by Clive B. Jones & John Robinett
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Introduction
The theme park has several historical antecedents, including the ride-based
amusement parks of early 20th century America and the garden parks of Europe. |
The birth of the modern theme park, however, is commonly recognized as
occurring with the opening of Disneyland about 30 years ago.
Economics Research Associates (ERA) has completed many assignments for
the Walt Disney Company over the years, and, since Disneyland, theme parks
have multiplied throughout the world. And they all bear the following primary
characteristics:
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They have a family appeal;
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They contain one or more themed environments;
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They have some form of “ambient entertainment.” That is, strolling, musicians,
performers, costumed characters and the like, who performs for “free”;
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They have a high investment level per unit of ride or show capacity;
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They have high standards of service and maintenance and cleanliness;
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They contain enough activities (entertainment content) to create an average
visitor length of stay of typically 5 to 7 hours; and finally,
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They will usually, but not always, have a pay-one-price admission policy.
Recently, there have been variations from the formula. These include theme
parks oriented around one theme or toward one market. This includes aquatic
parks and children’s parks. A second departure from the traditional theme
park is indoor theme parks combined with retail shopping centers. The largest
examples of these are West Edmonton Mall in Canada, Lotte World in Seoul
and Mall of America in Minneapolis.
State of
the Industry
The theme park industry has witnessed a fairly rapid international expansion
in recent years. Growth has been focused mostly in Europe and Japan. It
is instructive to compare industry development in the U.S. with where other
world markets stand.
The U.S. industry has had about a 30-year growth to maturity. This was
characterized by an inception period pioneered by Disney in the late 50s
and early 60s, rapid growth period through the 70s, and maturity in the
80s. Europe and North Asia are currently in the rapid growth phase
of their theme park industries. The developing countries are in the inception
period. While the U.S. experience can not be directly translated to foreign
markets, we can be reasonably assured that Europe, and North Asia will
continue to have fairly strong growth over the next 10 years or so, and
it will be 5 years or more before we see any significant growth in the
developing countries.
Europe
Europe has a number of existing parks. The industry is spread throughout
western Europe with a large concentration of attractions in Germany, France,
the Benelux countries, and the United Kingdom. Expansion of the industry
into southern Europe is now taking place, with several planned or implemented
projects in Spain, Italy, Turkey, and Greece. There are also a number of
proposed projects in North Africa and the Middle East.
Currently, the European theme park industry consists of 19 major attractions
with annual attendance of over 1 million, and some 45 moderate-scale attractions
with attendance between 500,000 and 1 million. Europe’s parks generate
annual attendance of about 70 million persons, and revenues of around $1.5
billion. The European industry is about 1/3 the size of the U.S. industry
in terms of revenues.
The European market is changing, of course, with the recent opening
of the EuroDisney project.
The watchwords for Europe are ANTICIPATION, REPOSITIONING, EXPANSION
and CONSOLIDATION.
| 1. Anticipation -
Wherever Disney theme parks enter new markets there are significant
structural changes to the indigenous theme park industries. In the U.S.,
Disney’s first attraction, Disneyland, founded the industry. In Florida,
Disney’s attraction converted an unknown swamp into America’s premier tourist
destination and attraction market, and in Japan, Tokyo Disneyland spurred
growth of the Japanese theme park industry. We believe Disney will have
a significant impact on the attractions’ industry in France and Europe.
This impact will be in six key areas:
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EuroDisney will expand the overall European theme park industry and focus
the industry in Paris by creation of a multi-park destination attraction
complex.
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Disney will educate the market as to the theme park product, the quality
of the theme park experience, and the value of the pay-one-price admission
for a day of quality entertainment.
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Disney will provide price leadership in the market. This will allow others
to price up to Disney levels.
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EuroDisney will create marketing awareness. Disney’s well established and
creative marketing programs will create awareness in the market and also
enlighten competitors relative to the use of effective marketing techniques.
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EuroDisney will improve management expertise in the European theme park
business. EDL will train and create a labor pool of experienced theme park
managers which will in the future help to enhance the performance of the
European theme park business as a whole.
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Finally, EDL will create the need for proper product positioning to complement
Disney in the market area. A variety of target marketing and positioning
strategies have proven successful elsewhere in markets shared with Disney
parks.
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| 2. Repositioning -
Many of the European parks have been expanding and repositioning with
a renewed emphasis on reinvestment and marketing. Many European attractions
have undertaken major expansion programs increasing ride and show capacity
and expanding visitor services such as restaurants and merchandise areas
(areas where European parks have traditionally lagged behind the U.S.).
Major expansion programs have occurred at Alton Towers in England, De Efteling,
in Holland, Gardaland in Italy, Parc Asterix in France, Walibi in Belgium,
and other European attractions.
Several European parks have repositioned themselves in the marketplace.
In the past, the parks relied on steady repeat business from the immediate
resident market. This market responded to the attraction’s low admission
prices, picnic areas, and relatively passive environments which offered
a quasi-public park experience. Through recent reinvestment programs, parks
have repositioned themselves as more active and commercial attractions
with higher admission prices, and drawing from somewhat larger markets. |
| 3. Expansion -
The European theme park industry has also been marked by new development
activity in recent years. In the last four years, new attraction development
has been focused primarily in France.
EuroDisney opened in 1992 but was preceded (perhaps unwisely) by four
other new attractions:
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Asterix,
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The Smurf Park,
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Mirapolis, and
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Zygofolis.
Disney has yet to be well accepted by the French market although it is
doing quite well with tourists. The other new French parks have struggled
financially, due to flaws in design, development, and management. Two (Mirapolis
and Zygofolis) have gone bankrupt and significantly damaged the enthusiasm
of investors and lenders. Busch is proceeding with its park in Tarragona,
Spain and several other new projects are proposed in Southern Europe. Legoland
is also expanding to several new key markets. |
| 4. Consolidation -
A final trend in the European theme park business is the consolidation
of the industry into key ownership groups. This occurs in industries as
they mature and has also been a trend in the U.S. In Europe, several
attraction acquisitions have begun this process. In 1990, Madame Tussauds
purchased Alton Towers (Madame Tussauds also owns several smaller attractions
on the Continent and the Rock Circus attraction in London). The Walibi
organization purchased The Smurf Park (now called Walibi Smurf), increasing
their theme park industry holdings to four parks. Finally, Accor,
France’s largest hotel operator, acquired a controlling interest in Parc
Asterix. With European unification and the continuing maturation of the
European theme park industry, this trend will continue.
It is too early to determine trends for the Soviet Union and Eastern
Europe but a number of schemes have surfaced including theme parks oriented
toward increasing tourism based foreign exchange. Because of the rapid
changes in these markets, we may have to wait some time before we see any
significant development in the amusement and theme park industry. However,
we should keep our eye on them. Winston Churchill may have put it this
way “Never in the history of mankind have so many been so un-amused for
so long.” |
North Asia
Asia is the world’s next leading international theme park market. It
includes a mature industry in Japan, strong growth in Korea, strong performance
in Hong Kong, underserved markets in Taiwan, and a rapidly changing China.
A substantial amusement park industry has been established in Japan
since the recovery from the post-war period. A variety of themed attractions
and numerous amusement parks are located throughout the country. the growth
of this business has been assisted by the presence of major amusement ride
manufacturers in Japan.
There are strong concentrations of amusement and theme parks in the
Kanto region around Tokyo and the Kansai region near Osaka and Kobe. These
are the two main urban areas in Japan and they both have huge population
bases which support a variety of attractions. A third concentration, now
in the formative stages, is on the southern island of Kyushu. The Kyushu
area is developing as a resort destination area which includes several
parks and attractions, including Harmonyland.
Tokyo Disneyland, which opened in 1983, brought the large-scale theme
park product to Japan, and since that time, several large projects have
been built including the $630 million Puroland in Tama, and Nippon Space
World in Kyushu. Several other large projects are currently being planned
or underway.
The Japanese industry at present has about 29 large parks with annual
attendance over 1 million persons, and 30 moderate-scale parks with attendance
between 500,000 persons and 1 million persons. As a whole, the Japanese
industry generates about 75 million attendees and about $1.5 billion in
annual revenues. This places the Japanese industry at about 30 percent
of the U.S. industry in terms of revenues. On a revenue per capita basis,
however, they are reasonably close.
The watchwords for Asia are SELECTIVE GROWTH and SHORT TERM RETRENCHMENT.
| 1. Growth -
For the last five to seven years there has been a strong interest in
theme park development in Japan and Korea. Much of this was catalyzed by
the success of Tokyo Disneyland. Other factors driving Japanese interests
in theme parks have been the high level of discretionary income available
for entertainment, and a heightened national interest in leisure. Also,
the Japanese government, until very recently, has provided strong incentives
for leisure development.
There are several-large scale theme park projects under consideration
at this time. These include a second-gate attraction at Tokyo Disneyland,
which may be a movie studio park or the Disney Sea attraction originally
planned for Long Beach, California, a major sea life park in the Awaji
area near Osaka, a large-scale theme park proposed for a large landfill
area in Kobe, MCA’s Universal Studios Japan project, expansion of Yongin
Farmland in Korea, expansion of Ocean Park, Hong Kong, several proposed
projects in Taiwan, and a push by China to encourage theme park investment.
There are also numerous other projects being discussed. |
| 2. Retrenchment -
In the last year or so, there has been a retrenchment of the theme park
industry in Japan. In the late 1980s, major Japanese corporations entered
this industry with gusto. Unfortunately, their efforts were met in many
cases with design, operating, and financial difficulties at some of the
major projects which were opened.
Several poorly performing projects which have been financial drains
on the major corporations which have developed them, have created an air
of caution in Japan about the theme park business. This combined with economic
ills being faced in different segments of the country’s economy have slowed
down the growth of the theme park industry as the Japanese reassess what
makes this industry work, and what the model for Japan should be. |
Developing World
Developing countries are concerned with many economic and social development
issues. Some see tourism as a major force for economic improvement and
look to themed attractions as part of the tourism product. There is also
a growing resident market that has the income necessary to afford attractions.
It is instructive to look at the world’s population distribution. Right
now, 78 percent of the world’s 5.4 billion people, or 4.2 billion people,
live in developing countries. By the year 2010, 82 percent of the world’s
population will live in these countries. Even if 20 percent of these people
are income-qualified for a theme park product, that is a market approaching
1 billion people! And many of these economies, particularly in Asia, are
expanding and have rising income levels.
It will be some time before the developing countries have major theme
or amusement park industries, but some countries should be seeing development
activity in the near term. Countries to keep an eye on are Brazil, Mexico,
India, Thailand, the Middle East, and the Southeast Asian growth triangle
of Singapore, Malaysia and Indonesia.
North America
The U.S. theme park industry is by far the largest in the world. There
are approximately 40 large-scale parks with annual attendance of over 1
million, and approximately 55 moderate-scale parks with attendance between
500,000 and 1 million.
Annual attendance at these attractions totals 159 million persons with
revenues of $4.5 billion. The U.S. industry dominates the world, in scale,
product innovation, marketing savvy, and operating knowledge.
The U.S. is a mature industry. Growth has been at a compounded annual
rate of about 3 percent over the last 10 years. About ½ of this
growth has come from the addition of new parks and not from attendance
increases in existing parks. Per capita expenditures have slightly exceeded
the rate of inflation, reflecting admission price increases and strong
growth in merchandise sales and games revenues. When we combine attendance
growth with per capita expenditure increases, we see an annual revenue
growth of about 9 percent over the last 10 years.
The watchwords for the U.S. industry are: MATURATION, CONSOLIDATION,
DIVERSIFICATION, and DESTINATION TOURISM.
| 1. Maturation -
The majority of U.S. markets capable of supporting large-scale, outdoor
theme parks already have them. It is unlikely that a significant number
of major regional theme parks will be developed in the future. Growth in
this industry has stabilized, and there should not be any huge fluctuations
in attendance or development activity. However, there are opportunities
for adjusting product to suit changing markets and to effectively compete
with other entertainment for consumers’ leisure time and expenditures. |
| 2. Consolidation -
Typical of a maturing industry, there have been numerous changes in
theme park ownership over the last several years. This indicates a strong
consolidation trend. Much of the control of the industry is now focused
into a few multi-park operating companies: Disney, Time Warner/Six Flags,
Paramount/KECO, Anheuser Busch and MCA-Universal.
Three major corporations have left the industry (Taft Broadcasting,
Marriott Corporation, and Harcourt Brace Javonavich). In 1984, Taft’s entertainment
group, King’s Entertainment Company (known as KECO) for a $167.5 million
in a leverage buyout transaction, KECO now owns five parks and manages
a sixth in Australia. They have recently been acquired by Paramount.
The Marriott Corporation sold its two parks to divest themselves from
the industry. One was in Santa Clara and is now owned by KECO, and the
other was in the Chicago area and is now owned by Six Flags.
HBJ, previous owners of the Sea World parks, sold all of their parks
to Busch, which already owned two parks. Busch’s theme park holdings now
total seven with a planned attraction in Spain.
The seven Six Flags parks have been sold as a group several times and
are now owned by Time/Warner. Four of the Six Flags parks started by independent
operators.
Disney continues to increase their ownership in the industry by building
more attractions. Within the last several years they have opened three
attractions: the Disney/MGM Studio Tour, Typhoon Lagoon, and Pleasure Island.
Disney has also announced plans for additional attractions in Anaheim on
Disneyland-adjacent property. |
| 3. Diversification -
The U.S. theme park industry is diversifying into new smaller-scale
targeted products for “niche” markets which may not be covered by the large-scale
theme parks.
ERA feels that this trend is being driven by market opportunities like
those which drove expansion of the theme park industry several decades
ago. The theme park development boom in the 1970s represented a massive,
heavily capitalized response to the need to provide baby boomers with family
entertainment. Theme parks fit into the urban fabric of America by being
located next to large, built-in metropolitan markets, and on relatively
inexpensive land.
The 80s witnessed a narrowing of market and product focus with the smaller
investment waterparks. This was the first major diversification of the
industry. Waterparks appealed to a more narrow market, usually teens and
young families, and were suitable for smaller secondary markets.
The new entertainment attractions of the 90s represent a furthering
diversification. These attractions narrow the niche appeal even more with
smaller capital investment and an appeal usually to very specific market
groups such as children, teens, young singles, etc. Many of these attractions
begin to tap the “baby boomlet”, and respond to the need to regenerate
under-performing suburban real estate properties by locating in shopping
centers.
Examples of the new entertainment attractions include the family entertainment
centers being developed in malls, the expansion of the outdoor family recreation
and mini-golf attractions, entertainment centers combined with urban mixed
use projects, sports bars, themed restaurants, children’s attractions,
mini-aquariums, and a host of others.
Diversification should continue as entrepreneurs attempt to seek out
untapped entertainment markets. |
| 4. Destination Tourism -
Within the last 10 years, the only major parks developed in the U.S.
have been destination market parks focusing on the tourist markets of the
sunbelt states of Florida, and Texas. these attractions have included Disney’s
EPCOT Center, Disney’s MGM Studio Theme Park, Universal Studios - Florida,
and Sea World Texas in San Antonio. One exception was Marine World Africa
U.S.A., which was relocated from one area of the San Francisco Bay region
to another.
Additionally, the major planned attractions: Disney’s new California
attraction, Fiesta Texas in San Antonio, and the possible Columbia Pictures
attraction in California, will all be destination in nature.
Theme park development in the U.S. has changed from selling a 7-hour
experience to a 7-day experience. Disney, of course is the pioneer in this
thinking. Developers have realized the incredible economic value created
by the impact of a tourism oriented theme park on surrounding complementary
properties such as hotels, resorts, and shopping centers. |
Theme Parks
and Tourism
Turning now to the relationships of theme parks to tourism. These relationships
are complex and highly dependent on the park’s scale, quality. and uniqueness.
Typically, residents (from within 1.5 to 2 hours) will account for 80
percent of traditional theme park visitation. Even the tourist visitors
are often in the area for other reasons (such as visiting friends and relatives).
Thus, just having a theme park does not automatically insure an influx
of tourism. Rather, to impact destination tourism, a theme park must:
Be unique, a “must see” destination.
This can be accomplished through character development (Mickey and
his friends), architectural form, natural features, special events and
programming (Opryland) or a combination thereof.
Have large scale and a critical mass of attractions.
Investment levels to impact international tourism generally must exceed
U.S. $150 million.
Combine high technology with human scale and quality service.
Investments in the thrill hardware must be combined with a high level
of service from the “hosts and hostesses” so that a unique local culture
and friendly human contact is balanced to the high technology.
Encourage overnight stays.
The principal economic benefits of tourism come when overnight stays
are generated. Day visitors or tourists who stay with friends and relatives
generate only 20 percent of the economic impact of tourists staying in
hotels and motels ($50 versus $250 per day). Thus, in designing a theme
park for tourism, a multiple attraction destination (with experiences that
can occupy two or three days) is more likely to have the desired impact.
Have complementary destination activities.
Tourist-oriented theme parks should be part of a mix of recreation
and leisure activities. A true tourist destination would also have supporting
recreation uses such as high quality hotels, convention and conference
facilities, resorts, recreational shopping and dining experiences, and
sports activities including golf, tennis, and water-related activities,
and excursions into nearby local tourism areas.
Support media (TV) coverage and exposure.
Like most other things in life, future theme parks must be designed
for television. The use of theme parks and resorts as backdrops for variety
programs, celebrity games, sports competition, and convention/conference
broadcasting is increasing rapidly and the resultant TV exposure is very
important in creating awareness in tourism markets.
Given that these criteria are part of the theme park/tourist destination
program, the results can be dramatic and provide a sustaining economic
base. For example, at Walt Disney World tourism increased from 2.8 million
visitors in 1970 to over 35 million by 1992. The increase in the number
of air visitors alone was 20 million. This increase in visitation (particularly
overnight visitation) spurred the development of over 50,000 hotel rooms
and resulted in the direct employment of over 250,000 persons. Quite a
success story for what was once only a mosquito infested swamp bought for
an average price of $200 per acre. Smaller scale attractions, such as Polynesian
Cultural Center in Hawaii, have also built a steady business of nearly
a million visitor a year through strong penetration of the tourism market.
Developing
Trends
As we moved toward the year 2000, how will theme parks evolve as a component
of international tourism. They will not blindly follow the U.S. model,
but evolve new forms of attractions where tourism is a more important source
of market support. From our perspective in analyzing development trends
and proposed new parks, we see the following changes:
Themed to country/region
New parks will have stronger theming tied to the country or local region.
Theme parks are increasingly becoming a symbol and showcase for regional
pride, culture, and technological achievement. The danger her, of course,
is that by being too serious about “cultural” tourism the parks can cease
to be fun. We have to constantly counsel our clients that a theme park’s
prime objective is entertainment. This is the “sugar” that makes the learning
and culture pill work.
Part of larger mixed-use destination projects
In the urban/suburban context, we now see theme parks and large scale
attractions being designed into regional and specialty shopping complexes,
mixed-use waterfront developments, and even some multi-use office buildings.
In more rural settings, additional components often include destination
resorts, bungalow parks, shopping/restaurant villages, and special events
centers/trade expositions.
Greater visitor participation and interaction
New attractions are being designed to provide greater participant control
and encourage interplay between the visitor and his environment. This is
a natural outgrowth of both available technology and the demonstrated appeal
of such involvement at places like the San Francisco Exploratorium.
New thrill rides are being offered where the rider can individually control
the experience and intensity of the ride. Future thematic concepts will
be based more on participative activities (sports, music) that relate to
the audience rather than comic book characterizations.
Use of simulation experiences and virtual reality
Perhaps one of the most exciting areas of development is in the area
of simulation. Advances in technology have allowed attractions designers
to realistically duplicate virtually any natural or special effects experience.
By combining extremely high quality visual imagery with seats that are
programmed to move with the action, visitors can realistically enjoy experiences
that were previously unavailable in a theme park environment. The first
highly popular example of this technology is the Star Tours attraction
at Disneyland. However, new simulation presentation include river rafting
in New Zealand, runaway sports cars in the Italian Alps, and intergalactic
space races. These simulations are produced for a fraction of the cost
of traditional attractions. The technology is also more flexible
(you can change the experience by simply changing the software (film) rather
them creating a new attraction), and more land efficient (a 45-seat simulator
needs only about 300 square meters). A major challenge, however, will be
to have the technology breakthrough and still maintain the thrill and spontaneity
of perceived personal risk and group interaction.
Greater water orientation
A greater use of water related activities, attractions and landscaping
is occurring in theme park design as well as in nearly all forms of real
estate development. Several parks (Ocean Park, Hong Kong; Dreamland, Australia;
Walibi, Belgium) combine an active water park with more traditional themed
rides and amusements. Performance parks such as Sea World are still popular
but future expansion will be limited by restrictions on capturing and displaying
aquatic mammals. We see a continuing acceptance of new, high technology
aquariums using acrylic tunnel concepts which combine a scuba diver’s view
of the undersea world with a ride experience. Some of these will be developed
in the open ocean.
Design for all-weather operation/artificial environments
New theme parks are designed to have more covered attractions as well
as climate controlled walkways and rest areas. This allows for shorter
amortization of high capital investment and fixed cost components. New
theme parks are being designed with a greater degree of weather protection
in order to enable a longer operating season and longer operating hours
per day.
When one looks ahead at the larger number of tourists who are expected
to travel to new destinations (particularly within the Asia - Pacific region),
there will be increasing pressure on sensitive environmental and social
resources at the destination. A new role for theme parks is emerging. By
their nature, they are designed to handle large numbers of people within
a controlled space and with manageable impacts. In the future they will
embody a greater educational function to introduce, interpret, and sensitize
the overseas tourist to the environment and to the host community and its
values. They can become a new gateway for host country tourism. Rather
than being viewed as a stand alone attraction, theme parks will become
part of a balanced leisure product and tourism system that contributes
to the economic development, employment, and resource preservation of an
entire region.
© 1998 Economics Research Associates - All rights reserved |
