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 3,300 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 employs 330 workers, and generates $40 million annually, while the average arcade establishment employs about 20 workers, and generates $1.2 million annually.

    • The amusement park industry includes about 500 establishments that employ over 162,000 workers and generate about $18 billion annually. The arcade industry includes about 3,000 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. Dave & Busters is a large firm with arcade operations.
    • 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

                            Jan 9, 2024 - Consumer Confidence Up in December
                            • Consumer confidence levels rose in December 2023 for the second month in a row, following three consecutive months of declines, according to data from The Conference Board. The Conference Board’s consumer confidence index increased to 110.7 in December 2023 from 101 in November 2023. According to Dana Peterson, Chief Economist at The Conference Board, “December’s write-in responses revealed the top issue affecting consumers remains rising prices in general, while politics, interest rates, and global conflicts all saw downticks as top concerns.” Peterson added that the gains in consumer confidence were largest in householders aged 35-54 and households with income levels of $125,000 and above. Plans to purchase homes, autos, and large appliances rose moderately on a month-to-month basis as interest rates moderated.
                            • Amusement park and arcade operators will have to monitor minimum wage changes, as 22 states increased their minimum wages in January 2024, according to USA Today. About half of the increases are automatic adjustments linked to inflation. States that raised their minimum wages in January 2024 include Hawaii ($14), Maryland ($15), Nebraska ($12), and Washington ($16.28). Several states are set to boost their minimum wage levels later this year, including Florida (up to $13 in September) and Nevada (up to $12 in July). According to the Economic Policy Institute, nearly 40 US cities and counties will increase their minimum wage rates above state levels at the start of the new year. The federal minimum wage is $7.25 an hour, and more than 20 states, primarily located in the South and the Midwest, use the federal minimum as their wage floor.
                            • Improving consumer confidence and higher demand for in-person activities are expected to support growth in the US amusement parks and arcades industry, which is projected to increase at an over 11% CAGR from 2022 to 2027, according to a recent Inforum forecast. This rate is faster than the projected growth of the overall economy. The forecast follows several years of sales volatility during the pandemic in 2020 (-59.2%), 2021 (59.1%), and 2022 (37.6%). According to the sector forecast, “Demand could be limited by elevated price levels, but personal consumption spending at restaurants and demand for travel and tourism should remain strong as people seek a wider array of entertainment and recreational activities.”
                            • American Express reported robust spending growth in the travel and entertainment category in the third quarter of 2023, according to Pymnts.com. The travel and entertainment category increased 13% in the third quarter of 2023 compared to the previous year. American Express also reported that millennials and Gen Z continue to be the firm’s fastest-growing consumer cohort, with spending up 18% in the US from a year ago and accounting for more than 60% of its new consumer account acquisitions globally.
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