Throughout the world, the COVID-19 pandemic brought many businesses to a halt. Lockdowns, quarantines, and social distancing requirements effectively made it impossible to continue. This included all types of crowded entertainment venues such as concerts, sporting events, and more. And among these were amusement parks where millions of thrill-seekers routinely visit on an annual basis. But as businesses begin to reopen, many of these theme parks are adding their name to the list. But without question, the experience will not be quite the same.
Entertainment trends come and go, but those associated with the pandemic may be more lasting. On the one hand, amusement parks want to protect both their patrons and staff from exposure to the deadly coronavirus. But at the same time, they also want to encourage attendance. Like many communities across the nation, theme parks are struggling to find the right recipe for success. And some of the more major ones offer a glimpse at what we can expect in the months to come.
“We’ve been as hard-hit as any industry out there. There’s no middle ground. We’re not a restaurant that can still do carryout. We went from being open to 100% shuttered.” – Brian Witherow, CFO of Cedar Fair LP
Entertainment Trends for the Summer
Over the next couple of months, we can expect to see nearly all amusement parks reopen in some capacity. Disney has already opened its Shanghai Disneyland theme park, and its Disney Springs saw its first patrons return mid-May. Disney’s Animal Kingdom and Magic Kingdom are set to resume operations on July 11th. Notably, this represents a phased opening of the entertainment giant’s amusement parks. And based on the experiences associated with new entertainment trends implemented, Disney may consider additional measures. Thus far, the restrictions imposed have been rather creative.
Currently at Disney Springs, all guests are required to wear face masks and pass fever checks as they enter the area. Likewise, social distancing requirements are being enforced throughout the park. The creative aspect of these measures relates to how Disney is making sure guests follow the rules. Throughout the area, Star Wars’ stormtroopers remind patrons of the new safety entertainment trends in a light-humored way. Engaged in amusing banter, the stormtroopers continually highlight Disney’s new requirements of its guests. At least it makes the new restrictions a little more palatable.
Other amusement parks will also be reopening soon. For example, Six Flags Corporation, Comcast-Universal Orlando, and SeaWorld plan to welcome guests in mid-June. They also plan on having the same set of safety measures in place. However, it will remain to be seen whether they will employ similar creativity in the process. Given that they’ve been closed since mid-March, they’re likely considering any entertainment trends that might entice guests to return. In this regard, Disney is providing a nice example.
“We’re going slow because we want to make constant progress and not have to backtrack. The risk is going too far, too fast.” – Bob Chapek, CEO of Disney
Will Entertainment Trends Bring New Financial Models?
Over the last many years, entertainment trends have seen many companies adopt subscription models. Subscriptions ensure steady revenue streams, which are more predictable and allow better future planning. For amusement parks, season passes offer a similar financial framework where loyal patrons purchase season passes year after year. In fact, nearly 60 percent of those attending major amusement parks are season passholders. But with all the uncertainties surrounding theme parks and the pandemic, it’s unclear if these entertainment trends will continue. This is a major concern for many of the amusement parks currently in operation.
Most amusement parks are trying to sweeten the deal by extending the use dates of their existing season passes. But until theme parks reopen and the next season arrives, it remains unclear how many will choose to repurchase again. Surveys have suggested that more than half of current season passholders plan on doing so. But this could represent a serious drop in revenues for these corporations. Because season passes breed loyalty and repeat customers, many amusement parks may begin offering season passes at lower rates. Amusement parks hope this will be enough to weather the current pandemic storm.
Understanding these risks, most amusement parks have lost substantial value in their share prices. On average, most have seen a 40 percent drop in their share price since lockdowns began in March. Disney, which is more diversified in its portfolio, has seen an 18 percent decline in its stock price. Large percentages of furloughed workers haven’t helped the situation. But even so, most amusement parks are positioned to survive at least through the end of 2020. The bigger question involves whether patrons will resume prior levels of attendance thereafter.
“You can’t sugarcoat how hard this is going to be managerially. Will there be a generational shift in the willingness of people to socially crowd? Will a generation of consumers find it uncomfortable to be strapped into a roller coaster next to a stranger? We just don’t know the answers.” – Craig Moffett, Media Analyst at MoffettNathanson
A Possible Short-Term Silver Lining
While attendance may be down, other entertainment trends may favor amusement parks in the near term. The travel and tourism industry has been negatively impacted by the COVID-19 crisis, especially for travel abroad. As a result, many families are considering vacations closer to home this summer. Traveling to a vacation destination by car that is closer to home has its advantages in the midst of a pandemic. Thus, it may be that amusement parks may see an increase in these types of guests in the months to come.
Of course, many unknowns still remain. As the fall approaches, it remains unclear if COVID-19 cases will again rise and force shutdowns once again. Likewise, social shifts in attitudes have the potential to influence entertainment trends and many other behaviors. For now, however, amusement parks appear to be taking the right approach…slow, cautious, and patient. This strategy alone might be enough to convince many that it’s safe to give amusement parks a try.
