Industry Profiles: Amusement Parks

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Industry Profiles: Amusement Parks

Overview

After stagnant years in the early 1990s because of the country's recession, the amusement park industry entered a period of renewed growth that began in the mid-1990s and continued into the early 2000s. During this period, amusement park attendance continued to rise along with amusement park revenues. Furthermore, amusement park operators took advantage of this renaissance to upgrade their parks, adding new rides and amenities and opening up new parks. In 2001 a record 319 million people visited major U.S. theme parks, and industry revenues were approximately $9.6 billion, according to conservative estimates from the International Association of Amusement Parks and Attractions (IAAPA). That year, industry leader Walt Disney Parks & Resorts posted revenues of $7 billion.

Since the U.S. market already contained a high number of amusement parks, U.S. amusement park operators such as Disney and Six Flags began to expand globally, setting up new parks in Europe and Asia. In the late 1990s, Asia became the hottest market for new amusement parks, especially in China. Nonetheless, several new U.S. amusement parks opened up in the late 1990s including Disney's Animal Kingdom and Universal Studio's Islands of Adventure, both in Orlando, Florida. The industry also continued to unveil new attractions within parks to lure visitors. In North America, 14 new roller coasters were expected to debut in 2002. This number was much greater in Europe, where 22 new rides were to open that year.

On September 11, 2001, terrorist attacks against the United States raised concerns about the safety of air travel. Along with an economy that was already slowing down, the attacks added to lower levels of consumer confidence. Consequently, the amusement park industry saw a reduction in business in the last quarter of 2001. This was especially true of amusement parks like Disney because most of these parks' visitors travel by air from afar. The impact was not expected to be as bad on regional parks, such as those operated by Six Flags, because visitors can reach these parks by driving shorter distances.

History of the Industry

According to The Great American Amusement Parks, the earliest amusement parks were the European pleasure gardens of the seventeenth and eighteenth centuries. But only with the technological advances of the industrial revolution did the mechanical rides of the modern amusement park come into being. In this area of development, American parks led the way.

Jones's Wood in New York City, established in the early nineteenth century, was probably the first major U.S. amusement park. But its humble attractions—including billiards, bowling, and donkey rides—were soon eclipsed by Coney Island. This legendary resort first began to expand dramatically in the 1870s, when a railway line to it was constructed. In 1920 the extension of the New York subway system to Coney Island put city residents a nickel away from the resort's attractions. Indeed, before the advent of the automobile, ease of travel played a crucial role.

Mechanized rides of the kind taken for granted in modern amusement parks reached Coney Island in 1884, with the advent of LaMarcus Adna Thompson's Switch-back Railway, the first roller coaster. From their inception, roller coasters proved to be the most popular attractions at these parks, as well as the largest and most expensive to build and maintain.

The first ferris wheel made its appearance at the 1893 Chicago World's Fair Colombian Exposition. It was named for George Ferris, not because he invented the concept, but because his engineering talents produced the first such ride made of steel rather than wood and built on a huge scale. Coney Island and the many other amusement parks that sprang into being in response to its success faced hazards from fire and water. Rainy weather discouraged attendance because most of the attractions were outdoors. Initial reliance for construction on such cheap but highly flammable materials as lath and staff, a combination of plaster of Paris and hemp fiber, meant that fires were frequent and caused great damage.

Other problems such as noise, dirt, and criminality often found in the early amusement parks became more apparent as larger numbers of middle- and upper-class Americans owning cars gained the freedom to seek their entertainment elsewhere. The formation of the International Association of Amusement Parks and Attractions (IAAPA) in 1920 was motivated in part by the industry's concern over its reputation. Individual parks, such as Cincinnati's Coney Island and Rye, New York's, Play-land, also sought to create a more family-oriented image by making sure that structural damage, litter, and graffiti were swiftly removed from sight.

Disney was, however, the most significant creator of family amusement in its innovative theme parks. The first of these, Disneyland, opened its doors in 1955. An instant success, the park initially proved hard to imitate; but Six Flags Over Texas, opened in 1961, found a winning formula, leading to the construction of additional Six Flags complexes. Other Disney competitors also began to find new angles on the theme park concept.

Significant Events Affecting the Industry

The industry's largest merger took place in 1998 when Premier Parks bought second-ranked Six Flags for $1.9 billion. Time Warner and an investment group led by Boston Ventures previously owned Six Flags, which had benefited from the relationship with Time Warner by creating Warner Bros. themes for its parks. As part of the acquisition agreement, Premier gained the exclusive long-term licensing rights to Warner Bros.' cartoons and characters as well as to DC Comics' comic book characters at its North American theme parks. Premier announced it would not only keep the Six Flags name and licensed characters at many of the chain's existing parks, but also change the names of the existing Premier Parks to "Six Flags." The move launched Premier to the top of the industry, becoming the world's largest regional theme park with attendance of roughly 50 million. In 2000 Premier Parks changed its corporate name to Six Flags Inc.

Key Competitors

Disney properties leads the present-day amusement park industry. In the United States, Disney World's Magic Kingdom, Epcot Center, and Disney-MGM Studios Theme Park, located in Lake Buena Vista, Florida, controlled a sizeable share of the market. However, the company's reach extends overseas as well. According to the International Association of Amusement Parks and Attractions, Disney operated 7 of the world's 10 most visited parks in 2001. Leading the list was Tokyo Disneyland, with 17.7 million visitors. Although Disney World's Magic Kingdom and Disneyland (both located in the United States) ranked second and third, Disneyland Paris came in fourth with 12.2 million visitors. Overall, Disney's amusement parks posted sales of $7.0 billion in 2001. In 1998 Disney added to its amusement park empire by opening the $1-billion Animal Kingdom in Orlando, Florida. In 2002 the company was moving forward with plans to open Hong Kong Disneyland by 2005.

Formerly known as Premier Parks, Six Flags Inc. ranked second in the industry in 2002 by using Warner movie tie-ins to boost attendance. That, and the fact that 98 percent of all Americans were able to drive to one of the company's parks, gave Six Flags a 20-percent attendance increase in the mid-1990s. Annual attendance levels at the company's 38 parks totaled approximately 50 million in 2001. Most of Six Flags' parks (29) are located in North America, while eight are located Europe, and one is located in Mexico. In 2001 the company reported sales of $1 billion, and a loss of $58 million.

By 2002 the amusement parks of Universal Studios Inc. had grown beyond Orlando, Florida, and Hollywood, California, to include international locations. Among these was Universal Studios Japan, which ranked among the world's 10 most visited parks with 9 million visitors in 2001. The company also operated Port Aventura in Barcelona, Spain, and the Universal Experience in Beijing, China. Busch Entertainment Corporation, a subsidiary of beverage giant Anheuser-Busch, is one of the leading U.S. operators of adventure parks. The company's nine parks, including SeaWorld Orlando, have more environmentally oriented themes.

Industry Projections

With the exception of 1994 when poor summer weather had a negative impact, the amusement park industry has achieved relatively steady increases in attendance since 1990. According to the International Association of Amusement Parks and Attractions (IAAPA), in the early 2000s attendance levels increased slightly from 317 million visitors in 2000 to 319 million in 2001. At the same time, revenues increased steadily between 1990 and 2000 and then remained flat in 2001 at $9.6 billion. In addition to weather, economic conditions and the availability of disposable income also are key factors affecting the industry. The weakening economy and terrorist acts of the early 2000s were a setback for amusement parks in 2001. According to some industry analysts, conditions were expected to improve sometime in 2002.

The IAAPA indicated that, in the early 2000s, several categories of attractions were especially popular at amusement parks. These included attractions that allowed visitors to become more involved in entertainment experiences by incorporating new sensory elements such as touch and smell. Thematic attractions based on popular movies and comic book characters, as well as an increasingly advanced offering of roller coasters, also remained popular. Finally, amusement parks were relying on new reservation systems that reduced the amount of time visitors had to spend waiting in lines to go on rides, as well as technology that allowed parents to remotely locate their children within parks.

Global Presence

In the early 2000s, the United States represented more than half of the industry's global revenues. As the U.S. market filled, amusement and theme park operators began tapping markets such as Europe and Asia. In Asia, according to The Economist, more free time and increased income was spurring a leisure revolution. Shopping malls have become theme parks, with more than 40 opened in China alone during the 1990s. Unlike their American counterparts, amusement parks in Asia often tend toward a cultural, historical, or environmental theme. Bangkok, Singapore, and Kuala Lumpur all would like to become hubs of tourism, and theme parks have figured into that future. In the early 2000s, Latin America represented the smallest market within the amusement park industry according to the IAAPA. However, as the fastest-growing market, it had considerable potential. Based on information from the IAAPA, of the 10 most visited parks in 2001 five were located in the United States, four were located in Asia, and one was located in Europe.

Employment in the Industry

The amusement park industry employs mostly high school and college students and senior citizens as seasonal workers. Pay at amusement parks usually starts at minimum wage, and returning workers receive an extra $0.75 to $1.00 per hour depending on the number of years with the company. In addition, some amusement parks offer bonuses and other incentives to reduce employee turnover. These incentives include bonuses for working on the busiest days of the year.

Besides the standard jobs related to the day-to-day operation of amusement parks such as ticket and concessions sales, maintenance, security, and ride operation, amusement parks also offer positions for actors. In fact, major celebrities, such as Steve Martin and Teri Garr, herald from amusement park theater positions. Many amusement parks provide scheduled performances, giving actors, dancers, and singers an opportunity to practice their art and job security relative to other fields in the entertainment industry.