Thrilling Insights: COVID-19s Impact on the Global Amusement Park Industry

Abstract

How “Fun” is the Amusement Park Industry? Global Amusement Parks Market Report 2021: COVID-19 Impact and Recovery to 2030 - ResearchAndMarkets.com January 29, 2021 05:06 AM Eastern Standard Time DUBLIN--(BUSINESS WIRE)--The "Amusement Parks Global Market Report 2021: COVID-19 Impact and Recovery to 2030" report has been added to ResearchAndMarkets.com's offering. “Amusement Parks Global Market Report 2021: COVID-19 Impact and Recovery to 2030” Amusement Parks Global Market Report 2021: COVID-19 Impact and Recovery to 2030 provides the strategists, marketers and senior management with the critical information they need to assess the global amusement parks market as it emerges from the COVID-19 shut down. Major companies in the amusement parks market include Disney Parks and Resorts; Merlin Entertainment; Universal Studios; Six Flags Entertainment and Oct parks China. The global amusement parks market is expected to grow from $51. 67 billion in 2020 to $63. 89 billion in 2021 at a compound annual growth rate (CAGR) of 23. 7%. The growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges. The market is expected to reach $89. 17 billion in 2025 at a CAGR of 9%. The amusement parks and arcades market consists of sales of amusement parks and arcades entertainments and related goods by entities (organizations, sole traders and partnerships) that operate amusement parks and arcades. The amusement parks and arcades market also includes sales of amusement arcades such as family fun centres, pinball arcades and amusement device parlors. This market includes sales of entry fees and ticket sales for rides, games, food and beverages, merchandise goods, and hotels and resorts. However, this market excludes sales of exclusive restaurants such as fast food chains operating within the amusement parks. Amusement and theme park companies operate mechanical rides, water rides, water games (includes both spectator sports and crowd engagement games), events, games, shows, themed exhibits, refreshment stands and other visitor attractions for entertainment. The amusement parks market is segmented into theme parks; water parks and amusement arcades. North America was the largest region in the global amusement parks market, accounting for 33% of the market in 2020. Asia Pacific was the second largest region accounting for 30% of the global amusement parks market. Africa was the smallest region in the global amusement parks market. Amusement parks are increasingly using virtual and augmented reality technology to enhance customer experience. Virtual reality is a 3D, computer generated environment which can interact with a person, whereas augmented reality turns an environment into a digital interface by placing virtual objects in the real world. Amusement parks are implementing this technology in rides and theater-based attractions. For instance, Plopsaland De Panne in De Panne, Belgium has a new virtual reality wooden roller coaster called Heidi the Ride, which can reach speeds of more than 43 mph. Amusement park SeaWorld has started operating a new Kraken Virtual Reality Roller Coaster in Orlando. The Weave Breaker coaster brings the reality of jet skiing in an amusement park. Universal Studios have The Walking Dead mazes with augmented reality elements. Coronavirus Pandemic: The outbreak of Coronavirus disease (COVID-19) has acted as a massive restraint on the amusement parks market in 2020 as governments globally imposed lockdowns and restricted domestic and international travel limiting the need for services offered by these establishments. COVID 19 is an infectious disease with flu-like symptoms including fever, cough, and difficulty in breathing. Increasing Use Of Social Media: Increasing use of social media and access to mass media is positively influencing the amusement parks market. Visitors in amusements facilities such as amusement parks like sharing their experiences, photographs and videos on social media platforms which helps other people know the experiences offered by the amusement parks. ------------------------------ A Look At The Continuing Effects Of COVID-19 On The Amusement Park Industry February 22, 2021 4:19 PM ET Heard on NPR: All Things Considered Ann Thompson Regional theme parks are considering selling off property to raise capital. Cedar Fair and Six Flags are in the midst of a cash burn of $25 million a month with attendance dropping due to COVID-19. ARI SHAPIRO, HOST: For the second year in a row, amusement parks are opening later and with limited capacity. Experts say the industry may not fully recover until 2023. Ann Thompson of member station WVXU in Cincinnati reports on the continuing effects of COVID-19 on amusement parks and the businesses that count on them. ANN THOMPSON, BYLINE: Chris Baynum and his roller coaster painting business were on track to have a record year in 2020, doing projects like this. THOMPSON: At Universal Orlando, this worker is hydroblasting layers of paint off a ride. He's on the ground, but often Baynum's 60 to 70 employees spend time hundreds of feet up in the air, safely secured in baskets. When COVID hit, his company had about 20 projects in the works. CHRIS BAYNUM: It seemed like everybody just pulled the plug at the same time. So we were trying to figure out how - what we do with our guys. Where do we redirect them to? Do we bring them home? And we had some just bizarre things. We had one project, a big project going that we've done for months. And we were literally two days from finishing it, and that project stopped. THOMPSON: Baynum broke even last year, but he had to be creative, allowing parks to defer payment as his staff continued to do maintenance. He even sent a crew to France to paint idled cruise ships. DENNIS SPEIGEL: It's been severe. It's been catastrophic. THOMPSON: Consultant Dennis Speigel says in 2019 the U.S. amusement park industry was worth 25 billion, but he estimates theme parks have lost 10 billion nationally and 30 billion globally since the beginning of the pandemic. That's not counting job and tax base losses. SPEIGEL: If you took the recent recessions that we've experienced through the last 15, 20 years, the oil crisis - COVID has had a larger impact on our industry than all of those combined. THOMPSON: Reopenings are a patchwork across the country. While parks in Florida are already open, California still hasn't set a date, and New York is allowing them in early April with strings attached. In the meantime, the COVID slowdown is continuing to affect all kinds of businesses related to the amusement park industry. Jim Seay owns Premier Rides, which designs roller coasters. He's had to furlough some of his employees. JIM SEAY: We have been bringing those people back based on the amount of work that's been coming in. But certainly some of those people went on to find other careers in industries that weren't as affected. THOMPSON: Seay's hoping 2022 will be the year of recovery. Others say it could be 2023. But Cedar Fair, owner of Cedar Point, Kings Island and a dozen others, told investors this month that it remains optimistic for this year - this despite revenue being down 88%, and the company has been burning through 40 to $50 million a month. CFO Brian Witherow says revisiting anniversary celebrations and new rides that didn't open last year will be a big part of this year. BRIAN WITHEROW: We're going to rebirth those here in '21 along with the new rides and attractions that we had planned, you know, across the system at the other parks. So it's always important to continue to provide our guests with, you know, new, exciting entertainment. THOMPSON: Cedar Fair looks to broader vaccine distribution, a strong season pass base and pent-up public demand as key drivers to its recovery - pent-up demand from fans like Luke Reynolds. The Virginia man can't wait to jump back on a ride. He's a member of the American Coaster Enthusiasts. LUKE REYNOLDS: I'm a mechanical engineer. So on that level, roller coasters have always fascinated me. But also on the other level, they're just fun to ride. It just puts a smile on your face. I don't know how else to describe it. THOMPSON: How has he been spending time while waiting for the parks to open? Building models of roller coasters. For NPR News, I'm Ann Thompson in Cincinnati. Copyright © 2021 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information. ---------------------------------------- Pre Pandemic ------ 5 Top Theme Park Trends Dominating the Season Hannah Sampson, Skift.com - Sep 20, 2017 The world’s largest theme park operators are on a spending spree as competition for visitors grows ever more fierce. Disney, Universal, SeaWorld, and Six Flags have all announced new plans to add rides, attractions, and entire lands in the past few months — on top of expansions already in the works. That kind of investment is crucial for operators to hold onto their fans, Dennis Speigel, president of consulting firm International Theme Park Services, told Skift earlier this year. “Our industry is a mature industry now, over 60 years old, and the hardest thing for us to maintain is market penetration,” he said. “And you do that through managing attrition, introducing new programs, season passes, capital investment.” This year has presented challenges for the industry, and some operators have managed better than others. In August, SeaWorld CEO Joel Manby told analysts he was “not satisfied with our results” for the quarter that ended June 30 after attendance was disappointing at parks in San Diego and Orlando. Per-person revenue fell and the company reported a net loss after having to take a significant write-down on SeaWorld Orlando. Executives lowered the forecast for the full year. At Six Flags Entertainment, the first six months were so much softer than expected that the Texas-based company said in late July it was no longer “probable” that it would meet financial targets for this year. During the second quarter, per-capita spending and net income fell. “I’ll be blunt with you: I think that we can move with more urgency, I think the opportunities we have are with us right now,” CEO Jim Reid-Anderson said at the time. “And I think we need to execute faster, more efficiently, and in a more focused way to truly achieve our potential.” Here are some of the trends that have dominated the last few months for theme parks. WEATHER IS COMPLICATING MATTERS. The biggest blow came in early September when Hurricane Irma tore through Florida, forcing operators to close theme parks all over the state. Walt Disney World Resort, Universal Orlando Resort, SeaWorld Orlando, Busch Gardens in Tampa and Legoland Florida all shut down for at least two days. Parks escaped significant damage from the storm, but the closures and related cancellations are likely to hurt business for the quarter. Even before the hurricane, executives at Six Flags Entertainment said weather was causing problems. Rain over the Memorial Day holiday weekend and in the last two weeks of June kept attendance lower than expected at the company’s Texas and East Coast parks. INTELLECTUAL PROPERTY FUELS EXPANSION. From Sesame Street to Guardians of the Galaxy, Star Wars, Harry Potter, and Avatar, established brands are dominating the landscape when it comes to theme park additions. Disney has made the most news on this front, announcing extensive plans in July at D23 Expo, a fan event. In addition to revealing new details about upcoming Star Wars-themed lands in Orlando and Anaheim and a Toy Story land in Orlando, the company also said new additions would be based on the Tron films, Pixar movies, and Marvel superheroes including Guardians of the Galaxy. That followed the opening of Pandora — The World of Avatar, based on the James Cameron movie, and a renovation of an older ride that added a Guardians of the Galaxy update. Universal Parks & Resorts opened a new Minion Park, built around the animated yellow villains, at Universal Studios Japan earlier this year. And the company announced a brand new roller coaster would be finished by 2019 at the Wizarding World of Harry Potter — Hogsmeade in Orlando. Not to be outdone, Six Flags announced a lineup of new rides for 2018 this month that includes several based on DC Entertainment characters such as Wonder Woman, Harley Quinn, and Cyborg. And SeaWorld, which has been trying to shift focus away from animal entertainment to family activities, revealed plans earlier this year to build a Sesame Street-themed land at its Orlando park as well as an entire Sesame Place theme park somewhere in the United States. The company already has a Sesame Place in Pennsylvania. IMMERSION INNOVATION. Disney generated tremendous buzz with its announcement about a new immersive Star Wars hotel planned for the Walt Disney World resort in Orlando. Walt Disney Parks & Resorts Chairman Bob Chapek described the hotel during D23 as “a revolutionary vacation experience” featuring a “dedicated multi-day adventure. ” There will be, he said, “starship transportation,” characters, costumes, storylines and windows with a view of space. “It is 100 percent immersive and the story will touch every single minute of your stay with us,” he said. “It culminates in a unique journey for every person who visits.” Even though details were limited — there’s no information yet on an opening date, price, exact location, or what “starship transportation” might entail — the announcement has industry watchers wondering if Universal might come up with a similar concept for a Harry Potter-themed hotel. EVERYONE WANTS WATER PARKS. Universal Orlando opened its latest addition, Volcano Bay, in late May. The operator describes it as a “water theme park” with an aqua coaster, raft rides, slides, and a beach. The new attraction also fits nicely into Universal’s bid to keep visitors on-site longer, giving them more of a reason not to wander off to Disney or SeaWorld if they have a day to spare. Six Flags Entertainment already has several water parks or water attractions within theme parks, but announced an expansion plan in April shortly after upgrading and reopening a water park in Mexico. The company’s former CEO, John Duffey, said Six Flags would star looking to acquire water parks near its current parks, in part to drive more season ticket bundle sales. “Taking over the operation of existing water parks allows us to expand our capacity and attendance with minimal investment providing a quick payback and high return on invested capital,” Duffey said. “We will look to accelerate this strategy in other markets as opportunities arise.” Reid-Anderson, who replaced Duffey in July, said later that month that the water park strategy would continue. “We have received multiple inbound inquiries from water park operators around the U.S.,” he said. “So the opportunity is not only compelling but it’s large-scale.” OVERSEAS PARKS ARE PAYING OFF. U.S-based theme park companies are looking to cultivate new audiences, and much of that expansion has been in Asia. Disney CEO Bob Iger said earlier this month that the company’s newest major expansion, Shanghai Disney Resort, was “nicely profitable” in its first year. The resort opened in June of 2016, and more than 13 million people have visited since. Expansions in Shanghai are already in the works — a Toy Story land is coming in the spring — and the positive reception so far has Disney thinking about other possibilities in China. “Ultimately, it opens up more possibilities in terms of other theme parks on the mainland, but we’re way early for that,” Iger said. Universal Parks & Resorts has a park coming eventually in Beijing, and the Comcast-owned operator completed the acquisition of the 49 percent of Universal Studios Japan that it did not previously own earlier this year. Comcast Corp. chairman and CEO Brian Roberts said in July that the launch of Minion Park in Japan had “significantly exceeded our early expectations.” “The region holds tremendous potential for us,” he said, adding that he and other executives had just returned from a trip to China. “We are as enthusiastic as ever about bringing a spectacular theme park to Beijing.” ---------------------------------------- INDUSTRY BACKGROUND Amusement parks evolved from period fairs of the Middle Ages. Natural or produced attractions drew crowds seeking entertainment and diversion offered many ways for organizers of local populations to profit from attendees. Possibly the first true amusement park is Dyrehavsbakken (‘The Animal Park’s Hill’) near Copenhagen, Denmark which opening in 1583 and is still open today. The natural spring there drew crowds from the city and this attracted entertainers, craftsmen hawking merchandise, innkeepers, and food vendors. Connecticut’s Lake Compounce is the longest continuously operated amusement park in the U.S. having opened in 1846. Lake Compounce first drew crowds to watch experiments involving explosives. By 2020, the global amusement park and attractions industry is estimated to generate over $43 billion in revenue. The U.S. remains the largest market at approximately one-third of the total global share, although many expect China to become the world’s largest market by 2020. Other booming markets include Dubai and Malaysia where national governments are eager to attract and exploit tourism. A mature industry dominated by massive global competitors Amusement parks can range from the quaint, 20-acre Enchanted Forest in [City, State] to the massive 30,000 acres at Walt Disney World Resort in [City, State]. Although there are over 400 operators of amusements and attractions in the U.S. the market, and even more small and individual park operators globally, the industry is dominated by a few massive multi-park operators such as Walt Disney Company, Merlin Entertainments, Parques Reunidos, Six Flags Entertainment Corporation, SeaWorld Parks & Entertainment, Universal Studios Parks and Resorts, Cedar Fair Entertainment Company, And China’s OCT Parks. In the U.S., for example, Disney accounts for roughly half of the entire industry. Based on annual attendance figures, Disney’s World Resort in Lake Buena Vista (Orlando) Florida boasts four of the five most-visited parks in the country: Magic Kingdom; EpCot; Animal Kingdom; And Hollywood Studios. Their original Disneyland park in Aneheim alone ranks second in attendance and their Islands of Adventure (Florida) and California Adventure parks are not far behind. Of the twenty most visited parks in the U.S., only one – Hersheypark – is not owned by one of the five largest firms. Operating Conditions Amusement parks require a high level of capital spending, nearly three times the amount of an average industry in the U.S. Spending is driven by a constant need for new attractions and rides as well as the costly upkeep of rides and the large-scale park facilities. The average park generates over 60% of its revenue through admission tickets and purchases for specific rides or games. Food and beverages account for about 25%, and merchandise sales account for approximately 10% with the remainder of average revenues produced by special events and sponsorships. Parks require a high degree of labor to operate, most of it seasonal and part-time. Wages overall average of 36% of total operating costs are related to payroll. Other major operating costs, on average, include maintenance (8%), marketing and promotion (7%). Park operators can end up being major food service companies when all their park operations are considered as a whole. Six Flags, for example, is essentially one of the largest restaurant operators. Food and beverage purchases are typically substantial and key suppliers are therefore typical food and beverage companies. Utility costs can also be immense as operating rides, shops, restaurants take large amounts of electricity, gas, and water. Investments in increasing the efficiency of utility use (e.g. low-flow water fixtures, high-efficiency ice machines and freezers) as well as sustainability-related efforts that reduce paper, plastic, and overall garbage burdens are an area of focus. Rides: Design, Safety, and Regulation Highly engineered rides such as roller coasters are designed and constructed by firms that supply the park industry such as Zamperla and Baltimore’s own Premier Rides. The design and development of amusement rides requires a mastery of physics, engineering, and mathematics. As technology has improved to include computers, advanced materials, and certain design innovations, the result has been an increasingly rigorous, complex, and precise creative process. This process has contributed to an extraordinary safety record...