Amusement Parks and Arcades

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 3,800 amusement parks and arcades in the US offer a variety of rides, games, or other attractions for entertainment purposes. Amusement parks include theme parks, water parks, boardwalks, and piers, which offer a variety of rides, shows, restaurants, and retail shops. Arcade operators include electronic game arcades, family fun centers, indoor play areas, pinball arcades, and video game arcades.

Seasonality and the Weather

The amusement park industry is highly seasonal and subject to uneven cash flow.

Capital Intensity of Development

Amusement park operations are highly capital-intensive, with firms investing millions to develop, upgrade, and expand facilities.

Industry size & Structure

The average amusement park establishment operates out of a single location, employs 406 workers, and generates $50 million annually. The average arcade establishment operates out of a single location, employs about 22 workers, and generates $1.4 million annually.

    • The amusement park industry includes about 470 establishments that employ over 162,000 workers and generate about $20 billion annually. The arcade industry includes about 3,400 establishments that employ over 66,000 workers and generate $4 billion annually.
    • The amusement park industry is concentrated; the top 50 companies account for 97% of industry revenue. The arcade industry is more fragmented; the top 50 companies account for 56% of industry revenue.
    • Large domestic amusement park operators include Walt Disney Co., Seaworld, and Cedar Fair. Large firms may have operations in foreign countries. The arcade industry consists mainly of independent operators. Large firms with arcade operations include Gameworks and Dave & Busters.
    • The most-visited theme parks in the US include the Magic Kingdom, Disneyland, Disney’s Animal Kingdom, EPCOT, Disney’s Hollywood Studios, and Universal Studios.
                            Industry Forecast
                            Amusement Parks and Arcades Industry Growth
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Mar 14, 2023 - Entertainment-Related Spending Drops
                            • Entertainment-related spending fell nearly 30% in the fourth quarter of 2022 compared to the fourth quarter of 2021, as inflation caused consumers to cut back on non-essential expenses, according to a Gravy Analytics survey in Consumers are looking toward budget-minded spending, with grocery stores, wholesale stores, home-building stores, pet stores, and discount stores notching an increase in foot traffic at the end of 2022. Experts expect the trends to continue in 2023 as long as the higher prices hold. Added Jeff White, founder and CEO of Gravy Analytics, “Insights from our report show that consumers are making careful decisions about their spending and are looking for value much more now than they were a year ago. As widespread layoffs and economic uncertainty rage on, expect consumers to look for ways to save money on clothing, housewares, and other living essentials so long as job security and inflation remain concerns.”
                            • Consumer confidence levels declined in February 2023 for the second consecutive month, according to data from The Conference Board. The Conference Board’s consumer confidence index fell to 102.9 in February 2023 from 106 in January 2023, as high prices and rising interest rates affected consumers’ willingness to spend. According to Ataman Ozyildirim, a senior director of economics at The Conference Board, “Consumer confidence declined again in February. The decrease reflected large drops in confidence for households aged 35 to 54 and for households earning $35,000 or more.” Plans to purchase homes, vehicles, and appliances have cooled, in addition to a drop in vacation intentions, per Ozyildirim.
                            • Home to Disney World and many other attractions, Orlando, Florida, has been named the largest US travel and tourism city destination for 2022 by the World Travel and Tourism Council (WTTC), according to USA Today. In addition to Disney, Orlando is home to Universal Orlando Resort, SeaWorld Orlando, Busch Gardens, and many other popular tourist hot spots. The city earned more than $31 billion from tourism in 2022, representing a fifth of the city’s total gross domestic product, per the Cities Economic Impact Report by the WTTC. Orlando also saw robust spending by international travelers, with spending up 20% over 2019. Las Vegas placed second on the list, with a direct GDP contribution of $23 billion. Researchers from Oxford Economics analyzed travel and tourism metrics such as traveler spending, contribution to the GDP, and employment for the Cities Economic Impact Report.
                            • Improvements made during pandemic-mandated closures could lead to a more profitable amusement park industry, according to research and analytics firm S&P Global. Companies identified efficiencies, updated rides, and improved experiences, changes which executives say will drive bigger returns. Some improvements focus on attraction upgrades, but operators implemented others for pandemic-era health and safety precautions. Many now offer touchless payment systems for in-park purchases, including tickets. Digital queues help keep customers from standing in long lines, and self-pay systems for food orders reduce contacts between customers and staff. In addition to easing health and safety concerns related to crowded venues, the upgrades also created financial efficiencies for operators and in some cases allowed for upselling opportunities. Mobile-app-based food-and-beverage ordering, self-service check-in kiosks at resort hotels, interactive smartphone park maps, and other technology solutions introduced or enhanced during the coronavirus pandemic to allow for safe operations are popular, especially among Generation Z, and are likely to remain in place, according to a study by technology developer Oracle Food and Beverage and park operator Merlin Entertainments.
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