Cedar Fair's (FUN) CEO Richard Zimmerman on Q1 2018 Results - Earnings Call Transcript
Cedar Fair (NYSE:FUN) Q1 2018 Earnings Conference Call May 2, 2018 10:00 AM ET
Executives
Stacy Frole - IR
Richard Zimmerman - President and CEO
Brian Witherow - EVP and CFO
Analysts
Brett Andress - KeyBanc Capital Markets
Brad Boyer - Stifel
Bart Crockett - B. Riley FBR
Chris Prykull - Goldman Sachs
Michael Swartz - SunTrust
Operator
Good day, everyone and welcome to the Cedar Fair First Quarter 2018 Earnings Conference Call. Today's call is being recorded.
And at this time, I'd like to turn the conference over to Stacy Frole. Please go ahead.
Stacy Frole
Thank you, Vicky. Good morning and welcome to our first quarter earnings conference call. I am Stacy Frole, Cedar Fair's Vice President of Investor Relations. Earlier today, we issued our 2018 first quarter earnings release. A copy of that release can be obtained on our website at www.cedarfair.com under the Investors tab or by contacting our Investor Relations Officers at 419-627-2233.
On the call this morning are Richard Zimmerman, our President and Chief Executive Officer and Brian Witherow, our Executive Vice President and Chief Financial Officer.
Before we begin, I need to remind you that comments made during this call will include forward-looking statements within the meaning of the Federal Securities Laws. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. For a more detailed discussion of these risks, you can refer to filings made by the company with the SEC.
In compliance with SEC's Regulation FD, this webcast is being made available to the media and the general public, as well as analysts and investors. Because the webcast is open to all constituents and prior notification has been widely and unselectively disseminated, all content of the call will be considered fully disclosed.
Now, I will turn the call over to Richard Zimmerman. Richard?
Richard Zimmerman
Thanks, Stacy and thank you all for joining us this morning. As you would expect, our main focus during the first quarter is to prepare our seasonal parks for opening. Knott's Berry Farm, our year around park in Southern California is our only park with meaningful first quarter operations. As such, we will keep our prepared remarks brief this morning because our first quarter operations represent less than 5% of our expected full year net revenues. We would caution that our results in the first quarter are not indicative of performance for the remainder of 2018, but we have seen some positive trends that we'd like to comment on.
I'll let Brian speak to the specific numbers in a moment, but the key message for today is that early season results and sales trends and advance purchase commitments continue to support our optimistic outlook for 2018. With a strong finish in 2017 and a fast start in the current year, we believe we are well positioned to deliver another outstanding year in 2018. We remain confident in our business model and our ability to maintain the growth trajectory we've produced for the past several years, which supports our commitment to a steady 4% increase in our annual distribution rate going forward.
At this time of year, we're always cautious about reading too much into early season returns, yet stepping back and looking at what we expect to be the primary drivers of our top line performance for 2018, we would like to highlight three areas of focus.
First, the appeal of new attractions that expand our audience, enhance repeatability and improve value perceptions. Steel Vengeance, a record breaking hyper-hybrid roller coaster at Cedar Point and Hang Time, the West Coast’s first dive coaster at Knott's Berry Farm are expected to be significant contributors in 2018. Both parks will also have second year benefits from the major water park expansions we introduced last year, investments that proved very successful in 2017 and should continue to be attendance drivers in 2018 and beyond.
Second, the product and experiences we offer to encourage advance sales and incremental spending. Consumers continue to prioritize experiences over possessions and our parks provide a platform where we can offer immersive entertainer at a scale not easily replicated by other regional entertainment operators. This includes our new rides and attractions, our culinary live entertainment offerings and our multi-week special events such as Knott’s Annual Boysenberry Festival, Halloween Haunt and WinterFest, all of which provide a better and more differentiated guest experience.
Third, the effectiveness of our marketing and sales programs allow us to speak to our guests with messages that break through the noise and create an emotional connection that drives action. Our brand position work has become a rallying point for developing attractions and programming that are true to the unique history and local market taste of each of our parts. And with this, our marketing efforts have become more strategic and analytical. We now have the historical data to analyze and determine the best audience for specific marketing campaigns that embrace the unique aspects of each of our parks.
In a few minutes, I will provide additional color on our 2018 plans and an update on some of our longer term initiatives. But first, I want to turn the call over to Brian to discuss the quarter's results in more detail. Brian?
Brian Witherow
Thanks, Richard. As Richard briefly touched on earlier, first quarter represents less than 5% of our full year net revenues. Even so, we are very pleased that net revenues for the three months ended March 25, 2018 were up $6 million or 13% to $55 million. Given the seasonal nature of our business, the majority of our revenues are realized during a 130 to 140-day timeframe beginning in our second quarter. Most of our revenue is concentrated in the peak vacation months of July and August and in recent years that has been supplemented with a growing amount of fourth quarter revenue stemming from our popular events and activities surrounding the Halloween season and more recently with our WinterFest celebrations.
Our revenue increase for the quarter was primarily driven by the outstanding early season performance of Knott’s Berry Farm, our only park with meaningful first quarter operations. Knott’s is a leader in the regional amusement park industry when it comes to immersive multi-week events. It delivers unique experiences that embrace the park’s history and features the culinary expertise of its executive chef and overall food and beverage team.
During the first quarter this year, this included their inaugural peanut celebration and a portion of their annual Boysenberry festival. The excitement surrounding these events as well as the other investments we've made and continue making at the park has not only led to strong sales in the first quarter, but it's also led to strong year-over-year increases in season pass sales in both the number of units sold and price per unit.
The strength of our advanced purchase commitments combined with this month's debut of Hang Time, a world class roller coaster, is setting up nicely for future success in a highly competitive market. The first quarter’s success at Knott’s was slightly offset by a small decrease in other park revenues compared with the prior year period. This is primarily due to the proceeds we received during the first quarter of last year from a business interruption claim at Cedar Point.
Operating costs and expenses in the first quarter were up $6 million or 5% to 124 million, which is in line with our expectations. They include normal offseason, operating maintenance and administrative expenses at our seasonal amusement and water parks and daily operations at Knott’s Berry Farm and Castaway Bay. The year over year increase in costs and expenses is a result of the higher attendance and guest spending during the period, higher labor cost due to market and minimum wage rate increases as anticipated and higher operating expenses attributable to the disassembling of the inaugural WinterFest holiday events at three parks.
Looking at longer lead indicators for a moment, our advanced purchase commitments including season pass sales, group event bookings, hotel reservations and the sale of all season products, such as all season dining and all season beverage are up when compared with the same period last year. This positive momentum is reflected in our deferred revenues, which were up $8 million or 7% to 125 million when compared with the first quarter of 2017.
All in all, we're pleased with our strong start to the year and a nice increase in early season advance purchase commitments. These positive trends put us on pace to deliver yet another outstanding year for Cedar Fair and to generate a significant amount of free cash flow in 2018. Our focus has been and always will be on optimizing the use of free cash flow to maximize unit holder value in both the short and long term. This includes making strategic long term investments at our parks and continuing to grow our distribution, which currently has an attractive tax advantage distribution yield of approximately 5.3%.
Finally, before I turn the call back over to Richard, I want to highlight for this group that our fiscal quarters typically end on the last Sunday of the month, as was the case with this past quarter and will be the case for the fiscal second quarter, which ends June 24. However, in 2018, our fiscal third quarter will end on Sunday, September 23. This will ensure that our interim results are comparable year-over-year with 13 weeks in the fiscal third quarter for both 2018 and 2017.
Now, I’ll turn the call back over to Richard.
Richard Zimmerman
Thanks, Brian. This is always an exciting time of year for us, as we now have seven parks in full operation with two more opening this weekend, including Cedar Point for its 149th season. Our commitment to investing in high quality and immersive experience at our parks is a key differentiator for Cedar Fair. We believe everything we do should be unique by scale and unique by offer. We invest a little more to build record breaking roller coasters that offer a highly repeatable experience, because the track is a little longer, allowing for smoother transitions between the ride elements. We want a three train operation which expands ride capacity with flexibility for maintenance without disrupting the guest experience. We invest in the areas around our new rides to provide new experiences for our guests through enhanced culinary, retail and immersive entertainment offerings and we are investing in overnight resort accommodations to enhance the guest experience and extend the length of stay. All of these investments elevate the overall guest experience, encourage repeat visitation and provide us with greater pricing power. It also allows us to more aggressively market to incremental audiences outside the traditional geographic market range.
This year, we have an aggressive capital program with four new roller coasters, refreshed and expanded children's areas, new and upgraded restaurants and catering facilities and expanded resort facilities with waterfront hotel rooms and luxury RV sites. Many of our investments have already debuted to medium guests with exceptional responses from both, giving us great confidence in the consumer demand for our products.
In 2018, we are once again expanding our immersive multi-week special events. This includes the expansion of WinterFest, our winter holiday celebration to Kings Dominion, our park in Richmond. The introduction of a peanut celebration at Knott’s Berry Farm and Kings Island and continued investment into an expansion of our popular Halloween Haunt events across all of our properties, our ability to provide very distinct seasons of fun throughout the year, capturing each park’s unique regional brand is allowing us to be more engaged with our customer base throughout the year.
In turn, this improves the overall price value proposition of our parks with all audiences and drives incremental advance purchase commitments, including season pass sales, all season products and group business. We believe these special events are another differentiator for Cedar Fair. These built to scale events create urgency to visit our parks multiple times throughout the year and drive increased guest spending through unique culinary experience that feature the creativity of our executive chefs.
Because of our growth over the past five years, because of this, our growth over the past five years has been balanced between improved attendance and guest spending levels and we fully expect this balanced growth to continue over the long term. New state of the art catering facilities are just one more way we are enhancing the guest experience and marketing more aggressively to our group clients, including corporations, youth groups and families.
Our catering facilities are no longer picnic tables under roost, but rather indoor and outdoor, high end dining areas with modern kitchen facilities, free Wi-Fi and self-service refreshment centers. The addition of executive chefs at all of our parks also allows us to provide customized experiences with premium food offerings. Our long term commitment to investing in these facilities and our team including the high quality of our group sales associates and executive chefs is delivering improved results.
Over the past few years, we have generated meaningful increases in active group bookings and I'm pleased to say that in 2018, our active group bookings are again up double digits when compared to this same time last year. As another key channel for advanced purchase commitments, we continue to believe our group sales category has strong upside potential and we expect it to be impactful in 2018 and beyond.
As you can tell from our comments today, we are focused on the execution of our initiatives and delivering another outstanding year in 2018. We also continue to have ongoing discussions with our board of directors, regarding long term growth opportunities for Cedar Fair. We are excited about our future and intend to provide an update on our long term strategic plan in late 2018 or in early 2019 once we're through the core of the 2018 season. We will provide additional details, including timing for an event over the course of the next few months.
Before I open up the call for questions, it's important for our investors to understand how Cedar Fair continues to build on its reputation as the place to be for fun. Our culture puts the customer first, so that each and every guest passing through our gates will want to return another day. Meeting that challenge requires a commitment from our people, a dedication like no other.
Therefore, we set the bar high and ask our employees to respond and indeed they do. We shine because of their dedication from our associates on the front lines to all those supporting them throughout the organization. For any associates who may be listening, I want to say thank you. But when all is said and done, providing the best day experience for our guests is not only rewarding for all of us, it also generates rewards for our investors.
That concludes our prepared remarks. At this time, we would like to open the call up to your questions.
Question-and-Answer Session
Operator
[Operator Instructions] And we will take our first question today from Brett Andress with KeyBanc Capital Markets.
Brett Andress
Going back to your past comments, early season sales for the advanced commitments were up in all categories. I think you said deferred revenues were plus 7 and group bookings were plus double digits. But can you provide some more insight into what kind of the blended price increases you're seeing in some of those buckets. I mean, if I recall, it was pretty strong coming out of the last quarter?
Brian Witherow
Yeah. Brett, it’s Brian. What we said in the prepared remarks is that for a park like Knott’s, we specifically mention that we're seeing both unit and price increase around season pass. Early on with only one of our meaningful operations, that being Knott’s Berry Farm, we’re not going to get into specifics. I would tell you going in to ’18 that our approach to pricing, both in the season pass channel as well as the other ticketing channels, is going to be very similar to where we've been in the last couple of years.
And what you've heard us say in the past is, I think for the last few years, we've been able to push those mid-single digit increases in average season pass price and then the admissions per cap on all other ticket types is sort of averaged in that 3% to 4%. So depending on where the growth comes from this year, clearly, we're more confident in pricing behind a big new capital. So parks like Cedar Point, Knott’s Berry Farm, Kings Dominion to name a few that are big coasters, we're a little bit more confident leaning in on pricing at those parks and so that will play into the overall number in the end, but I would say our approach to 2018 from a pricing is very similar to where we've been in the last couple of years.
Richard Zimmerman
Brett, it's Richard. I’d just add on to that, as we look at -- as I said in my prepared remarks, the guest experience, we truly believe the quality of our guest experience continues to improve the price value proposition. It gives us pricing power. It does vary by market as Brian said, but we feel pretty good about what we're seeing.
Brett Andress
And I think Stacy would probably yell at me if I don't allude to the fact that I did ride the Steel Vengeance side, I thought it was great, probably one of the best coasters you guys have had in a while. And I guess what I'm getting at is, now that you've seen some of the buzz around that, can you share any more insight into how maybe that alters your thinking around Cedar Point this year in terms of your expectation for growth for that park and I’m really kind of going back to the previous question, I mean are there any park specific anecdotes around bookings or pass sales or price I think as you alluded to that Vengeance is driving in that park.
Richard Zimmerman
Brett, Cedar Point is just a fabulous park and Jason McClure and his team do a great job. I did hear that you enjoyed Steel Vengeance and I have to tell you, when I rode it, I instantly put it in my top three. I think it's a tremendous coaster and I can't wait to see all the guests riding on it every day, but one of the great things about Cedar Point is not just the park, but the hotels, the resort accommodations, the sports complex nearby, there's a deeper share of wallet when you talk about Cedar Point and there's lots of different ways for us to extend both length of stay and increase guest spending. So, Cedar Point having a strong year certainly helps Cedar Fair overall and we're very excited about what we see for 2018.
Brett Andress
And then just last one for, I guess, modeling purposes, is there any way you can quantify attendance and quantify per cap, just so we have it right on a go forward basis in the quarter.
Richard Zimmerman
Yes, Brett. We're not going to give out specific attendance and typically don't for Q1, just because it's such a small portion of the overall year at 5% and basically it's entirely -- for competitive reasons, we've been giving out Knott’s results. So you'll be able to get it back into it essentially I think when we get second quarter numbers out there, but we're not going to give that detail at this time.
Operator
And next to Steve Wieczynski with Stifel.
Brad Boyer
This is actually Brad in for Steve. First question I have for you guys is just more of a big picture sort of industry question. Some of your peers out there in the regional space have talked a little bit more constructively of late about some M&A opportunities that they see out there in the hard ride parks. Just curious your perspective on that, if you've seen any increase in stuff that's being shopped and interactive marketed or M&A is something that's on your radar at this point.
Richard Zimmerman
What I would say is that we've always said publicly if something comes on the market, we’ll certainly take a look and be interested. Our focus right now is on producing the best results we can in2018, we think we’re shaped up. Certainly, we pay attention to all that stuff, but as I said, we’d be interested if something came on the market.
Brad Boyer
And then secondarily just on the out of park development side, kind of a two part question here. First of all, more of a technical question on the Carowinds hotel. Just curious, is that going to be on balance sheet or is there a third-party partner involved there and then updated thoughts around the California Great America project? We haven't really heard a ton there since Matt left. So just curious current thoughts there?
Richard Zimmerman
First, on Carowinds, we just broke ground on our Spring Hill suites down there and we're excited about that project, which should come online in late 2019. We're going to own that and we're going to operate that. So that will be our operation, so that's the Carowinds question.
As it relates to Great America, we continue to push along with our master plan for redeveloping that property we’re at, we were very pleased about a year ago to have gotten the rezoning that gave us a little bit more runway to plan out farther than just a singular year. So a lot of the effort that you see in the investments that we made in 2018 are really about getting that park ready for future expansion. So a lot of infrastructure enhancements around F&B. There is a new coaster going in for 2018, which we're excited about and expect a good reaction from the market. So we are pushing forward with that. I think you can expect to hear more as a multi-year plan continues to develop and we continue to lean into that market.
Brian Witherow
One additional thing to that Brad, as we look at the build out of Great America in Northern California, we look back at the success we've had at Carowinds and we said this before, we took a lot of learnings from the build out of Carowinds that we’re embedding those lessons that we learned in to our approach at Great America.
Operator
And next is Tim Conder with Wells Fargo.
Unidentified Analyst
[indiscernible] calling in for Tim Conder. I’m going to take a stab at this and see if you could perhaps provide us with any color or commentary on trends through April. I believe first quarter last year, you guys had provided that just because there was a shift from Easter and there was another meaningful shift this year. So, I just want to see if you could maybe comment as to what those like for like trends through April could be.
Brian Witherow
It’s Brian. You’re correct. Last year, the timing of the calendar definitely impacted first quarter results and because of that lack of comparability, we did provide a little bit more color. I would tell you this year, first quarter ’18 is comparable to first quarter ’17, and so that same comparability issue doesn’t present itself. The Easter shift and the related spring break timings really played out more so during the month of April and so there was a lot of comparability issues in the month of April. We're not going to give out specific attendance or per capita numbers through April. I can tell you from a high level color perspective, the trends that we saw in Q1 around advanced purchase commitments, season pass sales, group bookings, et cetera, those continued in to April and we're very pleased with where we sit at this point in time, going into the core of the season. But again like we said on the call, important to keep in mind, it's still just a very small sample size of the full year. So it's important that we maintain and build up this momentum and not rest on it.
Unidentified Analyst
Second question is just around kind of season pass signing, beverage packages, you had commented in the past that in the second, third or fourth quarters, those programs tend to gain a little bit better traction. So want to see if you can comment as to how those are trending so far, so early, but any read on the 7% deferred revenue on how those programs are trending?
Richard Zimmerman
This is Richard. We're really pleased with what we're seeing this year. We're seeing increased penetration levels across all our sites. So we continue to see, as we thought we would, increased interest and in particular what we see that we really like is those season pass holders who purchase all season dining and the beverage package tend to renew at a higher rate, so really reinforces one of the reasons we continue to drive our average visitation, which we think is a key indicator for renewals.
Unidentified Analyst
And then last question I suppose was just a quick stab to see if you could provide or quantify the cost related to WinterFest in the first quarter that was called out this quarter.
Brian Witherow
It’s interesting if this would have been the second or third quarter, I would tell you we probably wouldn't have even called it out, because it would have been fairly immaterial, but given it is Q1 and it's a very small quarter with a natural EBITDA loss, we felt it was important to at least give mention to it. It's -- overall it's between $1 million or $2 million, the takedown cost associated with disassembling those attractions and decorations and so not a meaningful number in the grand scheme of things for the full year, but definitely a little bit more impactful when you're looking at Q1 results by themselves.
Operator
And we’ll go to Bart Crockett with B. Riley FBR.
Bart Crockett
I guess on the costs, you guys had also called out minimum wage and I was just kind of curious what that meant for the quarter and how you see minimum wage impacting the balance of the year.
Richard Zimmerman
Barton, we do see increased labor pressure, wage pressure, labor is about 40% of our overall operating expense, but as we look backwards, the kind of pressure we're seeing now is what we planned for and I will tell you it's similar to what we saw in 2017.
Bart Crockett
I mean, is that single digit millions over the year that you think for minimum wage or can you give us a sense of how much the wage pressure should look like for the year.
Brian Witherow
Barton, it’s Brian. I mean when you look back on the impact that labor rates had on seasonal labor in 2016 and 17, while our overall might have been trending out in that -- around that 3.5% to 4.5% range, labor was probably another couple of hundred basis points ahead of that, sort of in that 5% to 6% range. I think right now, going into the year based on what we know, I would say, that you could expect, as Richard said, something similar to what we saw last year in terms of the pressure and that’s a combination both of the mandated minimum wage increases in markets like the two California parts or Toronto as well as the more of the market adjustments that we need to make in other markets because of availability of workforce.
Richard Zimmerman
Barton, one more thing on the labor pressures, one of the things we've seen historically and we believe we're seeing now is typically as wages go up for the four – our seasonal associates but also those in the areas around us, it really provides us a little bit more pricing power. So over the longer term, as we look back at it, I think it does reinforce our belief that we continue to see an ability to take price.
Bart Crockett
And then just stepping back a little bit bigger picture, we've just gone through big tax cuts, right, federal tax cuts and you guys are a business that would seem to be something that people might spend more on, if they have more money in their pocket. Do you have any sense that that's happening that this is stimulating more spending from what you can see from your consumer reservation or activity.
Richard Zimmerman
Barton, I’ll reinforce Brian's earlier comments, it's really early. We've got a lot of the year left. The most meaningful insight I can give you in terms of your question really relates specifically to Knott’s and maybe a couple of the early season weekends at some of our seasonal parks because as it relates to Knott’s, we’ve got a little more visibility. We've been very pleased day by day with the results, both from admissions and what we're driving in parks spending at Knott’s, which really is off to a really strong start. So I would say what we've seen has been positive.
Bart Crockett
And then just one final thing, just because it is -- your description of Easter is very different than your peer, Six Flags which reported a little bit earlier. They were calling out a basic -- nearly a 10 percentage point impact, one third of a 27% lift in attendance was tied to Easter. You guys are saying there's really no meaningful Easter impact. How can that be so different between the two of you? Any thoughts about that.
Richard Zimmerman
Barton, when we look at the spring break calendar, that's very different state by state. So when we look at the regions we operate, we may look at a little bit differently. But when we looked over the number of operating days and the operating calendars, we didn't see anything meaningful to our overall operation. Again, I'm going to take you back to the fact that Knott’s is such a significant contributor in the first quarter.
Brian?
Brian Witherow
I think the other thing Barton to call out is there may be some differences being created by the -- our fiscal quarter versus a calendar quarter end along with the fact that if we had more parts in operation, seasonal parts with weekend only operations, that may be a factor as well, Knott’s being open daily, we really didn't see a meaningful shift in terms of the impact benefit or otherwise to Knott's Berry Farm based on the timing of Easter and the spring break this year.
Operator
We’ll now go to Chris Prykull with Goldman Sachs.
Chris Prykull
Just one on incremental margins as we head into the summer. I know, margins aren’t your number one priority, but how should we think about the flow through to EBITDA during 2Q and 3Q if you were to achieve say mid-single digit revenue growth, do you expect to see margin expansion given last year's contraction or do wages or other costs mute that rebound year over year.
Richard Zimmerman
Chris, great question. We've said that we'd kind of be in that historical 36% to 38% margin range. When we look at any individual year, it’s -- the most telling part of where we end up is usually which parks are seeing the growth. So what we feel good about in 2018 is what Cedar Point and Knott’s, our two largest parks getting really outstanding product. We think they'll be significant contributors. And typically when that happens, we see nice flow through.
So Brian.
Brian Witherow
So Chris, you hit on, I mean, there's definitely going to be some pressure with labor rates much like we saw in ‘17 and ’16 that puts a little bit of pressure on margin, but I think as Richard said, the mix performance will play a large part in to where the final results come out in terms of full year margin. Clearly, with the calendar programs we have in place and our expectations for some of our largest parks, that should benefit us and drive a better margin than what we saw in ’17.
And lastly, I guess I would say is don't read too much into the lack of flow through in Q1. With only one park in operation, Knott’s Berry Farm. The other ten parks and the offseason cost associated with those parts tends to pull down Knott benefit in Q1. I would tell you in just looking at Knott’s by itself, the flow through and the margin that we saw in that part and I’m not going to give specifics, but qualitatively, I'll tell you we were very pleased with the flow through and the margin lift we saw in Knott’s Berry Farm in year one, I'm sorry, Q1 and expected to see the same kind of thing out of the other parks going forward.
Chris Prykull
And then on the peanut celebration specifically, does the success in Knott’s fuel interest in expanding that event to other parks, which parks would be potential candidates for that and how do you think about the attendance as well as the expenses associated with that type of event versus say a WinterFest. Is it similar or is it sort of lower cost, but you still get a nice meaningful attendance bump.
Richard Zimmerman
Really good questions. And as I said in our prepared remarks, we're rolling that out to Kings Island this year. Knott’s really put it, the peanut celebration was held mostly during January, and early February at Knott’s and what we saw was it was a great way to kick off the year. So when you think about peanuts celebrations, not to the level of the WinterFest either from a capital perspective or an operating expense perspective, but really drove some nice interest early on. So we think about it a little more broadly as we think about our seasons of fun. Seems like it feels really good as the springtime anchored some of our events. So we're evaluating right now, where throughout the portfolio that really could resonate and have some meaningful impacts. So we’ll have more on that as we start thinking about 2019, but we do really like the Peanuts celebration and again really think the -- our long term arrangement with Peanuts allows us to really invest behind larger scale, more immersive events like this.
Chris Prykull
And then just one last one if I could squeeze it in, just on the hotel development front. Can you maybe provide an update on potential hotel partnership in Canada? And then secondarily, how should we think about the cadence of CapEx from the hotel in Charlotte.
Brian Witherow
Sure, Chris. So as Richard said earlier on the call, the hotel in Charlotte is, we've broken ground on and it is pushing along with initial outlook for a late 2019 opening. So I would imagine that the cost of that project is going to probably be spread evenly between ’18 and ’19, maybe a little bit more heavily in ’19 as we think through some of the cost, but whether it's 50-50, 60-40 or 40-60, I should say, 18 to 19, that should be the spread on that. The Toronto hotel continues to move along really well, to be completely honest with you, I was hoping that we would have been able to announce the flag associated with that by now, but as we've learned that sometimes just working through those legal channels and those negotiations can take a little bit longer than desired.
That hasn’t slowed us down in terms of the architectural work and the other planning behind the scenes. So we'll be hitting the ground pretty quickly on that and I would estimate a debut that's maybe just a little bit behind Charlotte, but hopefully not too much. So still feel very good about both those markets and then like we did in the last call, I would be remiss not to mention the excitement that we've got for the Sandusky market.
This weekend will be the debut of the new 158 room addition to the Breakers Hotel here and we're very excited about that. The early bookings on all the resort properties here at Cedar Point are very strong, heading into ’18, I think reflecting the value of Steel Vengeance as well as the second year lift we continue to see of in sports complex. And we continue to look at Sandusky as a market where there is more opportunity to add more accommodations and more rooms into our inventory. So we'll continue to aggressively look at that market and are excited about the other two markets.
Operator
[Operator Instructions] We will now go to James Hardiman with Wedbush Securities.
Unidentified Analyst
Hi. This is Matt on for James. I’m wondering if you can comment on whether if it's impacting any park openings for the past few weeks or if you expect it to coming up.
Richard Zimmerman
Matt, good morning. As we've always said, over the course of a year, we expect that weather will average out. What I will say is that, as we move through April, there were some less than ideal conditions, but we're pleased with the long lead indicators, we're pleased with the reaction in the market to our new product, which seems to come through the noise and drives some urgency to get to our seasonal parks earlier and looks like we're -- got the momentum we want to see to put in a strong 2018.
Unidentified Analyst
And then just wondering on SpringHill Suites, if you can kind of quantify, build out costs and ultimately kind of the benefits you expect to see from the new hotel going forward.
Brian Witherow
Yes. Sure, Matt. We haven't given out a specific cost of that hotel, and don't intend to at this point in time. I think as we think about the benefit to the park is really two fold, right. Richard alluded to earlier the ability to reach out a little bit further into markets beyond what would be the traditional core market and at the same time, extend stay. So we see value both in the advanced purchase commitment and our ability to extend our core market out a little bit farther and then quite honestly for that park, it’s obviously going to provide a little bit more revenue in the -- what we would call the off season. When the park is not in operation, one of the core reasons why we’ve plugged into the Marriott system is for the loyalty program and the res system and see the SpringHill Suites brand as an ideal fit for us in that market.
Operator
And we’ll now go to Michael Swartz with SunTrust.
Michael Swartz
Hey. I just wanted to ask a question in terms of some of the new attractions this year. It obviously is more skewed towards coasters and as I recall last year, you had some big waterpark openings. So I am just -- I guess the question is, given the focus on coasters this year, I mean, how does that influence or maybe change the shape of foot traffic in parks this year? Should we expect more of a 2Q benefit from some of that stuff, relative to last year which I think it was a little more late 2Q, early 3Q benefit from the water parks.
Richard Zimmerman
Michael, great question. And what I would say, we always feel large scale attractions such as coasters drive urgency. So when we get out there and we've seen tremendous awareness, and tremendous interest in all of our new attractions, including -- not just the coasters, but our camps expansion in Charlotte, we tend to see reactions from market a little bit earlier and clearly something like Steel Vengeance HangTime, debut down at Great America, that comes through the clutter and we do see a little bit earlier reaction from the market and we plan on that.
Brian Witherow
Yeah. Michael, just to add to Richard’s comments, I think from a modeling purpose, as we looked at how we modeled out the potential impact of these things, different than a water park, which without a doubt tends to skew heavily into Q3 and the season tends to be a lot shorter for the most part, the water park calendar is memorial to Labor Day, the coaster attractions and I wouldn't shortcut the expansion of like a Camp Snoopy and the family attraction at Carowinds. Those kinds of attractions can drive and push attendance throughout the course of the season.
The other thing that I call out is that the coasters -- one of the ad benefits that we got out of a coaster is the value that it can bring to -- in park spend on such things as fast lane. That’s something that's not a real -- family attractions, I guess, I should say aren't really a driver of that, but clearly, the coasters are. So we should be very well positioned when it comes to our extra charge, traction revenue stream this year with the Fastlane benefit that the four new coasters should drive.
Michael Swartz
And then just two more quick questions, did you, I may have missed it, but did you quantify what season pass sales were up at the end of the quarter?
Brian Witherow
We did not provide a specific number on season pass by itself embedded in the deferred revenue number that I spoke to being up 7% or $8 million. Season pass is a big piece of that as are the Season Pass dining and Season Pass beverage programs and then the group business, we can't ignore the strength that we've seen and that in our sales teams at the parks are doing an outstanding job of continuing to push growth in that channel as well. So we did not provide a specific number on Season Pass.
Michael Swartz
And then just on the out of park revenue in the first quarter. I think you said last year, you had a kind of one time insurance, was it insurance claim benefit and if that's the case, can you maybe quantify that for us?
Brian Witherow
You're right. Michael, that’s what it was. Cedar Point collected on a business interruption claim that benefited us in the first quarter of 2017, low single digits in the $1 million to $2 million kind of range, not a meaningful number in the grand scheme of things, but clearly in Q1, it plays a little bit of a bigger role.
Operator
And that does conclude our question-and-answer session. I'd like to turn it back to Stacy Frole for any additional or closing remarks.
Richard Zimmerman
Thank you all for your interest and ongoing support of Cedar Fair. Even after decades in this industry, we still very much look forward to this time of year. There's nothing better than walking the midways and hearing the screams from people on our coasters and seeing the smiles of our guests and our associates. We truly enjoy what we do and I know our guests appreciate our commitment to giving them an amazing experience. As I hope you can tell, our strategy is working. We have great confidence in the quality of our business model and our ability to execute our long term plans. We will continue to do our best to serve our guests and in turn serve our unit holders. And with that, I encourage all of you to visit our parks this summer and experience firsthand what differentiates Cedar Fair parks from other entertainment offerings.
Stacy?
Stacy Frole
Thank you everyone for joining us on the call today. Should you have any follow-up questions, please feel free to contact our Investor Relations Department at 419-627-2233. We look forward to speaking with you again in about three months to discuss our second quarter results.
Operator
And thank you very much. That does conclude our conference for today. I'd like to thank everyone for your participation and you may now disconnect.
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