After the severity of the pandemic disruption, visitors are pouring back into the world’s leading theme parks. However, while 2021 saw something of a return to form, with attendance up 70% year on year, they still lag behind pre-pandemic numbers of guests. With the industry said to need a quarter of a billion people through the doors to maintain healthy margins, the 141 million people attending last year leaves much work to do.
The changes operators are making to catch up on the past few lost years are apparent. Bob Iger’s return to Disney and the changes he has made within the first 24 hours appear to be driven in part by a need to bring back storytelling to the world’s biggest park operator. With main rival Universal Studios catching up fast in recent years, changes were needed.
Across the sector, operators are increasingly looking to squeeze more out of their intellectual property with major investments in cross-generational offerings that connect with domestic and international visitors alike. Disney’s wildly successful Star Wars: Galaxy’s Edge and Universal Studios' hugely popular new rides like Jurassic World VelociCoaster and Hagrid’s Magical Creatures Motorbike Adventure show how there is no room for complacency.
Such has been the success of Universal Studios in leveraging its film franchise attractions, it overtook three of Walt Disney World’s parks in 2021. Every park across the world is building new attractions to retain or increase footfall amid a cost of living crisis and diminished consumer spending power.
Outside of the “big two” park operators, there is a race to invest, to remain relevant in the race for consumer spending. US park operator Cedar Point is investing over $200m in new attractions in 2023. European park operators are rushing to open new attractions as Disney continues to expand its Disneyland Paris offering with the opening of the Marvel Avengers Campus.
To keep visitor numbers and spending in parks high, requires enormous investment. Market analysts Plimsoll have completed their latest assessment of the world’s 400 leading Theme Park Operators. We have examined the financial performance, financial stability, overall valuation, and future outlook of each company.
After the pandemic period of lockdowns and restrictions, values recovered strongly, growing around 25% after a 21% fall in the previous pandemic-ravaged year.
The top-level average masks some serious fragmentation in performance across the industry. In total, over a quarter of leading park operators saw their value fall in the latest year despite strong growth as parks reopen after the pandemic. Only 308 firms have seen their value rise in each of the previous three years.
Within the industry, there is a growing divide in valuation performance based on size. The largest operators saw collective 45% increases in their average valuations, perhaps reflecting their ability to drive traffic back more quickly. The largest falls in value were at the lowest end of the market as smaller park operators have struggled to get back up to speed post-pandemic.
According to the latest Plimsoll Analysis, average company values across the global theme park sector have risen in the latest year by around 25%. That’s a sharp recovery from the plunges in average values we saw in the previous, pandemic-ravaged year. However, in 2022 and beyond we are experiencing soaring inflation, an acute cost of living crisis, and falls in disposable incomes. Where will a day or even a holiday at a theme park rank in terms of priority for consumers struggling with diminishing spending power?
The Plimsoll Analysis also highlighted geographical variance in performance between major regional markets. Company values of US park operators remain slightly higher than those in Europe and still growing faster. That despite the latter enjoying a faster recovery in traffic from the pandemic. Could this be due to many US attractions relying on international traffic which has remained subdued? According to Visit Orlando, international traffic made up 9% of visitors in 2019 whereas in 2021, it was just 4%. Will British visitors return as sterling’s plummet and a deep recession squeeze spending?
It is clear that the fortunes of theme park operators are intrinsically linked to consumer confidence, spending power, and the ability to travel. Can investments in new rides and attractions keep people coming through the gates and deliver a profitable return when consumer spending power continues to be hit from all sides? Only time will tell.
To help our readers make sense of some of the impact we are offering a free insight report looking at business value trends across the global Theme Park sector.
For a free copy of the latest Insights Report, please email me at c.evans@plimsoll.co.uk and I will get that processed for you immediately.