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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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

                            Coronavirus Update

                            Apr 29, 2022 - Lawsuit Over Season Passes may Proceed
                            • A judge ruled that a class action lawsuit filed by season pass holders for Cedar Fair amusement parks over passes sold for the pandemic-shortened 2020 season can proceed. Cedar Fair, which owns 15 amusement parks, considers season pass sales final. At issue is whether Cedar Fair’s advertising would have led a reasonable consumer to believe that if the company couldn’t provide a substantial portion of the unlimited visits promised for season pass holders, it would refund part of the passes’ purchase price, US District Court Judge James Carr wrote. Cedar Fair knew a force majeure event, or “Act of God,” could possibly force its parks to close for some or all of a season, Carr wrote, but the plaintiffs claim that no clause was placed in the terms and conditions on the company’s websites, and they did not realize the customers would bear the financial consequences.
                            • Foot traffic at amusement parks and arcades may decrease if the number of new COVID-19 cases continues increasing. New COVID-19 case rates increased in late April, with the seven-day rolling average increasing to roughly 58,000 on May 1, up from 50,000 on April 27, 46,000 on April 22, and 30,000 cases per day on April 8, according to a New York Times COVID-19 case tracker. Experts note that the American population has different vaccination rates, levels of previous exposure to the virus, and degrees of underlying health conditions, so the trajectory of new cases could vary. New cases were increasing in all but six states and Washington, DC on April 28 as the Omicron subvariant continues to spread. Analysts note that the data regarding new cases are getting less reliable as the public testing infrastructure continues to wind down and home test results are less likely to be reported to officials.
                            • 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.
                            • A Cardify survey of 1,044 consumers found that 72% are excited to return to amusement parks after the pandemic, more so than movie theaters (68%) or bars and clubs (67%). Only in-person concerts (79%) and sporting events (74%) are more eagerly awaited.
                            • The Centers for Disease Control and Prevention said that cleaning once a day is usually enough to minimize the chance of coronavirus transmission in most settings. Amusement parks and arcades are likely to benefit if the guidance results in lower pandemic-related cleaning costs. The CDC did identify one appropriate situation for deep cleaning: an indoor environment where a case of COVID-19 had been confirmed within the past 24 hours.
                            • Employment in the amusement parks and arcades industry increased 4.9% year over year in February but was down 19.4% from the pre-pandemic month of February 2019.
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