2016 Industry Expectations

Dear Mr. Theme Park,

By all accounts, 2015 was a banner year in our industry!  As most parks are now gearing up for opening day 2016 or may have just opened, what are your thoughts on how this year will compare to last year?  Are there certain things you feel must happen for the season to be on par or exceed last year?  Just wondering about your expectations?

- Phil


Dear Phil,

Indeed, 2016 is shaping up to be a good year for the theme park and leisure industry.  When you review the statistics for 2015, the “Big 5” all showed improvement over 2014, which in itself was also a good year.  And, we seem to be on a roll!

As we well know, there are certain aspects of our industry that can have different impacts on our business.  Some we manage, and some are out of our control.  A few of these are as follows.

First, oil prices.   Gasoline and jet fuel can affect visitation patterns at both regional and destination parks.  We saw this in 2007.  Oil prices reached $4.00 at the gas pumps for the first time in our history.  People did not start traveling until approximately July 12th of that season.  This was a very late start, which had negative impact on the total season when oil prices receded.  We rebounded somewhat, but not enough to turn the 2007 season around.  Gas prices in 2015 and now in 2016 have been much lower, giving consumers more discretionary spending potential.  This has been, and should continue to be, positive for the industry.

Second, weather.  Weather is a component of our business that most parks factor into their annual projections.  We have seen through the years that it can be too wet or too hot, and extended periods of either can shift a market’s visitation pattern.  In actuality, weather ebbs and flows in a way that typically works out in such as manner that it does not have huge impacts.  However, it can affect the annual season’s outcome.  Reports are that the 2016 summer is forecasting to have good or  above average weather for most of the U.S.

Third, pricing.  Pricing plays a huge role on a park’s bottom line.  Proper pricing a park is highly challenging and must be done correctly.  Today, the concept of “dynamic pricing” is making its way into our industry and I believe it will soon be the norm.  For 2016 and the coming years, it is imperative that parks properly implement pricing strategies that utilize innovations in dynamic pricing to help maximize revenues.

And, finally, the single biggest factor that impacts our industry in a most positive way is capital expenditures.  Cap-X drives visitors.  If you look at the last six years, particularly Universal Studios, you can see how significant the correct Cap-X spend can impact a park’s front gate and coffers.  Harry Potter of course!!   So, 2016’s expected Cap-X spend is looking good, considering the early positive response to the new VR technologies being introduced.

Phil, I believe we are in the middle to end of a huge growth curve in our industry.  That is not to say that we are not going to see any future growth.  Based on all of the capital being spent, we certainly will see growth in the next few years. However, we do cycle attendance and, as we reach the end of the current decade, I believe we will see some pull-back for the industry in general.

To fully answer your question, continued Cap-X in correct proportions, along with further introduction and evolvement of dynamic pricing, will help move the “growth checker” forward.  People want new experiences and are always looking for bargains.  All items referenced above properly charted can and will help our industry to grow.  Expectations for 2016 are very good.