Long live the king?
For the global theme park and attractions industry, the US undoubtedly remains the king of kings. Yet could the aftershocks of the worst financial crisis since the Second World War – coupled with the rise of ever-bullish emerging markets – eventually lead to the country’s crown being toppled? Adrian Lennox reports.
Think "amusements," "leisure" or "theme parks" and the US will never be far from your mind. From Disney’s iconic Cinderella’s Castle to the unforgettable narratives found within Universal Studios’ sprawling immersive resorts, the US theme park industry in many ways embodies the American Dream where, to paraphrase historian James Truslow Adams, "life should be better and richer and fuller for everyone."
Seemingly since time immemorial, carnivals and theme parks in the US have captured the imagination of more individuals than any other country – so much so that the Stars and Stripes are interwoven into the very fabric of amusement resorts, and vice versa.
Take the Statue of Liberty – one of the most famous icons of the US. According to folklore, the statue was often one of the first glimpses of the country for hundreds of thousands of immigrants after ocean voyages from Europe.
However, until it was destroyed by fire in 1896, the Coney Island Elephant was actually the first structure seen by immigrants arriving at the magnificent city of New York.
The US’ rich amusement park heritage is renowned around the world. Millions of families flock there from overseas every year with the sole intention of spending a week, two weeks or even more feasting on the out-of-home leisure delights to be found from coast to coast.
Indeed, the country’s prominence is well reflected in industry circles as it remains home to the leading global operators, manufacturers and the world’s principal amusement gathering, the IAAPA Attractions Expo.
Yet while the amusement industry remains in many ways firmly attached to US ideology, so too does the term "recession." The US, of course, was hit hard by what became the worst financial crisis since World War Two – and by all accounts many economists believe the aftershocks of the global meltdown will be felt for many years to come.
This, coupled with recent developments in Asia, has led many industry observers to question the country’s continued future as the king of amusements. So what does the future hold for the US theme park industry?
The numbers game
According to statistics released by the International Association of Amusement Parks and Attractions (IAAPA), the US theme park and out-of-home leisure industry enjoyed strong growth between 1990 and 2007, with annual attendance rising from 253 million to 341 million and gross revenues more than doubling to $12bn from $5.7bn.
It is interesting to note that although attendance rates began to flatten out at the beginning of the decade, revenues from theme parks in the country continued to grow strongly, indicating an increase in per-head consumer spending.
However, while the IAAPA data provides a clear overall picture of the state of the US amusements industry up until the full effects of the global downturn became apparent, we must turn to more recent figures provided by the Themed Entertainment Association and AECOM Economics in the 2009 Attraction Attendance Report for a more up to date overview.
Data from the report, which remains one of the most accurate amusement industry bellwethers, clearly indicates the US’ dominance, with 10 of the country’s resorts – including Walt Disney World, Disneyland, Epcot and SeaWorld – ranking among the world’s top 20 leading theme parks.
Yet, a closer look at the statistics unveils a less than rosy picture for the country. "The international theme park and attractions industry is coming off a challenging year due to the global economic recession," said TEA president Steve Thorburn at the beginning of 2010.
John Robinett, senior vice-president of AECOM, added: "The brunt of the North American recession was felt in the numbers. The two major markets, Los Angeles and Orlando, suffered from weak tourism and both saw single and sometimes double digit declines in their major parks – the exception being Disney which countered the trend through aggressive discounting and marketing."
At ground level, leading manufacturers serving the theme park and waterpark sectors have also noted the effects of the downturn. "The number of the visitors has dropped sharply," said Kubilay Alpdogan, sales manager for Polin Waterparks and Pool Systems, which has installed aquatic centres across the country.
"Over the last two years we have heard many loss announcements from the big parks and witnessed many acquisitions. Some of the already-started projects went on slowly and some others were frozen before getting off the ground."
Forever looking forward
Despite the myriad challenges presented by reduced consumer spending and budgets, the TEA/AECOM report states that attraction operators managed to weather the storm at a level equal or ahead of many other industries.
"This year’s attendance numbers show that parks are weathering the recession and positioning themselves for the recovery," said Robinett. "We expect next year to show stronger figures with continued economic recovery and pent-up demand."
According to Ray Braun, senior vice-president for AECOM, "Most parks felt the impact of the deepest recession since the Great Depression. The strategies parks employed to sustain numbers and make the best of a troubled situation underscore the basic fundamentals of good business in the visitor attractions industry: reinvestment in the guest experience, creative targeted marketing and building the relationship with the customer."
Indeed, in the face of the downturn the figures from 2009 also reflect the resilience and creativity of the US theme parks industry and point the way to future growth. Jorge Mochkovsky, co-owner and director of Sacoa Playcard, said: "What we can notice from our standpoint is that operators are coping, but they are being extremely cautious with their spending; every dollar invested is looked at twice before spent.
"Nonetheless, for our company, the US market has been steady. We did notice the crisis but the overall result has been good. In fact the US market has increased (and) although some operators seemed to be on hold at the beginning, they are now fully active.
"Many chain stores have decided to start using debit card systems, or to migrate to Playcard in cases where they had already tried out a competitor system, plus some smaller operations are realising their best bet for the future is to have control over their business, as well as the endless marketing possibilities offered by the Playcard system."
The innovative and creative strategies adopted by US operators have been noted across the industry and this is perhaps what has helped the country remain at the forefront of the industry.
"The sluggish economy decreases available discretionary income and therefore greatly impacts family vacation decisions," noted Steve Levine, president and CEO of US waterpark equipment supplier Splashtacular. "Local community or municipal pool ‘parks’ – long viewed as the ‘town babysitter’ – have continued to evolve in response to needs for increased appeal, with more slides, more attractions and more interactivity.
"Splashtacular continues to work closely with aquatic designers and pool builders on innovations that increasingly blur the lines between commercial and municipal projects, with more than 1,000 installations throughout the US."
Destination parks rely on a combination of tourists and locals, but in 2009 these mega resorts had fewer of the former coming through the turnstiles. Total visitation to Orlando in 2009, for instance, was down nine per cent on the previous year.
Destination parks endeavoured to maintain their attendance totals at healthy levels via strategies that put more emphasis on building relationships with customers and less on revenue, offsetting the lower levels of tourism by encouraging regional attendance and repeat visits through special programmes, passes and discounts.
While destination parks are adversely impacted by an economic downturn as discretionary spending declines, lower cost regional parks and attractions tend to benefit from those same trends, as consumers shift to the less expensive entertainment option. Other regional attractions such as museums and zoos tend to fare better as well during tighter economic periods.
Innovation, innovation, innovation
In terms of the out-of-home leisure industry, US consumers are considered to be among the most sophisticated and discerning. And as part of both operators’ and manufacturers’ strategy to re-focus their energy in order to stimulate growth, "innovation" has become a key watchword.
"Interaction is key and is ultimately guiding the direction and innovation of our products," said Cory Forrest, product line manager for Waterplay Solutions Corporation. "It’s also a difficult word to define since everyone sees interaction in a different context. Ultimately, giving users the ability to control, adjust, alter the experience is fundamental.
"While running through a backyard sprinkler is still fun, being able to hide behind a wall of water, spray another friend with water or co-operatively creating an unexpected outcome by altering a spray component will provide long term enjoyment and cognitive development. In addition, the dedication to water use – both in minimising the environmental impacts by reducing water use and by ensuring water quality is at safe levels."
Levine added: "Our new waterslide rides feature rider competition, with riders competing by executing more and more perfect ride paths. Our two new rides, SplashRally and 360Rush, build on the popularity of NASCAR racing and steep, thrilling acceleration. In addition, our development team has added a new division that will take activity pool play structures to the next level.
"Our customers have been intricately involved to help create what they have dreamed this product line to be. We believe this too will become an increasingly important trend, allowing clients to take part in the design and development of each aspect, including design, materials, features, size, price and terms, service, accountability and finally allowing them the opportunity to continually critique the entire development process."
This strong customer focus is also reflected in Polin’s endeavours: "We have just launched our new product which we believed will be the next trend, namely King Cobra," said Alpdogan. "This product is the first tube multi-racer slide with increased capacity and two double tubes ending in the same sliding surface.
"King Cobra Slide is the theme itself with a stunning Cobra look. Right after the launch, we received amazing comments on web blogs in the US. This shows the US consumer’s desire for new themed slides and new riding techniques, and we succeeded in combining both in King Cobra."
A waking giant?
Despite the shaky attendance and revenue figures in 2009, the TEA/AECOM report concludes that taken together, the numbers reflect an industry that is "stable at its core" and well equipped to survive, recover and continue its expansion into new markets as the world economy recovers.
Surveying the globe, North America remains the epicentre of the amusement business with 12 of the top-25 attended parks in the world. However, shifting east, Asia continues to be the foremost emerging market and promises strong growth well into the future, with nine of the 20 top earning parks in 2009 coming from that continent.
"China and key markets in Asia have a significant development pipeline compared to anywhere else in the world," said Christian Aaen, regional director of AECOM’s Asia division. "The opening of Universal Studios Singapore in the first quarter of 2010 marked the beginning of the new decade where Asia will dominate and remain the primary region for future growth of the industry in terms of new development potential."
Regardless of Asia’s unimpeached growth, it must be kept in mind that US theme parks remain the boilerplate for installations elsewhere. Brand power is key and while many developments in Asia have their own localised idiosyncrasies, most of the successful resorts in the continent are operated by the US-headquartered behemoths and largely modelled on their western forebears.
Running parallel to this, the core demographic of parks in Japan, Hong Kong, Singapore and elsewhere are primarily consumers who live in the immediate region and not westerners looking for something new.
Rather than fret about the growth in Asia’s theme park industry effectively cannibalising their domestic operations, US site owners should instead continue to focus on innovation, an increased product mix and an emphasis on ancillary services, particularly as the "staycation" trend is becoming more apparent in the US.
Of course, the Asian powerhouse is not something to be overlooked, but the fact that the biggest parks in the continent are operated by US groups ensures a two-way flow of information and ideas. In this respect, the growth of Asia should be seen as a good thing for the global theme park industry as a whole.
Ultimately, in an ironic twist of fate, just as the US started to haul itself out of the crushing recession, New York City authorities announced sweeping plans to redevelop Coney Island’s dilapidated amusement site. And now, after luring a record 400,000 visitors this summer alone, one is left to wonder whether the US amusement industry will once again grow to match an icon as symbolic and thought-provoking as the Statue of Liberty.