In our current economy we all need a break at some point, and a popular choice for many are amusement parks. But despite our need to have fun and get away from the stress, the economy and recession is having an impact on amusement parks as well. While we take our vacation, we (sometimes inadvertently) often alter our spending in the parks to save money, and this is a major problem that parks are trying to tackle. Some parks are having a visibly rough time, while others are taking it in stride, not seeming to have missed a beat. Let's take a look at Six Flags, Cedar Fair, and Disney to see how they are handling the recession and the different spending habits of consumers.
Six Flags, once the giant of the amusement industry with more than 20 parks, is now about $2 billion dollars in debt. While the debt situation is actually the result of massive expansion and spending in the late 90s and early 2000s, it has a large bearing on how the company is currently operating. The entire chain has seen a change in operating philosophy and how capital improvements are made, and in large part in an effort to tackle the huge debt load. While parks still receive a new thrill ride every now and then (like Terminator at Six Flags Magic Mountain this year), spending has been and will be largely focused on families instead of thrill seeking teens and young adults. The family market is generally seen as the most profitable audience, as young kids like to play games, eat lots of sugary snacks, and get souvenirs. This rather stark change of focus has seemed to been effective so far, and I expect it to continue to be effective.
While Six Flags has really concentrated on families, they have also been pushing their value proposition, which has generally always been viewed rather favorably. You can buy a season pass for about the same price as two single day tickets at the parks, and that season pass will get you into all of the Six Flags parks across the U.S. At that low of a price, you don't even need to travel to get the lowest value out of your pass if you just visit your closest park two or three times. This is a very popular choice for a lot of people, with Six Flags parks close to most every major metro area across the country. However, don't let the low price of a season pass fool you. You will still find prices for food and merchandise to be high inside the parks, as well as a rather steep parking price of $15!
At Cedar Fair parks around the U.S. things are a little different. While they are also under about $2 billion dollars of debt from purchasing the former Paramount parks in 2006, things are going along business as usual for the most part. Season passes that are good at all parks are still considerably higher than Six Flags, at $150. Gate prices at the flagship park, Cedar Point, are still around $40. The difference here is that for someone just visiting for the day, there are a lot of ways you can save at the gate and inside the park on food and merchandise. At Cedar Point specifically they have done several different promotions for discounted tickets, with the lowest price being $25 for a regular single day ticket. If you are doing the math, that is an almost 50% discount off the regular price! Unfortunately that promotion was extremely short, and your discount tickets at local Meijer stores and other places will be about $32, still almost $10 off the regular price. But just like at Six Flags, expect to pay more than normal for food and merchandise.
In Orlando, things have been humming along with most of the magic still there for guests at the Walt Disney World. In fact, for those visiting this year, there seems to be a lot of Disney magic for their wallets and purses. With promotions like a free visit on your birthday, stay four nights, get three free and other big discounts on their hotels and dining plans it is no wonder that their resorts have been consistently booked and the parks busier than usual sometimes. However, that does not mean that everything is looking up at Disney. In April there was a large round of layoffs that found a lot of middle level management without jobs, and other previously open positions indefinitely empty. In addition to these layoffs, getting people into the parks and the hotels at such a deep discount means that they really need to make that up inside the parks on food and drinks. But it isn't just Disney that is having to make up their deep discounts in the park, its Six Flags and Cedar Fair as well. This is where the recession and people's new spending habits are having the most impact.
Like was already mentioned, getting people into the park is great...as long as they are spending money once they are inside the gates. Unlike what a lot of people tend to think, parks are not actually making much of a profit (if any at all) on the ticket sales, the majority of profit is made on food, drink, and merchandise sales. However, new consumer spending habits mean that cutbacks happen wherever possible, and that is why there are so many discounts on tickets and hotel rooms. So how is it that the parks get their guests to spend just as much as they normally would or more in the park in these rough economic times?
When the parks discount their tickets and hotels that deeply, they are hoping that the guests will spend that much and more inside the park on the real profit makers. Because you saved $10 on your child's ticket, you can let them play that game for $5 and have some cotton candy for $3 more. You now have $300 that you can use for food during the week at Disney because you got three nights free. This is how the parks hope (and know, to a point) that you as a guest will react. By giving you discounts on areas that are not necessarily major profit points; they hope to increase their sales on things like food and merchandise. The parks can actually afford the discounts at the gate and at the hotel as long as the guests are spending in the park.
This recession has caused parks across the country to rethink how their consumers spend money, and how they can get them to keep spending inside the parks. And even though they seem to have figured out some ways to do this, that doesn't mean that times aren't tough. Disney has laid off and closed a lot of positions, Cedar Fair and Six Flags are dealing with $2 billion debt loads. On top of that, consumers are more conscious than ever about what they spend their money on. So while you are enjoying your ride on a thrilling roller coaster or laughing with your kid on a smaller ride, remember that the amusement industry is taking a ride as well. The economy doesn't care who comes along for the ride.