The Future of Theme Parks in International Tourism
Release time: 15:19:14 2017/04/21
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:
1. They have a family appeal;
2. They contain one or more themed environments;
3. They have some form of “ambient entertainment.” That is, strolling, musicians, performers, costumed characters and the like, who performs for “free”;
4. They have a high investment level per unit of ride or show capacity;
5. They have high standards of service and maintenance and cleanliness;
6. They contain enough activities (entertainment content) to create an average visitor length of stay of typically 5 to 7 hours; and finally,
7. 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:
1) EuroDisney will expand the overall European theme park industry and focus the industry in Paris by creation of a multi-park destination attraction complex.
2) 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.
3) Disney will provide price leadership in the market. This will allow others to price up to Disney levels.
4) 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.
5) 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.
6) 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.
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:
Asterix,
The Smurf Park,
Mirapolis, and
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.
This article is from Economics Research Associates