Herschend Acquires Palace Entertainment from Parques Reunidos

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First off, this is insanely huge news and changes a lot of the national map yet again. The balance of power in the domestic amusement industry is, once again, massively upended.

Secondly, I REALLY like Palace in Herschend's portfolio. I've been to Lake Compounce, Kennywood, Idlewild, Dutch Wonderland, and Adventureland and think all are somewhere between surprisingly good to great but, at the same time, all feel like they've lacked consistent vision, investment, and support. If Herschend can keep standards high, some of these parks almost certainly stand to benefit GREATLY from this merger—Kennywood being the most obvious.

Thirdly, there's a lot of, well, uh, trash, that comes with this merger—mainly a disparate array of small water parks and FECs that, while probably technically profitable, really aren't in Herschend's current wheelhouse at all. I could see Herschend selling off a good handful of those properties over the coming years potentially opening up the opportunity for Premier Parks, Merlin, United Parks, or others to grab a few interesting, smaller properties—possibly for conversion projects. Plus, since Herschend's territory is far less expansive than the newly-merged Six Flags', I don't think Herschend will have the same adversion to selling parks as operating parks that new Six Flags almost certainly does.

Though there are other angles, I want to share two I've thought about previously related to United Parks. Wet 'n Wild Emerald Pointe (the other, original Water Country USA) could make a compelling Sesame Place conversion (if the chain is still interested in those). Greensboro would a good fit for a children's park and it would greatly extend BGW's/United Park's footprint into North Carolina as better competition against Carowinds over the booming Triangle area. Meanwhile, out in Hawaii, there's a little-known marine life park named Sea Life Park that is already something approximating Discovery Cove or Discovery Point. It would make a TON of sense in the United Parks chain.

Anyway, probably a bit early to be parting out this huge, new chain, but I do think that many interesting doors are suddenly open all over the place...
 
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The other side of this is another theme park operator is now off the table in. the US and with the SF CF merger last year that a significant hit to competition and may only increase the odds of further industry price hikes. I would also submit that the likely buyers of any SF properties that SF ends up liquidating if the decide to sale them as whole parks is now likely just United Parks and Merlin as I don't see Herschend being in a position to further expand after this fairly massive expansion.
 
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I’m super excited for what it does to Kennywood and Lake Compounce.

Kennywood needs some loving with its historical rides. Jackrabbit, Racer, Thunderbolt all got less than 0 love from Palace. I feel like Herschend will do a lot with it. And then an overhaul for Thomas Train area, removal of raging rapids and Pitt plunge, bring in a new flume would be some first steps. Then I would add, being creative they can add about 3-4 more coasters without any removals. Sandcastle can burn to the ground for all I care.

Lake Compounce….man my OG home Park. I’m super excited for it! There’s so much room for growth along the hill and around the lake that Herschend’s experience in working with parks with lots of terrain will be a BOON for Lake Compounce. Add in that there’s so little competition in the area it’s going to be good there.
 
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the_pantsmith said:
I'd be upset if Herschend (or anyone) was buying Holiday World or Knoebels, but Palace sucked ass. This is an inherently good thing for these parks and the industry imo. I ultimately don't care if prices increase if the parks are better (which I trust Herschend to do)
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I have not yet been to any of the parks Herschend acquired but based on reviews and my experience at Herschend parks I think it's great for them. That doesn't change my very real concern that it's bad for the industry. Leaving out Disney and universal as resort destinations We are now left with basically 4 park companies and a few handful of independent parks that is going to effect everything from ticket prices for example if Kennywood were to move closer to a Dollywood level price that makes it easier for SF to jack prices up considerably at any number of North East parks cause they wouldn't have to worry about a slow bleed of people pile going to cheaper Kennywood any longer. It also likely means manufacturers and suppliers are going to be fighting harder for those bigger company contracts quite possibly at the expense of independent parks like Holiday World. I don't think we have quite hit that point yet but I definitely think that this last acquisition moves us considerably closer.
 
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I very much agree that consolidation is bad for the industry overall, but unlike with a certain other, recent merger, this one doesn't really decrease regional competition anywhere in particular so I'm far less concerned about the loss of competition angle here. If Herschend were buying Worlds of Fun, Carowinds, or Six Flags Over Georgia, I would be far more concerned than I am with Herschend buying all of these Palace properties. Anywhere competitive markets exist around the Herschend and Palace properties, that state of regional competition remains intact with this merger.

I am concerned on a broader scale that all of the efficiencies theoretically obtainable by these large chains will make it harder for independent parks to compete in the markets where such independent completion still exists (say, Adventureland vs Lost Island and Kentucky Kingdom vs Holiday World?), but again, I think this merger pales on that front in comparison to what we just saw happen last year too.

So yeah, all of this consolidation is not good for the industry overall, I certainly agree, but at the same time, we crossed the Rubicon last year in such a horrific way that this feels FAR less concerning. Truthfully, it could be argued that, given how screwed up the national map became last year and how degraded the United Parks experience has become (the closest rival in size to the merged Six Flags), adding Herschend in as another similar-sized chain to United may help push the industry in a better direction in at least the short-term.

Now the nightmare scenario. If this is all a build-up to taking Herschend public, you'll see me turn on a dime on all of this. Herschend has been a spectacularly well-managed company in my opinion and I suspect that is due in no small part to their ability to focus on the long-term arcs of their properties with a disregard for the next quarter. They regularly behave dramatically differently than their publicly traded counterparts and I desperately hope their ownership structure isn't set to change in the years ahead.
 
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