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Sherri Cruz

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Jumping on the (Real) Roller Coaster

Sherri Cruz, Business Journalist 11/14/2011 26 comments
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While reading the latest economic forecast put out by the University of California, Los Angeles, I was struck by the dreary numbers and the prediction of even slower growth, or what UCLA economists sum up as a "stalled" economy. And then, there it was -- a sparkling tidbit of information.

Attendance at Disneyland Park and Knott's Berry Farm set records in 2010, and it appears attendance for 2011 will be even higher, according to the report. Curious, I checked the financial statements of amusement park operators across the nation, and I found the same thing -- attendance is up. That doesn't always mean more revenue or higher profits, but in recent months, theme parks have reported both. Who would've thought more people than ever were eating cotton candy, buying souvenirs, and getting cheap thrills on roller coasters? In 2010, attendance at the top 20 theme parks in North America was up nearly 2% over 2009, according to the Themed Entertainment Association. The industry is projecting higher attendance and revenue for 2011, thanks to good weather and new attractions and rides. Cedar Fair Entertainment Co. (NYSE: FUN), which operates several amusement and water parks in the US and one in Canada, had record attendance last year and is expecting 2011 to be another banner year. "The 'staycation' is real," says Stacy Frole, director of investor relations for the Sandusky, Ohio, company. Families are vacationing closer to home. "People want to get out of their house, and they're looking for entertainment at a value." For the quarter that ended Sept. 25, Cedar Fair reported a 5% increase in net revenue to $572 million, due to increases in attendance, in-park spending (food, merchandise, etc.), and out-ofpark spending, such as lodging. Many park operators own hotels. Gene Jeffers, executive director of the Themed Entertainment Association, says theme parks offer families a relatively cheap form of escape during bad economic times. "During the Depression, people went to the movies more often than they had before. Even though they didn't necessarily have a lot of money, it was a small enough amount of money to escape from the realities of the economic perils," he says. "People are still trying to give their families cool experiences and a little break from the weekday routine, the worries, and the day-to-day problems." The US has about 400 theme parks, which employ about 50,000 full-time and seasonal workers annually and contribute $57 billion to the economy, according to the International Association of Amusement Parks and Attractions. About 300 million people visit amusement parks in the US yearly, the trade group says. Amusement parks have been wooing visitors with new rides and various types of discounting and incentives. Disneyland Park and Disney's California Adventure in Anaheim, Calif., both properties of Walt Disney Co. (NYSE: DIS), don't typically discount admissions (admission tends to go up). However, "quite often they will offer really nice three-day hotel packages," Jeffers says. Building rides and attractions fuels the amusement park business. The 20-acre Wizarding World of Harry Potter, which opened in June of last year at Universal Studios Orlando, remains a huge draw, boosting sales and profits for Universal Parks & Resorts, part of NBC Universal Inc., a subsidiary of Comcast Corp. (Nasdaq: CMCSA). The amusement park business appears to be as recession-proof as an industry can get. But not every year. Many parks reported flat or lower attendance in 2008-09, along with lower sales, as people spent less at the parks. What theme parks aren't is weather-proof. They're dependent on

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people spent less at the parks. What theme parks aren't is weather-proof. They're dependent on good weather. It will be interesting to see if families across the nation continue to frequent amusement parks in 2012. The parks will do their part to lure the masses, offering many new rides and attractions. Here are a few set to open next year: Universal Studios Orlando will open a 3D attraction based on the movie Despicable Me. Six Flags parks have several new rides coming, including SkyScreamers in New Jersey and Texas. The Six Flags park near Los Angeles will get a Drop of Doom, which drops riders from 400 feet at speeds of 85 miles per hour. SeaWorld in San Diego will add a Manta roller coaster, which will travel through a marine life exhibit. Holiday World in Indiana will add the Mammoth, set to be the world's largest water coaster. Cedar Fair is spending $90 million on rides set to open in 2012, including the Stinger, a roller coaster that resembles a scorpion, at Dorney Park in Allentown, Pa.
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Re: I Left My Heart at Disneyland mInvestor 11/20/2011 10:30:27 AM

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USER RANK IRON

Thank Sherri for this great research article. And Thank you, StreetSmart to add on these great comments. You are quite right about " It sets the bar high for good behavior and it gets it from its patrons". That is my family's feeling as well. I'd really happy that these themes parks, especially Disney's, provides people some cheap and easy way to have a happy time during this downturn time, also keep their integrity on their behaviours.

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Re: Theme Parks philtheinvestor 11/19/2011 12:02:48 PM

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The recession put more stress on everyone's life. No wonder entertainment is the only real way/outlet to escape the big worries. These theme parks are actually working well enough to put a big happy face on most visitors.

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Re: Theme Parks Bargain Bin 11/18/2011 4:28:02 PM

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InvestUprising So What if the Internet Goes Dark? http://t.co/1HbPzXWd

Are there any numbers on water park revenue? I'm curious to see how much is made in the short time they're able to operate.
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Theme Parks impactnow 11/17/2011 10:59:21 AM

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The theme parks are also offering a lot of incentives these days in my area there were coupons everywhere in the Summerso many went often or bought season tickets for great prices. Childhood is fleeting and most parents cant resist the thrill their kids get from a theme park visit. If they continue to offer incentives and the economy continues to chug your local theme park will reap the rewards of a day away that felt like you went away!
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Re: I Left My Heart at Disneyland AskAsa 11/17/2011 8:32:28 AM Scary, perhaps, but what a great story it would be.

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Re: I Left My Heart at Disneyland Noreen Seebacher 11/17/2011 7:29:37 AM
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You've whet my appetite to go--though it would be pretty scary to bump into Rod Serling now!
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I Left My Heart at Disneyland Street Smart 11/16/2011 5:14:22 PM

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@Broadway, I'll be happy to try to get this market research ball rolling as best I can!
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First, some background: I grew up in Los Angeles; went to the park the first time in 1956 when I was four. During my childhood and adolescence the park was just exotic enough to be special each and every time I went and just accessible enough to be no super big deal if that makes any sense. I went for birthday parties, Girl Scout outings, family trips, high school Grad Nights--you name it! My family still laughs about the time I grabbed hold of the wrong man's camera strap and walked away with him through Tomorrowland, all the funnier or more eerie because that man turned out to be ROD SERLING! I've stayed at the Disneyland Hotel and my husband has been to the top of the Matterhorn (where they have a basketball hoop inside for the mountain climbers to use during their time between shows.) Years later when I returned to LA as a parent, it was my joy to repeat the entire experience with my two boys. By then the park had done away with the A, B, C, D, E ticket pricing of my youth and gone to one price admission and season passes so we went as often as possible. So...not to bore you but I think it distills to this: The park is clean; the attention to detail is fanatical; there is something for everyone; there are both nostalgia and new attractions, and I've never had a bad or disappointing trip. Disneyland also manages to bring out the best in its guests. It sets the bar high for good behavior and it gets it from its patrons. I've never seen scuzzy people there, which is quite a statement to make! It's also never the same trip twice-always a new character, a new experience. It makes me feel like a kid again, and at MY age, that's no small feeling! Comments from others?
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Re: Simple pleasures PAW 11/16/2011 2:40:52 PM

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I agree. A visit to ones favorite theme park, no matter how expensive, leads to childhood memories of visiting the park which can be very comforting in these times.
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Re: Local Fun Broadway 11/16/2011 2:34:04 PM

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StreetSmart, let's do some marketing research for Disney for free here on IU ... can you please explain what brings you back to Disneyland 300+ times? I think then we can get better at why amusement parks still succeed in down times.
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Re: Local Fun Noreen Seebacher 11/16/2011 1:10:09 PM I think I'd go more if I had the time. I miss cotton candy,
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