Hershey Entertainment exec talks assets, prices, strategy
Fourteen months ago, Hershey Entertainment & Resorts Co. sold Lancaster County-based amusement park Dutch Wonderland to focus more on its diverse portfolio of Derry Township attractions and grow Hershey as a destination.
The hospitality and entertainment leader also manages several key properties — among them are the Giant Center and Hershey Theatre — that help make Hershey a destination for millions of visitors annually.
Improving attractions and bringing in new entertainment acts have been top priorities as the company works to strengthen the complementary relationship between its business units, CEO and chairman Ted Kleisner said.
The Hershey Story, a downtown museum dedicated to the history and legacy of the company's visionary builder, opened in 2009 to further market the destination to the family segment, which is the company's bread and butter.
Kleisner, who was on the board as an independent member for 11 years, became CEO and an executive board member in 2007, and he was named chairman at the beginning of the year.
A third-generation hotelier, the 67-year-old formerly was president and CEO of the Greenbrier Resort and Club Management Co. and president and managing director of The Greenbrier, both based in West Virginia.
Kleisner is a 1967 graduate of the University of Denver, where he received a bachelor's degree in business administration. He and his wife, Karen, have been married for 39 years. They have two children and five grandchildren.
The Business Journal recently sat down with Kleisner to talk about the diversification of the company's assets, adjusting ticket prices at Hersheypark and identifying efficiencies.
Q: What more can be done to strengthen the company's portfolio?
A: We have constantly looked at ways to improve what we already have. We made a conscious effort over the past several years to consolidate everything that we do in Hershey. Our focus is strictly on Hershey and the destination and how we build and continue to maintain it because it's been incredibly successful for so long.
You take a look at what you have and what you need to do and listen to your customers. What's most important is value for price. Did you receive the value that you perceived and would you recommend us to your friends and family and neighbors?
Reinvesting in heritage assets like The Hotel Hershey. We could have ended up trying to exist too long on historical laurels as opposed to making sure that we're always reinventing ourselves for the new customer.
It's very competitive businesses that we're in. We focus on the total destination. We don't get real edgy with anything we do, whether it's bringing in an entertainer or when we build a new rollercoaster. Some of our competitors, I think, have pressed the envelope too far. We've always taken a very conservative approach and we will continue to do that.
How did the Hershey Haymakers lacrosse team deal develop and is the diversification of professional sports products at Giant Center a sign of things to come?
(The Giant Center) is owned by the Derry Township Industrial and Commercial Development Authority and we run it for them. We have an obligation to make sure it's profitable because that's how and why the Giant Center was built.
When an opportunity comes up to rent space to another attraction, whether it's the circus coming to town or "Disney On Ice" or another sporting event, we look at it as an opportunity if we have a dark evening.
The Haymakers are still in the embryonic phase of a startup club. We feel it's something that could enhance the general popularity of Hershey. It's one more thing to do.
Do new rides like Skyrush justify annual ticket hikes? Do you ever worry that families won't be able to afford the price of admission?
We have taken a very conservative approach to pricing. We constantly look at what other people charge for multiplicity and entertainment opportunities. We look at the cost of a baseball game in Philadelphia or Baltimore, or what concert tickets are selling for in other venues. We try and stay within a reasonable percentage increase that would not look like we're moving up too aggressively.
Generally speaking, we have moved ticket prices less than inflation. In these times, that's important. We have not lost business during recession. We lost business due to difficult weather opportunities more than anything else.
Our customers will tell us very quickly if the price value relationship is going the wrong way. They tell you by their absence. You can't wait until you've lost customers. You really need to monitor it very closely and carefully to make sure that you're rewarding the loyalty we have perceived over many generations of families. It's one of the toughest things we do.
We have this very loyal following and attract close to 6 million visitors a year. In the park, it never varies much between 2.5 million and 2.7 million. That has been adequate to produce an enviable return that all of our competitors would like to have.
What is the economic impact of the company's facilities? Has that been on the rise?
Potential full-time people is about 4,000, and we put on another 5,000 (employees) in the summer. There are about 5,000 more in companies (serving us).
We have added more jobs since 2007 because we've added new venues. We added Devon Seafood Grill, Harvest restaurant (at The Hotel Hershey) and added 48 more rooms at The Hotel Hershey.
The destination Hershey has grown, but we also sold the Dutch Wonderland operations at the same time. We don't grow by leaps and bounds. The pace is better than inflationary trends.
Other hotels have popped up around the park and at least one from Springwood Hospitality is on the horizon. How does that impact your hospitality facilities?
It does support things already here. We do all the marketing to bring the people in here. The only reason why those properties are being built is because we've created the demand. We continue to see that growing. It doesn't hurt us. It does provide other opportunities.
We don't expect to own it all. We see it very positive that everyone can benefit from what we do.
What is your strategy to bring more corporate events to Hershey, especially those from larger metropolitan areas?
We have more convention space than any other convention center (between) Philadelphia and Pittsburgh. That makes us a great regional venue for all kinds of meetings. It's also been the segment that's been most affected during the recessionary period that we've just been through.
There has been a change in the market approach to who we go after. If the corporations are not meeting, well then who is? We have social groups and fraternal groups and religious organizations and military groups. We have benefited from all of that. There are a lot of other groups out there.
That is a segment of our business that books into out years. During recessionary periods, they tend to stop booking as far out. Recently we've noticed that they are returning to a booking pace that is out a year or two years. It's very positive, so we're encouraged by what we're seeing in that business.
We don't go out and try to figure out how to steal business from Harrisburg or Philly. We try to find where is the business that fits into the times when we need business. Because we do so incredibly well during the summer, it doesn't make sense for us to displace rooms that will be taken by families and the per capita spending that goes with that in the park and all the other areas.
We have a very loyal following. Probably 50 percent of our group lodging business is repeat business and a lot of it is Pennsylvania associations.
What is the company's long-term development and marketing plan and how do you become more efficient in the process?
Ours is a labor intensive business. You don't create robotic efficiencies. That works in manufacturing, but does not work when delivering warm welcoming service. There is no substitute for those people.
You're never going to cut your way into profitability. You're never going to find efficiency as a replacement for organic revenue growth. You need to grow the business that you have. Once you get to a certain level, it's incrementally more difficult. Where can you fill in business? That's really where we are.
We want to focus on making sure that we keep this as successful a company as it has been because part of our commitment is providing in perpetuity to the children of the Milton Hershey School.