|by John Robinett and Raymond Braun
Prior to the recent surge of new development activity in France, Europe had a modest theme park industry. Many of the existing parks in Europe were opened in the late 1960s and the 1970s as family-operated “garden parks”. The intensity of ride, show, food, and merchandise facilities in these parks has been much less than in the bottom-line oriented, corporate-operated U.S. parks. This has given a softer, lower-key appeal to the European parks. However, in recent years, several of these attractions have been altering their approach, and have embarked on intensive reinvestment campaigns to add major rides, shows, and revenue-generating facilities. Two parks which have been particularly successful at making this transition are Alton Towers in England, and De Efteling in Holland, which, after major improvements, now attract up to 2.5 million visitors a year.
Although attention to expansion and revenue growth have improved performance at several existing European attractions, the industry as a whole still underperforms U.S. theme park standards. Market penetration, and visitor per-capita expenditures, two key measures of theme park performance, are notably below those of the U.S. theme park industry. A partial explanation for this differential is that the European theme park industry is younger than the U.S. industry, and that European parks are still maturing in their markets. The development of the theme park industry in Europe has lagged behind the U.S. by about 15 years. At present, the U.S. has about 1.1 major theme parks for every 10 million people. Europe on the other hand, only has about 0.5 theme park per 10 million people.
There are several other possible reasons why the European attractions industry has not achieved the level of performance found in the U.S. These include:
Attempting to preempt Disney’s entrance into the market, new theme park development in Europe has been focused in France. Four major commercial attractions have been developed in France within the last few years; Asterix and Mirapolis near Paris, Big Bang Smurf near Metz, and Zigofolis in Nice. A fifth attraction, Futurescope in Poitiers is not technically considered a theme park, although it has incorporated some theme park elements into a publicly-built science and cultural attraction.
Unfortunately, the new French parks have not performed up to expectations. Actual attendance fell short of projections by 25 percent to nearly 70 percent (see box). Speculation abounds as to the reasons for the poor performance, with blame being placed on operating management, designers, consultants (including many from the U.S.), and even the French public.
Although some would attribute these problems wholly to a lack of appetite
on the part of the French for this sort of leisure (French author Jean
Baudrillard called Disneyland’s entertainment “banal”), in fact, there
are some specific identifiable causes linked to attraction design development,
marketing, management, and operations. In examining the development history
and performance of the recent wave of new theme parks in France, five areas
have been identified where important lessons can be learned.
In many of the new French parks, project capital investment was either overspent, or inefficiently spent. Between $100 and S200 per attendee was spent in developing these new facilities. In the U.S. this ratio typically falls between $S0 and $100 (see Table). Overspending on a per attendee basis, of course, was largely a function of less than expected attendance. However, for several of the parks, including Zygofolis and Big Bang Smurf, actual investment exceeded projected investment by a significant margin; in the case of Zygofolis by over 50 percent.
Although over-budget projects are not new to the theme park industry, these projects also suffered from poorly spent or inefficiently spent investment funds. Theme park development projects typically consist of: “hard” costs applied toward construction of facilities, fabrication and installation of rides and shows; and “soft” costs for financing, design, legal and other fees, pre-opening expenses, and other miscellaneous costs. In the U. S. theme park industry “hard” costs usually represent about 70 percent of the total project development cost and “soft” costs about 30 percent. This ratio helps ensure that at a given budget level the theme park product being built will have the entertainment and market impact necessary to meet attendance projections At many of the new French attractions, “soft” costs have escalated to a disproportionately large amount of total investment. At Asterix, design changes and other factors led to “soft” costs equaling about 40 percent of total investment. In the Smurf project investor infighting, design and management team changes, and associated problems caused “soft” costs for this project to rise to 55 percent of the total amount spent. Since the visitor does not benefit directly from these “soft” costs, these parks did not have the market impact they should have had.
A final investment factor responsible for underperformance at several of the new French parks has been the cost crunch which has occurred on over-budget, and/or late projects. The “hard” costs of developing a theme park can be conveniently categorized into four areas which are developed sequentially:
Although design flaws have not been the primary reasons for the underperformance of new European parks, there are some design lessons to be learned. Since several of these parks utilized U.S. designers at some stage in their development, a lack of understanding of market distinctions between Europe and the U.S. could have contributed to certain problems. Probably the most notable lesson to be learned is the need to understand habits particular to the market, which in France included suck factors as eating at certain times, and a strong preference for attending attractions on Sunday. The Asterix park was designed with insufficient capacity to accommodate peak crowds, and midday food service demands. (More about this issue under Market Assessment.)
Mirapolis suffered directly from lack of experience in theme park design.
Mirapolis did not rely to any notable degree on U.S. design help, and was
designed by groups unfamiliar with theme parks. This attraction contained
several serious design flaws including a limited number of attractions
spread too thinly over the site, limited or ineffective theming, and poor
Experienced management is the engine of the theme park industry. Particularly in the U.S. where mature and competitive markets have squeezed profit margins, strong management is essential. Key executives of the five major U.S. theme park operating companies have a minimum of 14 and up to 34 years experience in the business. At the new French parks a lack of experienced management and, worse, quick management turnover have led to problems both in the planning and operational phases of these attractions.
All of the parks recently developed in France began with management teams inexperienced in the theme park business. To gain industry experience, some of the attractions supplemented management with experienced U.S. consultants during the early phases of development. However, these consultants were not retained to any Significant degree once park operations commenced.
The second problem a lack of continuity in management, has also plagued the new French attractions. As initial management teams struggled through their first year (a year of learning about the theme park business) with operating results falling short of expectations, investors and backers, fearing failure, moved quickly to “clean house”. They replaced the initial teams which then had one year of experience with fresh teams with no experience. In the case of Mirapolis, the first year management team was replaced with a group of managers from Club Med. The hope was that management experience from a related field, resort hotels, would be useful. However, second year results were no better than the first year. At the Smurf park, half of the staff was released before the close of the first fiscal year, including the director of operations and the director of equipment, who were the two founders of the project.
The need for experienced management has become very evident in the initial years operations at the new French parks. Core management groups trained and experienced in the theme park industry will be important for the ultimate success of the Europarks. As Disney enters the market (Disney has trained managers who now work throughout the industry in the U.S.), and as existing park management goes through an intense learning curves the management profile is expected to improve.
3. Market Assessment
Market assessment is a key step in the planning, design, and ongoing operations of theme parks. With some of the new parks the market was not fully understood. Consultants, planners, and operators, have been responsible.
In some cases, the cultural habits of the market were not fully accounted for in market evaluations of France’s newest theme parks. The peaking of attendance on Sundays is a prime example. Even though annual attendance was much lower than that projected at Asterix, design day attendance (or the daily level of attendance for which a facility should be planned) was significantly higher than projected. This caused the park to have to close several times due to excessive crowding on Sundays. Depending on the operating season, a rule of thumb for a seasonal U.S. park is that the design day equals about 1 to 1.2 percent of annual attendance. At Asterix, design days equaled 15 percent of annual attendance, indicating a weekend day preference not experienced in U.S. parks.
Missing this one key market characteristic at Asterix created undersized facilities including rides and shows. Asterix is currently reinvesting 1S4 million Francs to increase second season capacity by 20 percent. Restaurants were also undersized because of accentuated demand for food at the peak hour. In U.S. theme parks, visitors generally spread the lunch peak eating time over a two-and-one-half to three-hour period, whereas in France, peak lunch service occurs in a one-hour period.
Market tastes were inadequately assessed in certain parks. Mirapolis, for example, chose as its central signature feature, Gargantua, a giant medieval wine-swigging glutton. This did not play well in the health conscious Parisian market. Similarly, intellectual thematic concepts mentioned earlier proved to have limited mass appeal.
The ability of the new theme park products in Europe to draw from more distant markets was also overestimated. For example, at the Smurf park, which is located in the northeast corner of France near the German border, market projections called for 45 percent of attendance to come from Germany. In actuality, the Germans did not cross the border as readily as planned and the park received only 8 percent foreign attendance.
4. Educating the Public
An important factor in understanding the underperformance of the recently built parks in France is that market’s lack of education relative to the theme park product. Older, more modest parks have operated elsewhere in Europe for a number of years. Tivoli Gardens opened in Copenhagen in 1843; De Efteling in Holland began operations in 1951; and Phantasialand in Germany opened in 1965. France, on the other hand, has not had these long-term installations to educate its market.
Traditionally, French amusement parks have been limited to traveling carnivals run by “Forains,” tough, streetwise, amusement hawkers. The French public, being accustomed to this sort of basic carnival approach, did not understand some of the fundamental principals of the new theme parks. These principals include: paying one price for admission and all attractions; not being able to bring picnics into the park; and the price/value relationship between a relatively high admission fee and a full day’s activities.
French awareness and excitement about theme parks only began to blossom when Disney expressed interest in a development in Europe in the early 1980s. Disney’s inquisitiveness led a number of French entrepreneurs and organizations to seize this new development opportunity, and several new projects were soon underway. lithe market, unfortunately was not quite ready for this rapid onslaught of development.
The huge scale and broad appeal of the EuroDisneyland project, is likely to create a mass market awareness of the theme park product. This awareness is expected to catalyze further theme park development in Europe. This phenomenon has been demonstrated on two continents, and in three locations. In Los Angeles and Orlando, numerous other theme park projects have thrived around the massive Disney attractions. In Japan, development interest in theme park projects has been extremely high following the success of Tokyo Disneyland. The experience in France of numerous theme parks preceding a Disney attraction into a new market suggests it may be unwise to reverse the timing of this development process.
The stronger French parks are hopeful that Disney will benefit their business by raising market awareness and educating the market to the theme park product. If history in other locations can be used as an indicator, this may be the case.
The theme park business is extremely marketing sensitive. A visit to a theme park is a temporal product which requires intensive marketing to successfully compete among the many other forms of leisure and entertainment. In new markets, heavy marketing is required to establish identity and to build awareness of the product.
In a mature market such as the U.S., there is a strong need to constantly induce repeat visitation to nullify the effect of natural attendance erosion. This erosion has traditionally been overcome by reinvestment in new rides, shows, and other attractions which can be sold to visitors as a reason for returning to the parks.
Massive marketing alone without major new investment can also have a dramatic, though temporary, impact on attendance. One of the best examples is Disneyland’s attendance surge in the mid-1980s. Disneyland had been suffering from lackluster performance for over a decade, with attendance ranging from 9 to 11 million per year. Then a new management team headed by Michael Eisner and Frank Wells took control of the Walt Disney Company. They saw that Disneyland was underperforming its potential and focused on an intensive advertising and promotional campaign. There was also a long term plan for reinvestment in new rides and attractions. But in one year, 1984 to 1985, Disneyland’s attendance jumped from 9.9 million to almost 12.0 million. It now regularly receives annual attendance of over 13 million.
Allocating a significant portion of operating expenses towards marketing has been the practice of U.S. theme parks for years. Typically, major U.S. parks spend from 10 to 15 percent of total operating expenses on marketing. Recent surveys of European parks indicate marketing expenditures ranging from only 8 to 10 percent of total operating expenses.
At the new French parks marketing effectiveness has also been an important issue. Directed and focused advertising, promotions, special events, and group sales programs are key elements of theme park marketing success. The new French parks experimented with different advertising approaches. Some efforts proved fruitful while others fell short. For example, Asterix had simple, direct television advertising spots which had a beneficial impact on attendance. The Smurf park, on the other hand, used an intellectual/philosophical advertising approach which failed to sell the product to the market. Much like the Japanese car maker Inanities cerebral advertising campaign which did not show the product, the Smurf park’s marketing did not effectively convey the fundamental attributes of the product. Located in an economically blighted blue collar area of France, the Smurf park needed to communicate the emotional, family fun experience of the park and not the intellectual theories behind it. Park management, which is government influenced, considers this attraction a “cultural and social laboratory for the region and not a traditional theme park. Although this idea may have merit at some level, it is difficult to market.
Group sales account for a large share of theme park attendance in the U.S. Effective use of this marketing approach is usually critical to an attraction’s success. In most cases, the new French parks did not market group sales effectively U.S. parks and established European parks in other countries typically receive from 35 to 50 percent of their annual attendance in the form of groups. At Zygofolis, there were virtually no group or pre-sold tickets, and marketing prior to the attraction’s opening was negligible. The Mirapolis and Smurf parks, similarly, sold very little group business. Asterix, the highest attendance park of the new French attractions, did a very strong group business, and succeeded in attracting about 50 percent of its annual attendance from groups.
Some difficult and unforeseen problems also impacted some of the French parks.
These setbacks would have been hard to overcome even with good marketing and public relations, and would have harmed the best efforts of even seasoned park operators. At Mirapolis, the “Forains,” or French carnival operators, perceiving a threat to their traditional line of work, vandalized the theme park and proved threatening to guests. At Zygofolis, an unseasonably strong storm saturated the top soil surrounding the park and caused a serious mud slide which buried a portion of the park, and forced a one-week closure near the end of its first season.
Disasters notwithstanding, the first season at the new French parks was a struggle with the intricacies of theme park marketing. The emergence of effective and appropriate levels of marketing for these new French attractions will hopefully result over time as the parks gain experience with each season.
The performance of the recently developed theme parks in France has faltered for a variety of reasons. The nature of investment, design problems, lack of management experience, inadequate assessment of markets, lack of public experience with the product, and weak or inappropriate marketing have all played roles in the underperformance of France’s new theme park industry.
In some cases shortsightedness on the part of U.S. and other industry consultants contributed to this underperformance. In other cases, inadequate understanding of the theme park product by developers and operators led to many of the attractions’ problems. European leisure interests, theme park operators, and U.S. experts, are hopeful that several years of experience, and Disney’s $2+ billion project will help to transform these shaky initial years of France’s new industry into a solid and growing leisure business for this country.
The new French parks have not realized the expectations of their developers
and the bankers which financed them. Of the four major theme parks recently
developed two have noticeably underperformed attendance projections, and
two have gone bankrupt Some of these attractions are hopeful that reinvestment,
redirected marketing, and staff shake ups may put things back on track.
In the meantime, fee investment community (and Disney operatives) are rethinking
these products and their markets.
© 1998 Economics Research Associates - All rights reserved