Earlier, Deeper, Longer

As we prepare to launch the 2009 amusement/theme park season, several thoughts come to mind. I believe we should immediately reflect on the 2008 season and take pages from that playbook.

As much as we all dislike over-discounting our admissions at the front gate, it is a necessary evil that we have all come to utilize and depend upon. Had it not been for heavy discounting in 2008, the season would have been a huge financial disappointment. However, many of the regional theme parks got out in front of the year by discounting EARLIER in the season with DEEPER discounts and kept them in the marketplace LONGER. This early, deep, longer approach allowed for massive “consumer traction” once gasoline prices began to decline.

In preparation for the 2009 season, all operations should reflect on the impacting issues that beset the industry last year and factor those into this season’s pricing, marketing, and operations programs. At this time last year, the economy was beginning to show strong signs of downturn. This time last year, we were nowhere near the dire economic straits that we are in today. Unemployment was at 5.2%, the banking collapse had not yet begun and certainly not the enormous bailouts. Consumer confidence was suffering but had not reached the 25 year level we are now seeing projected. Oil was high. It was ranging $88-101 per barrel (twice the current cost of oil) and it actually continued rising to over $147 per barrel until July 11, 2008 when the barrel price began to decline.

Realizing early last year that we were going to be faced with a difficult season, parks began implementing cost-cutting and discounting procedures from the outset of the season.

Even without today’s dire economic problems, we learned very early last season that high gasoline prices play a major role and have a major negative impact on themed attraction attendance. As gas prices increase, people stop moving. Fortunately, at season mid-point 2008, four things occurred that had positive impact on the season:

  1. Gasoline prices began dropping during the peak period of the season;

  2. Pent up demand drove people to use the many discounts that were floating in the marketplace;

  3. Good weather prevailed during this important part of the season; and

  4. The season ended with strong Halloween promotional events which were extremely well attended.

All of these factors saved the season.

As a matter of reference and due to the above, during the period July 15 through August 24, many parks regained significant attendance losses that had occurred in the early part of the season. Some regional parks recaptured as many as 200,000 people during this three to four week period. The term “stay-cation” truly came to pass. People stayed closer to home and travelled once gasoline began to drop.

As we enter the 2009 season experiencing the worst economic downturn in 25 years, one has to wonder what the season will bring. Assume oil remains at current pricing levels (Memorial Day to Labor Day), that the weather patterns are similar to last year (good) (Memorial Day to Labor Day), and that parks once again float discounts EARLIER, DEEPER and LONGER, it is fair to say that we will hopefully have a decent turnout as we did in 2008 for the regional parks.

Destination parks, we believe, will be hit much harder particularly being impacted by foreign travel and the decrease in foreign currency to the dollar. We also believe that, due to the severe domestic economic downturn, families will be less inclined to make commitments to spend major sums of money on vacations particularly in Florida and southern California. We have seen it already manifest itself as announced this week by Disney who indicated that bookings across the board were down.

At ITPS, we are preparing a major geographical industry attendance analysis based on many impacting factors. Suffice to say that the ITPS 2008 projections for attendance and revenues for our industry fell within 2% of actual results.

On a brighter note, movies (another form of escapism which seems to do very well in times of economic difficulty) are currently experiencing a strong turnout by the American public. They are promoting and discounting. It’s working. Numbers are up dramatically for 2009.

If we lay the proper groundwork capitalizing on what we learned from the 2008 season, 2009 may turn out to be a manageable season. Remember that over 340 million people visited leisure attractions last year. An amazing number when put into context that our industry outdrew all combined professional paid sporting events.

Recession proof, NO. Recession resilient, YES! Take a look at last year….EARLIER, DEEPER and LONGER paid off.

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Dennis Speigel, President -International Theme Park Services, Inc.