Hershey Entertainment and Resorts Company

Posted September 5, 2018

Introduction

When Milton Hershey decided to build a new chocolate factory he also decided to build a model town to house his workers and support his business. His model town included comfortable homes, an inexpensive public transportation system, a quality public school system, and extensive recreational and cultural opportunities. Under the umbrella of the Hershey Chocolate Company Milton Hershey established a variety of businesses to build and operate the town. Businesses included: a transit company, construction firm and lumber company, utilities for water, electricity, phone; sewage management, a laundry, department store including hardware and farm implements, dairy farms and a creamery, a park and zoo, a cemetery, a nursery and greenhouse. The construction related services were grouped under the Hershey Improvement Company. This business was responsible for building the infrastructure of the town: roads, sewers, laying the utilities, constructing new homes and overseeing construction of public buildings.

Until 1920, all these businesses and ventures were funded, when necessary, by Milton Hershey as a private concern. As the owner of the Hershey Chocolate Company it was a simple matter to devote Company net profits to the improvement of his town. However, that year Hershey Chocolate Company suffered financially following heavy losses due to investments in sugar futures. The sugar market collapse sent tremors throughout the company. That crisis forced Milton Hershey to mortgage the company and to accept a watchdog representative of the lender, National City Bank. Led by Milton Hershey the company managed to free itself of its obligation to the bank by June 1922.

In 1927, Milton Hershey decided to reorganize and refinance his company. Refinancing had three objectives: liquidate the financial obligations still pressing from the 1920 crash, get more money for future expansion, and lastly, create a middle way between Hershey’s free spending on town improvements and his obligation to the future public holders of company stock. The sugar crisis had taught Milton Hershey a painful lesson, because it threatened everything that he had worked for. While he was able to recover, it could have spelled disaster for the town of Hershey and Hershey Industrial School.

Hershey Estates Established

To accomplish these goals Hershey Chocolate Company was dissolved and three separate companies were created: Hershey Chocolate Corporation, which acquired all the chocolate properties; Hershey Corporation, which acquired the sugar interests in Cuba; and Hershey Estates, which carried on the work of the old Hershey Improvement Company, administering all the non-chocolate interests in town: including the department store, the nursery and greenhouse, water, electricity, Hershey Park, and public buildings. The new businesses were held together by Hershey Trust Company who as trustee for the School owned and operated all three companies.

The list of businesses operated by Hershey Estates is extensive and illustrates the scope of the new Hershey Estates.

• Hershey Baking Company
• Hershey Cemetery
• Hershey Cold Storage
• Hershey Community Building
• Hershey Community Inn
• Hershey Community Theatre
• Hershey Country Club and Juvenile Course
• Hershey Dairy
• Hershey Department Store
• Hershey Electric Company
• Hershey Experimental Candy Kitchen
• Hershey Feed and Grain
• Hershey Farms
• Hershey Farming Implements
• Hershey Filling Station
• Hershey Garage
• Hershey Greenhouse and Nursery
• Hershey Hospital
• Hershey Laundry
• Hershey Lumber Company
• Hershey Museum
• Hershey Park
• Hershey Park Golf Club
• Hershey Rose Garden
• Hershey Sewerage Company
• Hershey Telephone Company
• Hershey Transit Company
• Hershey Water Company
• Hershey Zoo
• Hotel Hershey
• Coal
• Real Estate
• Ice

During Milton Hershey’s lifetime Hershey Estates was the conduit to carry out his vision for his town: construction plans that provided jobs to local unemployed workers during the Depression. Milton Hershey’s “Great Building Campaign” between 1929 and 1939 resulted in the construction of most of the town’s major structures including the Community Building, Hotel Hershey, Hershey Industrial School Jr.-Sr. High School, Hershey Chocolate Corporation Headquarters at 19 East Chocolate Avenue, Hershey Sports Arena and Hershey Stadium. Smaller projects included Hershey Park Swimming Pool, Hershey Creamery, Park View Golf Clubhouse, Hershey Zoo Birdhouse, Hershey Rose Garden and major renovations to the Community Inn.

Hershey Estates served the town while operating at a financial loss. During Milton Hershey’s lifetime, profit for the Estates was never a prime consideration. After 1927, Hershey Corporation profits resulting from the Cuban operations funded the large construction projects. Because Milton Hershey did not set up a large fund to operate Hershey Estates, the company suffered undercapitalization.

During the 1930s, Hershey emerged as a tourist destination. The construction of Hotel Hershey, Hershey Sports Arena, Hershey Stadium and the enlargement of Hershey Park, paved the way for Hershey’s reputation as a popular destination for tourists and fun-seekers. In 1934, Hershey Estates hired Alexander Stoddart to publicize all of the Hershey interests. Until his death in 1951, Stoddart oversaw a growing and comprehensive promotional effort as the events at the stadium, arena, park and hotel made Hershey a center for tourism.

End of an Era

Hershey Estates’ practice of providing subsidized business and recreational services to the community ran into trouble beginning in the 1960s. Because of a combination of governmental regulations, competition for capital financing and a poor business climate, Hershey Estates chose to divest its electric, water, sewer and telephone utilities.

Competition from shopping malls and less service-oriented lumber yards made the Hershey Department Store and Lumber Yard unprofitable. They were closed and the Hershey Creamery was sold.

While the 1960s and 1970s were characterized by closings, it also was a time during which major additions and changes began to occur. Seeking to build on its strength in tourism, Hershey Estates opened the Hershey Motor Lodge in 1967. The downtown Cocoa Inn, plagued by inadequate utilities, too small rooms and sinkholes was demolished in 1970.

Hershey Park also faced serious challenges by the late 1960s. The amusement park industry had moved into a period of fast growth and development. Hershey needed to make major changes to survive and prosper. One of the most significant challenges facing the Park was its open gate design. While local residents loved the openness, the design left the park open to vandalism and trouble from visitors who could enter and leave the park from many directions. By 1969, much of the Park looked worn and in need of new direction.

In 1970, Hershey Estates approved a master plan, a five-year, six-phase development program which was designed to transform Hershey Park into a major theme park. Hershey Park, with its gated, one-price admission opened in 1970. By 1973, major renovations and innovations had made the new park a great success.

Company Expansion

In 1976, Hershey Estates was renamed HERCO, Inc. The change symbolized the beginning of a new era as HERCO began to expand outside of Hershey.

The first major acquisition outside of Hershey was the Sheraton-Picasso Inn located near White Haven in the Poconos. It was renamed Pocono Hershey Resort. Simultaneously with its outside expansion, HERCO focused efforts on consolidating and expanding local holdings. Hershey Motor Lodge underwent several expansions adding rooms in 1973 and 1975. In 1974, the Lodge added the Hershey Convention Center to its facilities. The Hotel Hershey added a 100-room wing, complete with indoor pool in 1977.

A year later, Hersheypark continued its expansion opening the ZooAmerica North American Wildlife Park.

The process of closing old unprofitable divisions while adding new ones and fortifying existing ones continued. In 1980, the company closed the Hershey Bakery and the Hershey Meats abattoir. It was replaced with a modern warehouse and office complex for Hershey Meats and Commissary, its newly reorganized wholesale grocery distribution company.

The company’s outside expansion continued with the ground breaking for The Hershey Philadelphia Hotel, the company’s first city hotel. The Philadelphia Hotel opened in 1983 with much pomp and ceremony. That same year the company committed $6 million to expand and improve The Pocono Hershey Resort and broke ground for The Hershey Corpus Christi Hotel in Texas. The Corpus Christi project conformed to the company’s general goal of spreading its assets out in a wider geographic area. It believed that the move South would provide much needed revenue during the winter when income slowed from its Hershey properties. In 1985, The Hershey Corpus Christi Hotel opened on Valentines Day.

Concurrent with the company’s lodging expansions, HERCO was working very hard to forge a partnership with several investors to purchase and rebuild Lake Compounce, a turn of the century amusement park in Connecticut. After massive infusions of capital, Hershey Lake Compounce opened July 4, 1986.

Financial Set-backs

However, as a result of adverse market conditions, HERCO’s expansion properties suffered a series of setbacks, beginning in Philadelphia. There a promised convention center was delayed by several years. In Texas the bottom fell out of the oil-based economy just months after the hotel’s opening. Lastly, Hershey Lake Compounce incurred cost overruns during its redevelopment and attendance never met expectations. Corpus Christi was sold in September 1988.

In an effort to retrench and consolidate its mounting debt HERCO announced on October 2, 1987, that it would withdraw as operator of Hershey Lake Compounce. The Connecticut amusement park was sold in May 1988. In the Poconos, although the amount of business was respectable, the resort struggled with seasonal fluctuations and high operating costs. HERCO announced on December 7, 1987, that the resort would be sold.

On August 10, 1987, J. Bruce McKinney was named chief executive officer. At the same time, the Board of Directors endorsed a new mission statement. The new strategy called on HERCO to dedicate itself to becoming a profitable, quality amusement/entertainment, hotel and related service company that will enhance the Hershey name and make Hershey an unexcelled showplace.

During the next decade HERCO determinedly worked to focus its energies and resources on its Hershey based enterprises. Pocono Hershey Resort was sold in April 1988. In 1993, HERCO withdrew from Philadelphia, transferring its operating lease for the Philadelphia Hilton and Towers to Doubletree Hotels.

Locally HERCO sought to focus its energies on its entertainment and resort divisions. In 1993, Hershey Meats and Commissary was disbanded, selling the retail distribution line to Hatfield Quality Meats, Inc. and its institutional food distribution line to Feesers Food Distributors, Inc. That same year the Lumber Yard was sold to the Wolf Organization and the Hershey Nursery’s retail business was leased to Royer’s Garden Center & Greenhouse, Inc.

Building and Developing Core Businesses

Concurrent with this consolidation, HERCO began to build and develop its core businesses:

Hersheypark, the most visible part of the entertainment division, began a program of adding a major new attraction every other year:

1987        Canyon River Rapids
1988         Frontier Chute-Out water slide
1990         Flying Falcon
1991         Sidewinder roller coaster
1994         Tidal Force splashdown ride
1996         Wildcat roller coaster
1998         Great Bear inverted steel roller coaster
1999          Chaos
1999          Wild Mouse
2000          Lightning Racer roller coaster
2002          Roller Soaker
2003          The Claw
2004          Storm Runner hydraulic launch coaster
2006          Reese’s Xtreme Cup Challenge
2007          The Boardwalk at Hersheypark
2008          Fahrenheit roller coaster
2009          The Boardwalk: The SEAquel

In 1997, the Park also began developing a new themed area: Midway America, celebrating the amusement parks of yesteryear. In 1999, ZooAmerica opened its first new exhibit in over a decade, Black Bear Encounter.

Seeking to capitalize on the region’s need for facilities for small to mid-size outdoor concerts, HERCO opened the “Star Pavillion” in 1996. With a seating capacity of 7,000, the new outdoor concert bowl enabled HERCO to broaden the variety of musical groups performing in Hershey.

The Hershey Resorts division also received attention and an infusion of capital to improve and expand existing facilities. Beginning in 1990, Hotel Hershey began a series of improvements designed to capitalize and enhance the Hotel’s unique history and elegance as a 4-star resort hotel. The historic formal gardens were restored in 1990 and during the decade the entire interior was renovated and redesigned, including all guest rooms. A second restaurant, The Fountain Café, opened in 1994. In 1999, the Hotel broke ground for a European style spa, which opened January 2001. The success of the Spa led to its expansion in 2004.

In 1997 Hershey Lodge, HERCO’s family oriented motor lodge and convention center, broke ground for a major expansion and renovation of its facilities. The expansion doubled the amount of meeting space and added 230 guest rooms. Following the completion of the project, the original guest rooms were also renovated. In 2000, Hershey Lodge continued with its improvements opening the Bear’s Den Sports Bar. Since then, responding to guest needs, the Lodge’s restaurant offerings have grown to include some new restaurants: Lebbie Lebkicher’s, offering casual dining in a family-friendly atmosphere; the Hershey Grill, offering a more sophisticated menu in an elegant, though informal setting; and the Cocoa Beanery with a menu featuring hot and cold drinks with signature soups, salads and sandwiches.

HERCO’s commitment to divesting itself of businesses not directly tied to Hershey and its core divisions paid off by 1997. In early 1998, the company was renamed Hershey Entertainment and Resorts Company (HE&R). Today, Hershey Entertainment & Resorts owns and operates Hersheypark entertainment complex, Hersheypark Arena and Stadium and The Star Pavilion, Giant Center, ZooAmerica North American Wildlife Park, Hershey Bears AHL Hockey Club, The Hotel Hershey, Hershey Lodge and Convention Center, Hershey Highmeadow Campground, Hershey Nursery, Hershey Laundry and Dutch Wonderland.