Theme parks are facing another roller coaster ride as it finally re-emerges after the COVID-19 shutdown – and it's not the kind of ride the industry wanted to take.
As a Disneyland Resort, Friday was an important milestone for the theme park business
eventually reopened its doors to the public after being closed for over a year as a result of the global pandemic. Before the pandemic, Disneyland was the most visited theme park in the world after Magic Kingdom Park in Walt Disney World in Florida.
As at Disney's Florida theme parks, California attractions lagged nearby competitors, including Universal Studios Hollywood
Knott's berry farm
and Six Flags Magic Mountain
at the reopening.
Fans have been eagerly awaiting the return of the theme parks. Reservations to visit Disneyland Resort sold out on the first day they opened to the public. Would-be visitors waited in online queues for hours to secure their seats.
Reservations to visit Disneyland Resort sold out the first day they were open to the public.
But even if people run back to ride roundabouts and eat turkey legs, the industry faces a bumpy road to recovery.
"2020 was the toughest year ever for theme park operators," said Carissa Baker, assistant professor at the University of Central Florida’s Rosen College of Hospitality Management.
Reopening theme parks was no easy feat. In Europe and Asia, amusement parks have been allowed to greet visitors at certain points only to see rising COVID-19 cases have to close the venues again.
"Even in places like Florida where the parks haven't closed again, they are missing the attendance and revenue they would have had in years past, and they have had to cancel several high-revenue seasonal events," Baker said.
Here's what you need to know about the industry's comeback:
Financial challenges remain – but discounts could follow
While all theme parks saw fewer visitors and fewer profits due to the pandemic, the impact varies greatly from company to company. And larger operators probably had it easier than smaller theme parks.
"If you have a conglomerate like Disney or Universal, thankfully they have plenty of legs to stand on in this situation," said John Gerner, managing director of industry consultancy Leisure Business Advisors. Disney is a prime example: although the theme park business has seen a huge drop in sales, the pandemic has helped boost subscriptions to the Disney + streaming service.
At the same time, the most popular theme parks such as Walt Disney World or Universal Studios Orlando are heavily dependent on tourists. Now that vaccinations are rolling out across the country, Americans are ready to get back on planes to Florida and California. However, this was not the case for a long time, which had a detrimental effect on these attractions.
“The visitation returns to local and regional parks first. When visitors wanted to return to parks, they opted for closer deals. "
"I can imagine that some would predict that more regional operators like Six Flags or Cedar Fair would be in a worse position because their portfolios are less diverse than those of giants like Disney and Comcast," said Baker. "They are in a good position, however, as we have seen that visitors return to the local and regional parks first. When visitors wanted to return to parks, they opted for closer deals."
At the same time, many local and regional parks run a seasonal business and welcome visitors in the spring and summer before they close as the weather turns colder in the fall and winter. Some of these theme parks were unable to resume full operation at all last year due to restrictions imposed by their state governments.
Many regional parks run seasonal business and welcome visitors in the spring and summer before relaxing in the winter.
There is evidence that these parks may see demand well beyond their limited capacities. However, the attraction industry has warned that meeting this demand could prove difficult.
"We are struggling to fill our parks when we reopen due to many factors causing a shortage of manpower," said Mike Spanos, CEO and President of Six Flags, during the company's quarterly earnings statement this week.
Factors hindering Six Flags' ability to expand its workforce include the unusual school schedules caused by COVID-19 and immigration restrictions on foreign workers.
Factors hindering Six Flags' ability to expand its workforce include unusual school schedules and immigration restrictions.
Demand may seem high given the reduced capacity, but if parks are allowed to reopen to full capacity, it's not clear if massive crowds will follow. And if the past sets a precedent, it could lead to big discounts.
Popular promotions like the free dining offer at Walt Disney World came amid other declines in park attendance, including following the September 11th terrorist attacks and the Great Recession.
The post-COVID era may not be much different.
"We're going to see unprecedented discounts in our industry over the next two years just to draw back the people we've lost," said Dennis Speigel, CEO and founder of International Theme Park Services, an industry consultancy.
Special security measures are not canceled
With the parks reopening, the experience has changed significantly to keep visitors safe as long as COVID remains a threat. To begin with, capacities are limited by most state governments, and theme parks have generally reopened with an even smaller capacity to start out of an abundance of caution. Most of the time, masks are required in theme parks, and guests are usually required to undergo a temperature control before entering.
The pandemic has changed the theme park experience in other notable ways. In Disney parks, plexiglass partitions have been installed in the queues for rides and even for vehicles themselves to reduce airflow among guests. Character meet-and-greets will be suspended during the pandemic, although visitors can see Mickey and Minnie from a distance.
Most of the time, masks are required in theme parks, and guests are usually required to undergo a temperature control before entering.
Certain attractions, including parades and fireworks shows, are also unavailable due to concerns about the crowd that forms to view them.
How long these restrictions will persist is an open question. "Will there be some overlap by the time we know we have reached herd immunity? Sure it will," said Bob Chapek, Disney CEO, on a recent investor call asking about pandemic-related security measures do we also believe that by 2022 we will find ourselves in the same state of social distancing and wearing masks? "Absolutely not."
Ultimately, the rules will be left to state and local lawmakers. This week, the mayor of Orange County, Florida, where several theme parks are located, said the county's mask mandate would gradually be relaxed as more people were vaccinated. The rules were already relaxed at Walt Disney World so that guests can briefly remove their face coverings when they pose for a photo.
New rides and attractions could be delayed
Theme parks rely heavily on new rides to attract visitors, industry experts say.
"Our industry thrives on repeat visits, and repeat visits are driven by expansion," said Speigel. "Always presenting new products and ideas – people love that."
COVID has not only had a positive impact on visitor numbers and income, but also on the grand plans of many theme parks. The pandemic caused the biggest slowdown in investment and expansion spending in 40 years, Speigel said. For example, Disney executives revised down their outlook on capital spending earlier this year due to the COVID-related closings.
Many theme parks have been forced to forego new feature development to service their debts. In contrast to other industries, the federal government did not specifically relieve the theme park business. Due to the closure of the pandemic, many theme park operators have borrowed to keep operations alive.
Some theme parks have gone a step further. Enchanted Forest, a family-run Oregon theme park, turned to GoFundMe to make up for some of its losses. To date, the theme park has raised over $ 450,000 through the crowdfunding platform.
"That was just a tremendous help in getting the season started because that's money that doesn't have to be paid back," said Susan Vaslev, co-manager of Enchanted Forest.
However, Enchanted Forest also had to borrow through the Paycheck Protection Program. The park was slated to reopen in March, but an ice storm in February caused significant damage that delayed its reopening even further.
Meanwhile, Oregon has reintroduced many COVID-related restrictions as the caseload has risen, meaning the park's revenues will be significantly limited, even if operations resume.
Usually when they park they take out a loan "to build a big ride or build something new," Vaslev said. "And then we would have this source of income to repay that loan."
Enchanted Forest, a small Oregon theme park, raised over $ 450,000 on GoFundMe during the pandemic.
With the COVID loans, the money just keeps the business going. "Not doing maintenance or paying for your insurance is not an option," said Vaslev.
Once the park is out of the pandemic, the first priority is to replace its sewer system before adding any additional rides or attractions. As a result, it will be a long time before visitors to the magic forest experience something new.
That's not to say that amusement parks have completely stopped introducing new themed areas, rides, and attractions. In some cases, the opening of new rides, which were about to close at the start of the pandemic, have been postponed to this year to allow more guests to attend.
When Universal Studios Hollywood reopened this month, guests were able to enjoy new rides based on the Secret Life of Pets and Jurassic World film franchises. And Disney California Adventure is opening a new section this summer based on characters from the Marvel Cinematic Universe.
And some of those expansion plans are even bigger than a new trip or two. Universal Studios Orlando has resumed work on a third theme park, while Disney announced plans to expand its parks in California as part of a proposal to the City of Anaheim.
"The pandemic caused a delay, but many projects will resume at some point and theme park construction in emerging markets will continue," Baker said, citing Universal Studios' theme park opening in Beijing, China, earlier this year.
Some theme parks may not survive
Ultimately, this summer will become an emergency for many of these attractions across the country. The Enchanted Forest remains optimistic about their ability to survive the pandemic, Vaslev said, but if they have another slow summer due to COVID it will be difficult to do.
"I don't know how many companies can go two years without generating the funds they need," she said.
Even if a theme park manages to reopen this year, its survival is not guaranteed. COVID restrictions will continue to affect the bottom line of these companies as long as they persist.
"I don't know how many companies can work for two years without generating the funds they need."
"Theme parks are designed for density," said Gerner. Operating a ride like Peter Pan's flight at Walt Disney World costs essentially the same amount, regardless of whether the park is 35% or 100% full.
Theme parks can downsize certain elements of their operations – many have less entertainment or limited restaurants open – but many costs are inevitable.
Parks also rely on people looking for ways to spend their time, such as For example, go to a gift shop to escape the heat, or grab a bite to eat before waiting in line. With less crowds, visitors can do more, but that could mean they are actually spending less money.
Nevertheless, the industry remains optimistic about its future prospects. "Theme parks are a compelling form of entertainment," said Baker. "Guests really enjoy the theme park experiences and are more likely to want them once the health and financial barriers are removed."