'Experience Economy' Boosts Theme Park Spending To A Record $45 Billion
Worldwide spending on theme parks surged by 5% to a record $44.8 billion last year driven by the increasing importance to consumers of posting photos on social media from fairytale locations.
Known as the experience economy, this trend is particularly common with millennials. Their magic touch on the theme park industry is revealed in the 2018 Global Theme and Amusement Park Outlook report from the International Association of Amusement Parks and Attractions (IAAPA).
According to the report, "an emerging trend is the growing preference among consumers to spend on experiences rather than products. This is evident in the cinema and live music markets, where people are willing to spend more for out-of-home experiences...This same trend is believed to also be contributing to ongoing growth for theme parks, which market their unique experiences."
It is reflected in the results of a Harris Poll survey conducted on behalf of ticket agency Eventbrite in 2014. It showed that 78% of millennials would choose to spend money on a desirable experience or event over buying something desirable whilst 72% said they wanted to increase their spending on experiences rather than physical things.
It is a spell which has been cast by social media. The survey showed that 60% of millennials had shared their events and experiences on social media in the previous year compared to just 34% of the 45 to 54 age bracket. Crucially, 69% of millennials said they experienced fear of missing out by seeing photos and posts of what their friends had been experiencing. It has given a glow to the theme park industry as, unlike cinema and live music, there is no in-home equivalent to a theme park.
It helped to propel worldwide theme park attendance to a record 1.1 billion in 2017, an increase of 31.4 million on the previous year. That trend is set to continue as the IAAPA report forecasts 3.8% of compound annual growth in attendance between 2017 and 2022 giving a total of 1.3 billion theme park visitors in the final year of the period.
Spending is set to surge even more as prices rise and new parks open. According to the report, this will grow by 6.5% annually over the next four years to hit $60.5 billion in 2022. It follows a $2.1 billion increase last year with the fastest-growing market being the Middle East and North Africa.
Spending there soared a staggering 80.2% last year but started from a small base so only hit $182 million. Likewise, although attendance rose 71.9% it came to a total of just 5.5 million. It was driven by the opening of a string of new parks in 2016. First up was the indoor IMG Worlds of Adventure which features lands based on Marvel and Cartoon Network characters. This was followed by the Dubai Parks and Resorts (DPR) group of the movie-themed Motiongate, Bollywood Parks Dubai, Legoland Dubai and its neighboring water park.
Last year was the first full year of operation for all of the parks with DPR attracting nearly 2.3 million visitors alone which made it the principal driver of overall growth in the MENA region according to the report. That's just the start.
Earlier this year the doors swung open to the $1 billion Warner Bros. World Abu Dhabi, the biggest-ever indoor theme park. In 2022 it will be joined by the first SeaWorld outside the United States with two Six Flags parks due to open over the next few years in Saudi Arabia and Dubai.
Theme park spending in the MENA region is expected to nearly triple over the next five years, rising at a 24.3% compound annual growth rate to $541 million in 2022. Attendance is due to follow suit and hit 12.7 million in the next four years.
At the other end of the spectrum, attendance at North American parks hit 399.7 million last year which was second only to Asia Pacific. However, it only grew by 0.7% compared to 2.3% the previous year. The increase in spending was also down and fell 1.1 percentage points to 3.8% giving it a total of $22.9 billion.
The report explains that "extreme weather in some areas hurt regional parks in 2017. A rebound is expected beginning in 2018, as attendance is on the rise and new attractions are being introduced."
As we have reported, the deluge has already begun with the recent opening of Infinity Falls, a cutting-edge raft ride at SeaWorld in Orlando. Next year Star Wars lands will make their début at the Disney resorts on both coasts whilst Universal Orlando will add another attraction based on the wildly successful Harry Potter series. It has a spellbinding effect.
Universal's Hollywood outpost opened a land themed to the boy wizard in April 2016 and the report says that it "produced record attendance at that park." Over in Orlando, an alien-looking land based on the sci-fi Avatar movie opened at Disney's Animal Kingdom last year and the report adds that "both parks recorded double-digit increases in 2017 and drove the increase in overall attendance." It is set to hit 448 million in 2022 with spending rising 29.3% to $29.7 billion. It will outstrip the $21.5 billion forecast for the Asia Pacific region then but the Far East has the edge when it comes to attendance.
Asia Pacific benefits from huge population masses and a surfeit of top-spec parks. As a result, its attendance last year came to 465.3 million which is already higher than the total forecast for the US in 2022. By then, 601.2 million people are expected to stream through the turnstiles of parks in the Asia Pacific region driven by yet more new openings including Universal Studios Beijing, which is expected to be the world's biggest theme park development.
According the report, "Universal Parks and Resorts is increasing its investment in Universal Studios Beijing from $3.3 billion to $6.5 billion. The park, expected to open in 2021, will feature a 'Harry Potter' attraction, a 'Fast & Furious Supercharged' attraction, a hotel, as well as retail space and a shopping and entertainment area. Six Flags has plans for three parks in the Nanjing area - the first opening in 2021 - and is planning a total of 11 parks in China in the coming years." It doesn't stop there.
"As part of a multi-year expansion, Hong Kong Disneyland Resort will add new themed areas, immersing guests in the worlds of 'Frozen' and Marvel, and recently debuted a new 'Moana' stage show. Oriental Land Company, the operator of the Tokyo Disney Resort, is more than doubling its planned expansion budget with a $2.2 billion project to expand Tokyo DisneySea, adding a new hotel and new themed port featuring 'Peter Pan,' 'Tangled' and 'Frozen.' The project is expected to be completed in 2022."
Disney is also waving its magic wand over its resort in Paris and announced in February that it will invest $2.3 billion (€2 billion) in one of its biggest-ever expansion projects. It will see the addition of lands inspired by Star Wars, Marvel Comics and Frozen launched in phases from 2021.
IAAPA says this will help to drive a 12% increase in attendance at European theme parks between 2017 and 2022 when it is expected to hit 192 million. It rose 4.6% last year to 171.5 million with total spending surging 6.4% to $6.6 billion. They were the biggest gains of the previous five years which had been depressed by the dark clouds of terrorism and a slowing economy. The report says that "faster economic growth and new attractions in 2017 contributed to a rebound in attendance and a jump in spending."
As the home of Disneyland Paris, it's perhaps no surprise that the France made the one of the greatest gains of any European country in 2017 with theme park spending increasing 12.6% to $1.4 billion. The other big winner was Spain. Although total spending in the country came to less than France, at $515 million, it was a 15.7% increase on the previous year. The growth was partly fuelled by the opening of a new land at the PortAventura World park. It features Europe's fastest roller coaster and is themed to the luxury auto maker Ferrari. Photo opportunities for social media don't come much more high-octane than that.
Source - https://www.forbes.com/sites/csylt/2018/11/04/experience-economy-boosts-theme-park-spending-to-a-record-45-billion/#638f766f29e4
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