when Bush Entertainment Corporation, even though at the time the Bush Gardens parks were the juggernauts of the system, they chose the SeaWorld name because SeaWorld was better known, it was more immediately recognized. And now it's like there, I'm guessing, but it's like United Parks is kind of gone the opposite to try to make the corporate umbrella less important and the multiple brands of the parks more important. So it provides more variety to the guests and again diversifies their portfolio.

9:43 Yeah, well, it seems was there anything else? Let's see, I think that we talked about, you know, seasonal stuff could be an issue later, but maybe not. I mean, if they're going to end up keeping each thing individually, you could see where they would just say that these parts have always done scary, so we're going to let them continue to do scary well. And the quest you know, we all know that that Hershand. Well, not everybody, I guess, but most people in the industry know that Hershand is incredibly family friendly based on their they're well the religious background and the morality background of the point. We talked about that last time. Yeah, yeah, I just want to you know, that's that's the only thing that I think might be a little bit of a hiccup for some of the adult stuff.

10:26 But again, I guess it depends on the sensitivity of you know, what is what is too much. You know, even when I do adult stuff, I don't go I don't go anti religion. So but that's that's my own personal cross to Barra, so to speak. Now that's my that's my own personal approach. So we'll see, we'll see. There there are the part of this acquisition does include some smaller water parks than FECs, and there are some people, some analysts that are thinking that they might close those or those out. But you know, I think that's the same thing we see with six Flag or just any you know, you have to analyze to see if they think they can keep the asset profitable or whatnot. That's that's to be determined, you know, in the future. For these right, and in order to have in order to have that sort of unified buying power, you have to evaluate and see, you know, what are the parameters? Do the parameters go from you know, a mile to three quarters of a mile? Is that the is that the world we're living in? To make it so that you can have that that that buying power.

11:39 Well, let's go. I want to transition over to the next story, which is I think directly related in that it creates a great contrast. So last week, after we did our analysis about six Flags, then uh, a few days after, they announced that they're removing all their part presidents. So they've chosen to do a new regional management model. Where so effectively. We talked about this in the past a little bit where they first experimented with this with their PR teams. So like one PR team was managing media relations for several theme parks in a region, and now they're doing the same thing with their park presidents. So like one park presidents, they're going to have just one president. It's going to manage multiple like whole regions. Right, And I think there's been a lot of pushback about this as usual, but it is interesting because I think the best criticisms I've seen have pointed out that this is fundamentally different in that like having someone that's accountable for the park, like the buck stops here in individual park is pretty critical to any company. And you know you can it's kind of like you can share lower roles, but can you really share the president role for the area. And then I think the best quote I'm going to read here from a forum that was from the Theme Park Insider article, and here's like the best quote I thought was, these are theme parks we are talking about, not Chipotle locations.

13:04 Each one has a different department of employees and thousands of people. How can you operate a theme park and adjacent water parks for most parks without having someone directly responsible for it? Which I think is a great encapsulation of the whole challenge. So, yeah, Scott, is this Chipotle or is it a theme park? And so so it's interesting when I first heard this, I had the exact same response. However, as I think, as I've let it sync in and kind of looked at it, tried tried to look at it from a more open point of view, I'm questioning and I'm not one hundred percent convinced yet. But if there is no buck stops Here president, there is a regional manager who is the buckstops Here regional manager? Is this Will this not encourage those people who are the vice president of culinary, the vice president of merchant, the vice president of operations.

14:02 Will it not force them to work together more? Will this break down silos, which is in my opinion, one of the first one of the first earmarks of Hey, this park's in trouble is when their silos get too strong and it doesn't become what's good for the park. It becomes what's good for the culinary bottom line, or the merchandise bottom line, or the the you know, the operational budget or whatever. So will this break down some of those walls between departments? And I don't know whether it will or not, but I know that if I were working in a park and I were the vice president of entertainment, and all of a sudden there was no chief on grounds, we now had to report directly to, in essence corporate, I would be I would be going to my peers in the park and making friends real fast.

14:54 I would also be going to my peers in the region and making friends real fast. So I think there's a possibility, and I don't know this for sure, but there's a possibility that this could help eliminate some of the silo situation, help eliminate some of the one department fighting another. And this doesn't mean anything unless you've worked in a theme park. But once you've worked in a theme park, you're gonna go, oh, everybody has silos. Yes, every park has silos. Doesn't matter how big, doesn't matter how small. It doesn't matter whether you're a theme park, a zoo, a museum, any large attraction that has multiple departments. There are silos. And some of them have very thick walls that you never know what the other one's doing.

15:37 And some of them are pretty good about talking to one another. But when you don't have a buck stops here who can take all the blame, then all of a sudden, you gotta work together. It's sort of like if you've got you know, you got three kids are being babysat by the same person, the babysitter gets up and leaves. Those kids have to be resourceful, they have to find a way to keep going. So I'm curious to see if this is going to happen. I'm not saying it will happen, but I'm saying it is a possibility. And I'm saying, you know, if I were involved here, I would immediately break down all those walls if they hadn't been broken down already, and say, gosh, guys, you know, we can't hide behind our park president anymore. Our work is going to be completely transparent to the next level up.

16:26 And so there's a possibility then it may change the way the parks operate and it may make them operate more efficiently. Yeah, I really like this idea, and I hadn't thought about it and that lens, but I really like it because I'm just thinking about that as you're saying it. So you're in this department, you're needing to work to each other because then it becomes well, we want to do this thing for Halloween. We have to all work together to pitch it to the regional person because and I think it also the. Regional park all have to be on the same page. Yeah, we all have to pitch it to you know, regional boss.

17:07 To get the budget. You have to do that more accurately. We in the region have to all be on the same page. Yeah, that's what I like about it too. I like having you have like one person who sees everything from every from their whole parks and their whole jurisdiction, and they're able to make a decision that's not just for one like it's you know, you're you're balancing multiple things. And then to your point, if the people on the ground, like the merchandise person at this park, is having to go and argue directly to the regional person, then it might give the regional person much more visibility on the day to day working. So it will almost like shorten, you know, shorten the strategy window where you're not having a whole layer you have to go through.

17:49 And after they get over the after they get over the the initial shock of the change, they're going to become much more comfortable with their regionals so that they will not feel as though they have to hide information from them. And the only reason I say that is back a thousand years ago when I was working retail, I worked for a major department store, and the major department store chain had a regional It had a park or a park, it had a store, a store general manager, but then also had a regional manager, and it just happened that the regional manager's office was in our store. So we were very comfortable with the regional manager. We saw him all the time, you know, we would say hi, he would ask us a question, we would give a straight, honest answer. We didn't. We were empowered by our store manager not to you know, not to fib to him, to be straightforward, to be honest, because we didn't have anything to hide. And I think, just by the nature of hierarchy, when you eliminate that level, it will put the regional manager much more in control and have a much more realistic understanding of what's going on in the region.

18:58 Yeah, that's interesting, that's really you know, I feel like that's very similar to what even thirteenth Florida does, which is a totally random example, but I just think even there, you see it where it's like they have read you know, the regional director that and even on the entertainment front, it allows them to coordinate entertainment across a whole region, you know, especially when they have multiple shows in one metro area, even you to be able to coordinate resources, coordinate the shows, theming. That's another thing I was thinking of too, is you know, say, for example, Philip, you and I are both vice presidents of entertainment and two parks in the same region, and we are both sharing our information with our regional head and he says, hey, you know what, Philip's doing something really cool that he's got a great he's found a great vendor. Maybe you want to tap into that because you know, he's already found it, it's already working well for him, and we might be able to get a price break if we can get you both buying the same thing.

19:57 Yeah, yeah, yeah. And then also staffing, you know, being able to even potentially share staffing strategies, stare your recruitment ideas, you know, and. Sharing staff I mean, I know that sounds crazy, but but you could do it. I mean there's uh, you know, restaurants have done it. Restaurants with chains have done it for years, where they would after you get to a certain level, having been with the company for a certain number of years, you can go shadow another location. Or they can even call and say and retail establishments do this too. They can call and say, hey, I need I've had my assistant manager is out on maternity leave and I've had five call ins today, can you send somebody over here? And basically, if it's someone to come over and run a register, they can do it and they pay mileage and they ship you over to another store.

20:46 So that would handle although I know staffing is getting better, but that would handle some of the staffing challenges if they you know, rear their ugly heads again. Yep. Well it's not just that. It's also the idea of like you you produce a show, you make a show, you know, you could potentially move the show over if you needed to you to fill up something, or there's a weather thing over here, you could read deploy. Yeah, it's a lot, that's yeah, that's interesting. I really like this idea because even when I was back when I was talking to the different entertainment teams at the different universals, you know, and there's not even that many universals really, I mean not compared to forty two parks, you know, I mean there's only so many, and there's only two in the US and I and what shocked me even then.

21:30 Was about what there's four in Florida. Yeah, of course, God, but how they just didn't talk to each other at all, And even when it came down to the Halloween people and they would ask me, like back when we're doing the magazine to send them versions of the magazine so they could like look at what the costumes looked like for this show that this person did because they didn't know. And I was like, can't you just call the costumer at Universal that you need to talk to? And because you both work at the same company, that like doesn't work like that. You can't talk to people at the other places. That's crazy. It breaks down those it breaks down those walls, It breaks down those silos, and you know, if the if the business model is let's let's make it so that you know they are they're gonna they're going to own the regional park, say say six Flags goal is to own the regional park market, not to be the destination location, but to be the location, to be more of the fast food than the once a year high end restaurant.

22:31 Then making sure that the quality is comparable with throughout the region is going to benefit that model. And it's going to benefit that model because yeah, I was telling Philip just before we started recording that, uh, later this month, my husband and I are going to the Chicagoland area, and I'm going to visit Great America, which I grew up going to, and when I bought a season pass to go, they gave me all of the information on buying passes and the upgrades to go to all the other six Flags parks, which is you know, really really cool. And if they're going to do Philip had mentioned the possibility of maybe doing a regional version, which I think would be really smart. If that does indeed happen, then there's there's a great This makes an awful lot of sense.

23:18 It's scary as hell right now, and it seems counterintuitive and quite honestly, to all those people who have you know, lost their positions. My heart goes out to trust me. I've been there. I understand you, Cameron. I'm going to say it again, don't panic, just pivot. One of our listeners loves it when I say that because he hasn't posted in his office. But don't panic, just pivot, and you you know, you've you've got a great deal of skills and you can continue to work because there's you know, plenty of plenty of theme parks in the country right now, and now only a few companies to work for to to make that happen, so it makes your job search a lot easier.

24:01 Well, I guess my question. Do you think that they're going for like what we talked about with Hersheen, where it's like they're trying to make each park have its own distinct like family brand, or are they going for more of a Chipotle ESK model where you can expect certain like quality standards across like every six Flags name. I can't speak, I can't speak knowledgeably about that. I can give you hypothetical and how I would approach it if it were if it were my choice, because the parks in some in some regions, the parks are not far away, they're very close to one another. Yeah, like six Flags and Knots and Knots. I would make sure that the regional parks maintain their own individual qualities. But I would make sure that the the experience that you had at and you've said it yourself, Magic Mountain, the experience at Magic Mountain, the experience a Knots are very very different. And I would make certain that you just as comfortable going to Magic Mountain as you would going to Nott's, that the restrooms were all clean that the security made you feel safe, that the rides were all properly updated and maintained, properly operated, all that kind of stuff so that guests will feel comfortable. I mean, if you think about it, it's not that different from Walt disney World, only it's a regional approach instead of everything being in one place where you have to go to a hotel and spend money on a hotel, you go back to your house, and then you go off in

25:32 this direction to another park, and then you go back to your house, and two days later you go off to another park. And you know that when you're in the mood, you can get a variety of the experiences, but all the money goes to the same company. So that's what if I were a regional manager, that's what I would try to do, is to make certain that the all of the parks didn't duplicate but complimented each other. Because again, if you look at just the hard good, it's the hard assets of Magic Mountain and the hard assets of Knots, they're very different. They're very very different, and the vibe of both of those parks is very different. I would try to enhance that difference well once again, giving that that regional regional buying power.

26:19 Yeah, and a regional person instead of a parking president model could do that because the regional person then is making that they responsible for all of them, so they can more you know, enhance and balance and versus if they were park presidents, they wouldn't know the information to be siloed. But then also the park presidents would be like, well we they it's like two focused on just one, I guess, versus like balancing a region. And there's also that human nature thing, you know, park presidents. If you have a park president with two parks in the same region, they're going to be competitive with each other. Yeah, a regional will not. They will be supportive of each other because the success of their region is more important than the success of Indian individual park. Yeah. I don't and again this is all I just want to really really clarify. This is all hypothetical because I don't know whether this is the plan or not. I don't know whether it would work. But since we're having this discussion, you know, we've said for many many years we start with the facts. But the idea is we want to make sure that people are talking and asking the right questions, and this is just a possibility, and I think that it's a viable one. The more I talk about it, the more we chat about it, the more interesting it sounds to me. But you're right, Philip, as you said at the very beginning of this segment, it's a different approach.

27:39 It's a very different approach. And because it's very different, it's scary and seems either unique or crazy. But once again, going back to one of my dearest mentors, she used to look at me and go, first, break all the rules, you know, go back and blow something up. Another one of my mentors would use the phrase, you know, you'd look at them and you go, if it ain't broke, don't fix it. And his response is, if it ain't broke, break it and rebuild it, because that's how you make it better, you know it Just getting by it is a is the best, the best way to stop progress. If you are, if you are, if a modicum of success, if you're moderately successful, you're never going to get better because you're gonna go, hey, we're successful, we're good, we're good.

28:25 So this is this is a unique approach, and I'm curious to see how it's how it's going to pan out. I hope. I mean, obviously it's for the industry, so I hope it does well. And you know, those of you who those of you who have been directly affected by this, I'm sorry. I know how it hurts. Believe me, I know on a personal level how it hurts. But at the same time, it is doing the same thing to you. It is opening you up to new possibilities. And in my particular case, had it not happened, had I not been restructured a way, which is exactly what's happening here, you know, recognize, first you didn't do anything wrong. This was not your fault. This is a restructuring for the betterment of the company. And if you get restructured to another part of the company, dive in with the same fervor that you did before. And if you move on to a different company, dive in with the same fervor because your experience is valuable. So just something that's important to remember, because this does impact impact people. And I don't want people to contact us later and say how heartless can you be to say it's okay to get rid of all of these jobs. It's it's hard.

29:29 It's a hard time. I think that's exactly from what I read online that that was what mostly is what everybody was saying. But I think, you know, you can, like you said, take a step back, and I would also argue, I mean, I know this is also terrible and people are gonna that. I would say the people that are part presidents of those parks probably are pretty high skilled individuals. Of course they are. They wouldn't be where they are if they're not correct. Yeah, I think that's that's also the thing too. But yeah, we're at time and I think on our page Treon show after this, which you can find by just going to Patreon and searching green tag or just looking at the link in our show notes. So we're going to be discussing a little bit more what's going on, and then next week we're going to talk about trends.

30:14 Great, yeah, because there's been a lot of trends in the industry, and we do this every now and then. We kind of do like a taking our pulse, taking the pulse of the industry, and so we hope you've enjoyed this week. I know I have. This has been a good, good show for me. I like this, but we hope you've enjoyed it as well, and we also hope to see you all next week here on green Tag Theme Parking thirty