International Journal of Contemporary Hospitality Management

Trends in the amusement park industry

Sandro Formica Michael D. Olsen
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Sandro Formica Michael D. Olsen, (1998),"Trends in the amusement park industry", International Journal of Contemporary
Hospitality Management, Vol. 10 Iss 7 pp. 297 - 308
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 Trends in the amusement park industry

Sandro Formica
Virginia Polytechnic Institute and State University, Blacksburg, VA, USA
Michael D. Olsen
Virginia Polytechnic Institute and State University, Blacksburg, VA, USA

The aim of this paper is to Bramwell (1991) examined the negative and
explore the amusement park Introduction/background positive impacts that are associated with the
industry and its evolution Amusement parks represent a relatively new creation of an amusement park. The negative
during the 1990s. The pri- concept among the most common tourist impacts include the following factors:
mary causes of change in this attractions, such as cultural and heritage 1 adverse environmental effects;
industry are determined and tourism, or sun-sea-sand vacations. This type 2 loss of leisure attractiveness of the land-
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their impact on the compa- of tourist attraction typically emphasizes a scape surrounding the attraction;
nies operating in this busi- major theme on which man-made, natural, 3 poor educational experiences with no
ness is investigated. The and human resources are co-ordinated in enlightening learning elements; and
assumption to be ascertained order to offer a unique visitation experience. 4 personal reactions are replaced with pro-
is how currently operating Amusement parks are a profitable business. grammed responses.
amusement park firms have The number of visits to the top 50 North
been able to effectively The main benefits focus on:
American amusement parks reached 160
respond to the threats and 1 increased employment;
million in 1997 whereas the total park visita-
opportunities created by the 2 physical regeneration of derelict land; and
tion at the 400 US and Canadian parks was
environmental changes 3 stimulus of new transportation infrastruc-
over 280 million (O’Brien, 1997). However, this
occurring in the 1990s. The ture to the area.
business requires substantial capital invest-
analysis is framed into three ment and is particularly sensitive to financial
main sections: first, it offers leverage. Historically, rising interest rates
Purpose
an overview of the amuse- The purpose of this paper is to explore the
have affected new and well established facili-
ment industry; second, it amusement park industry and its evolution
ties significantly. Indeed, the initial invest-
examines the environmental ment only represents the first financial effort during the 1990s. The primary causes of
trends affecting it; and third, to enter the market; once operating, the change in this industry will be determined
it attempts to delineate the amusement park demands considerable capi- and their impact on the companies operating
future development of the tal funds to update the available attractions in this business will be evaluated. The
amusement business. and implement new, more captivating rides in assumption to be ascertained is how
order to retain market share. currently operating amusement park firms
Part of the success of amusement parks have been able to effectively respond to the
depends on their clean, controlled environ- threats and opportunities created by the
ment (McClung, 1991). A survey conducted by environmental changes occurring in the
the Association of Amusement Parks and 1990s. In conclusion, in light of the results
Attractions in 1986 – reported by Milman obtained through the aforementioned
(1988) – elaborated the need for fun, recre- analysis, an attempt to delineate the future
ation, amusement, and entertainment. The development of the amusement business will
results revealed that 53 per cent of American be proposed.
citizens are willing to experience a visit to a
theme park during spring or summer. The Methodology
average number of visits was 1.9 a year, lead- This research study is based on the content
ing to a projected patronage of approximately analysis methodological technique. Content
235 million people. The 1986 United States analysis is one of the most effective tools in
Travel Data Center (1986) study also showed order to effectively appraise the environment
that 60 per cent of those participating in the and track trends in a specific business by the
research indicated that the presence of an means of specific source materials. In partic-
amusement park was a critical component ular, the research process involves the inves-
when selecting the most appropriate travel tigation of the most significant components of
destination. This is especially true when the amusement park industry by scanning
tourists include children. The 1997 Outlook different information and data sources –
International Journal of for Travel and Tourism reported that amuse- normally printed articles. The resulting
Contemporary Hospitality
Management ment parks represent the top vacations for components are then arranged into units of
10/7 [1998] 297–308 families with children for 65 per cent of analysis. The final procedure entails the
© MCB University Press visitations in 1993, 69 per cent in 1994, and segmentation of the units of analysis into
[ISSN 0959-6119] 72 per cent in 1995 (Mason, 1997). specific topics. For example, technology, as a
[ 297 ]
 Sandro Formica and unit of analysis was divided into virtual real- Only 27 US parks located in five states
Michael D. Olsen ity, motion pictures, automatic ticketing, and account for as much as 115 million visitors,
Trends in the amusement many other topics. which represent 74 per cent of all the 50 top
park industry amusement parks attendees. Six amusement
Quantitative and qualitative information
International Journal of relating to amusement parks was developed parks in Florida account for 50 million visi-
Contemporary Hospitality tors, eight Californian facilities account for
Management through the analytical scanning effort of five
10/7 [1998] 297–308 different database sources. A total of 847 arti- 36.5 million visitors, while parks in New
cles – abstracts and full text documents – Jersey, Ohio and Texas account for an aver-
were scanned. Specifically, these are the data- age of 9.5 million visitors each (O’Brien,
bases and the percentage of articles that have 1995).
been explored for each source: Info-Track (54 The majority of the firms operating in this
per cent), ABI Inform (22 per cent), Lexis industry are not only involved in the park
Nexis (14 per cent), Dow Jones (6 per cent), amusement business, but have financial
and World Wide Web (2 per cent). interests in other sectors as well. For exam-
The content analysis developed in this ple, when considering the first three leading
corporations – Disney; MCA Universal
paper includes a description and profile of the
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Studios, Florida; and Time Warner, Six Flags

amusement park industry. The major events
– it is easy to note that the success of the
that have influenced industry performance
leading amusement parks is somewhat linked
are illustrated and their impact and timing
to the movie business and other related enter-
appraised. The outcomes of content analysis
tainment fields. The number of business
generally constitute a solid basis in which to
activities operating in different industries
speculate about the future evolution of the
owned by amusement park corporations
industry under investigation. As a conse-
increases if we take into consideration the
quence, a description of the events that will UK based Rank Organization plc, and Busch
affect the amusement park industry in the Entertainment Corporation. The first is
future will be included. directly involved with films and television,
leisure, hotels and restaurants, and
electronic equipment. The second is also
Industry overview interested in beer and snack food production,
The amusement park industry represents one cruise lines, and biotechnology.
of the major components of the hospitality/ The interaction within different business
tourism industry. They have evolved accord- segments headed by the same corporation has
ing to changing preferences and trends in created a wealth of synergistic strategies that
travel and tourism demand (Chasse, 1993). In have positively influenced the overall
fact, the most visited amusement parks are amusement park company performances.
located in major tourist destinations, such as However, in many cases, amusement park
firms had to face financial difficulties and
California or Texas in the USA and Paris in
were forced to divest their capital. An indica-
Europe. This assumption is confirmed by the
tor of the instability of this industry is demon-
fact that 90 per cent of visitors to Walt Disney
strated by the number of mergers and acquisi-
World travel from outside Florida and require
tions that have occurred over the last five
lodging and foodservice facilities (Milman,
years. Table II illustrates some of the divesti-
1988).
ture, mergers and acquisitions that took place
Despite its relatedness with the hospitality/
between January 1991 and April 1996.
tourism industry, the amusement park busi-
Similarly, the hospitality industry had to face
ness may be considered as part of the more an increasing pressure from capital markets in
extensive entertainment industry. The enter- terms of profitability and a number of attempts
tainment industry is one of the most impor- were made to cut expenses. Particularly, 1991
tant businesses in the USA (Lewin, 1994). The was unanimously considered by hoteliers
production of entertainment outlets and throughout the world the worst year of the last
services, such as home entertainment, VCRs, decade because of the devastating effects of the
games, and theme parks, produces domestic Gulf War and the international recession,
revenues for US $340 billion and determines which peaked in the USA and started hitting
North America’s leadership in the interna- Europe. In 1992, many major brands, such as
tional market. Holiday Inn and Hilton were striving to reposi-
The amusement park is both a capital and tion their flags with little cash-flow for renova-
labour intensive industry. Table I, which lists tion. Towards the mid-1990s, hotel companies
the top 20 companies in this industry, clearly with substantial cash reserves purchased
shows the financial and organizational other hotel chains (Olsen, 1995). Table III shows
muscle of the leading firms operating in this some of the major hotel purchases and acquisi-
business. tions which occurred between 1990 and 1994.
[ 298 ]
 Sandro Formica and The competition in this industry is not Disney’s empire is managed much differently
Michael D. Olsen homogeneous. Disney has dominated the from the management of the other firms oper-
Trends in the amusement competition in this market for more than 40 ating in the amusement park business. Over
park industry years and its leadership is unlikely to change 50 million visitors each year choose to spend
International Journal of in the near future. In 1995, the four parks their vacation days in a Disney park as
Contemporary Hospitality opposed to other major international destina-
owned by Disney accounted for 30 per cent of
Management
10/7 [1998] 297–308 the total visitation to the top 50 parks in the tions. As a consequence, Disney’s competi-
USA (O’Brien, 1995). tors are represented not only by the other
theme parks, but also by ski resorts, exotic
destinations, and the major capitals of
Europe. Disney’s promotional strategies are
Table I
directed accordingly.
The top 20 theme park companies
Apart from the major corporations that
Revenues in have been listed in Table I, hundreds of small,
Company million US$ Employees independently owned amusement parks are
spread all over the US territory. The competi-
Walt Disney Corp. 10,055 62,000
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tion is fierce among all these amusement

Walt Disney World Corp. 4,390 34,000
attractions. Especially in this industry, the
Walt Disney Attractions 2,480 30,000
power of substitutes is very strong and con-
Universal Studio Florida 1,350 4,500
tinuously increasing. Arcade games, movies,
Six Flags (Parispany, NJ) 390 1,300
and home entertainment centres are also
Gaylord Broadcasting (Oklahoma City, OK) 340 4,600
important competitors of amusement parks.
Opryland (Nashville, TN) 240 3,800
In other words, everything that encourages
Bush Entert. Corp. (S. Louis, MO) 220 15,000
people to be entertained while staying home
Knotts Berry Farm (Buena Park, CA) 200 3,000
represents a potential competitor for this
Sea World of California Inc. (S. Diego, CA) 200 3,000
industry. Internet, with its infinite possibili-
Fiesta Texas (S. Antonio, TX) 200 2,500
ties of entertaining people may pose major
Cedar Fair (Sandusky, OH) 198.4 325
threats to the amusement park industry as
Sea World of Florida (Orlando, FL) 160 2,000
well. Interestingly, many corporations operat-
Dollywood (Pigeon Forge, TN) 160 2,000
ing in this industry are also involved in home
Pier 39LP (S. Francisco, CA) 100 200
entertainment. Their goal is to create strate-
Six Flags California (Valencia, CA) 99 330
gic advantages through synergistic combina-
Hershey Entert. & Resorts Co. (Hershey, PA) 96 2,400
tions between the two businesses.
Nichels & Dimes Inc. (Carrolton, TX) 91 1,100
Kennywood Entert. Co. (West Miffin, PA) 91 1,100
Wometco Enter. Co. (Coral Gables, FL) 83 2,500 Industry performance from 1991 to 1996
This analysis starts with one of the worst
Source: Info-Track years in terms of domestic and international
economy. In 1991, the USA was in the middle
of a difficult recession. In addition, the effects
Table II of the 1991 Gulf War encouraged families to
Some of the acquisitions in the amusement park industry from January 1991 spend much of their leisure time at home. The
to April 1996 weak economy proved to be hard hit for the
Year Acquiring firm Acquired firm major parks. The major impact caused by the
economic instability was reported by parks
1991 Southbrook Corp. Bryant Morris Development located in destination markets and parks that
Time Warner Inc. Six Flags Corp. represent a destination themselves (e.g. Walt
1992 Paramount Pictures King’s Entertainment Parks Disney World). Local parks have generally
Cedar Fair Dorney Park & Wildwater Kingdom benefited from the economic downturn
Bush Entertainment Corp. Water Country USA because families took shorter holidays within
1993 Paramount Communications Inc. Wonderland Park Canada driving distances from their homes. Industry
1994 Tussaud Group Ltd Grand Tibidabo Group of Barcelona’s experts argued that small, easily accessible
Mountasia Entertainment Inc. Malibu Grand Prix specialty amusement centres will perform
Warner Bros Inc. Sea World Trust better than the other bigger competitors
a Blockbuster Entertainment Co. Viacom International Inc. (Powers, 1992). In 1991 the total attendance in
1995a Brazil Amusement Parks Playcenter G.P. Investments the top 40 parks was approximately 123.4
Ogden Corp. Firehole Entertainment Corp. million people and showed a decrease of 3 per
Premier Parks Funtime Parks Inc. cent when compared with data from the pre-
Cedar Fair Ltd Hunt Midwest Entertainment Inc. vious year. Disney reported a decrease in
Boston Ventures Management Inc. Six Flags earnings of 31 per cent while the overall Dis-
1996 Walt Disney Co. Capital Cities ABC Inc. ney park revenues decreased by 5 per cent.
Renaissance Entertainment Corp. Creative Faires Ltd The total value of contracts awarded in the
Note: a = Merger domestic market for this industry was US$4.9
[ 299 ]
 Sandro Formica and billion, which equals 8 per cent in compari- 45 new roller coasters were added. Appar-
Michael D. Olsen son to 1990. ently, a general optimism was perceived
Trends in the amusement In 1992 the overall attendance went up in about the future of this industry. Attendance
park industry the top 40 amusement parks and the number in the USA went up by a modest 2 per cent,
International Journal of of visitors expanded from 123.4 in 1991 to 131.4 while in Europe, still under the effect of the
Contemporary Hospitality million (6.4 per cent increase). The cool recession, a drop of 4 per cent was reported.
Management
10/7 [1998] 297–308 weather caused a slow start to the early Amusement parks in Asia and the Pacific
spring attendance figures. However, the reces- Rim marked an explosive growth period,
sion seemed to have a minor influence on reporting a 14 per cent increase. Disney’s
visitors’ expenditures, which were more performance had still not fully recovered
congruous than the previous years. from the percentages of visitors lost during
Discounted tickets were extensively offered previous years. It accounted for a share atten-
by minor and major parks, and this factor dance of 24.6 per cent of the entire US market
contributed to the positive performance for in 1994.
this year. The major capital improvements made in
Good weather accounted for the positive 1994 brought the expected positive results in
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performance of amusement parks in 1993. It 1995. The North American amusement parks
also appeared that those parks that added increased their visitor attendance by 7 per
more rides and new attractions obtained the cent. Disneyland obtained a 38 per cent
best results. Attendance in the top 40 parks increase from the 1994 attendance owing to:
was 134.4 million people, which accounted for the new “Indiana Jones” attraction; a mas-
an increase of 2 per cent with respect to 1992. sive discounting strategy for California resi-
For Disneyland, 1993 marked the fourth year dents; and a significant recovery of interna-
of decrease or stagnation in terms of visitors’ tional tourism, especially in California and
attendance. Europe followed the positive Florida. Attendance at Disney’s attractions in
trend of the USA, since the overall attendance Florida increased by 14.5 per cent and the
in the Old Continent went up by 7 per cent parks were visited by 33.1 million people.
from the 1992 level, reporting over 150 million While completely recovering from recession,
visitors. Approximately 600 amusement the European parks led the year’s growth
parks are present in Europe. with a 9 per cent increase in attendance over
Major restructuring activities were under- 1994. This increase was mainly the result of a
taken during 1994. Internationally, amuse- 21 per cent visitor increase in Disney Paris.
ment park investors spent more than US$300 Surprisingly, the Asian market fell by 11 per
in infrastructure improvements to amelio- cent. The slow Japanese economy influenced
rate the existing facilities. In the USA alone, this mediocre result.
Overall, the analysis of these five years
reveals a general increase of US park atten-
Table III dance by 14.4 per cent, which equals to a
Some of the acquisitions in the hospitality industry from 1990 to 1994 yearly average increase of 3 per cent. Detailed
Year Acquired firm Acquiring firm information on park attendance is offered in
Table IV, which shows the yearly visitor
1990 La Quinta Motor Inns Inc. Brierley Investment Ltd
admissions in the top 20 North American
Aircoa Hotels Partners LP Century City International Holdings
parks.
MetHotels Inc. Canadian Pacific Ltd
Despite the excellent performance of 1995,
Crest Hotels Forte plc
little potential for additional market expan-
Motel 6 LP ACCOR SA
sion in the USA exists. In 1994, the industry
Econo Lodges and Friendship Inns Choice Hotels
mainly focused on revitalizing and ameliorat-
Rodeway Inns Choice Hotels
ing the present infrastructures with minor
Holiday Corporation Bass plc
investments in new, traditional, amusement
Omni Hotels World Int’l & Wharf Ltd
parks. Internationally, the Asian countries
Swisshotels SA Aoki Corp.
accounted for the most potential in economic
1991 Windsor Court Hotel Sea Containers Ltd
development between 1994 and 1996, followed
Days Inn Hospitality Franchise Systems Inc.
by the South American region and the
1992 Regent Hotels Int. Ltd Four Seasons Hotel Inc.
European Continent. However, major
1993 Super 8 Motels Inc. Hospitality Franchise Systems Inc.
environmental changes, such as labour short-
Stouffers Hotels and Resorts New World Development Co. Ltd
age and technology development, may impose
Park Inns (USA and Canada) Hospitality Franchise Systems Inc.
constraints and offer opportunities that were
1994 Ciga Hotels ITT Sheraton
considered unrealizable only a few years
Société des Hotels Meridien Forte plc
back. As a consequence, the amusement park
Marimar Hotel & Investment Co. Henderson Development Ltd
industry may be forced to allocate capital and
Westin Hotels Starwood Capital Group
human resources differently from that which
Source: Olsen, 1995
has been practised until recently. The next
[ 300 ]
 Sandro Formica and Table IV
Michael D. Olsen Top US amusement park admissions from 1991 to 1995
Trends in the amusement
park industry 1991 1992 1993 1994 1995
International Journal of attendance attendance attendance attendance attendance
Contemporary Hospitality Park and location (in millions) (in millions) (in millions) (in millions) (in millions)
Management
10/7 [1998] 297–308 Walt Disney World, 28.0 30.2 12.0 11.2 14.1
Lake Buena Vista, Fla (includes EPCOT (includes EPCOT
and MGM) and MGM)
Disneyland, Anaheim,CA 11.6 11.6 11.4 10.3 12.9
EPCOT Walt Disney World,
Lake Buena Vista, Fla 10.0 9.7 10.7
Disney MGM Studios,
Lake Buena Vista, Fla 8.0 8.0 9.5
Universal Studios Florida,
Orlando 5.9 6.7 7.4 7.7 8.0
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Universal Studios
Hollywood, California 4.6 4.8 4.9 4.6 4.7
Sea World of Florida,
Orlando 3.4 4.1 4.5 4.6 4.9
Sea World of California,
San Diego 3.3 4.0 4.0 3.7 3.7
Six Flags, Jackson, NJ 2.9 3.1 3.5 3.2 4.0
Bush Gardens, Tampa, Fla 2.9 3.0 3.5 3.7 3.8
Cedar Point, Sandusky,
Ohio 3.0 3.1 3.6 3.6 3.5
Paramount’s Kings Island,
Ohio 2.8 3.2 3.2 3.3 3.4
Six Flags Magic Mountain,
Valencia, California 3.2 3.2 3.3 3.5 3.4
Knott’s Berry Farm,
Buena Park, California 4.0 3.9 3.7 3.8 3.4
Santa Cruz Beach
Boardwalk, California 3.0 3.0 2.9 3.1 3.1
Six Flags Great America 2.6 3.1 3.0 2.9 3.0
Six Flags over Texas,
Arlington 2.7 3.0 2.9 3.0 2.9
Paramount Canada’s
Wonderland, Maple, Ontario 2.4 2.3 2.6 2.8 2.8
Six Flags over Georgia,
Atlanta 2.2 2.6 2.7 2.6 2.8
Knott’s Camp Snoopy,
Bloomington, MN – – 2.5 2.5 2.6

section will analyse in detail the major events ways. The consequence of the recession to the
and forces existing in the economic, socio- provider brought about a more accurate
cultural, political, natural, ecological, and analysis of the costs involved with amuse-
technological environment. Some of these ment operations and a focus in cost reduc-
events and forces have affected the amuse- tion. Additionally, it has been stated (Graff,
ment park industry during the time span 1990) that during times of a harsh economy,
1991-1996, while others are likely to influence vacations become shorter and visits to the
this industry in the years to come. closest amusement parks increase visibly.
This statement appears to be consistent with
data collected in 1991. In fact, they highlight a
General enivronmental trends 3 per cent drop from 1990 caused by the
affecting the amusement park economic recession and major decreases in
industry revenues for the most representative compa-
Economic environment nies. Six Flags over Mid-America reported a
Recession was present in almost all industri- record year for local attendance and Knott’s
alized countries during the beginning of this Berry Farms was able to reduce the damages
decade and affected the industry in several of the bad season with an aggressive regional
[ 301 ]
 Sandro Formica and marketing campaign. Not surprisingly, the Singapore are among the most attractive
Michael D. Olsen high density of population living in the territories to consider for further
Trends in the amusement Pennsylvania area and in the border states investments; China, however, seems to offer
park industry allowed the amusement parks located in that the highest potential. Overall, the Asian
International Journal of area to report record attendance too (O’Brien, countries are estimated to spend US$3 billion
Contemporary Hospitality 1991). by the turn of the century (Deckard, 1993a).
Management
10/7 [1998] 297–308 Another major difference between amuse- Warner Bros’ Movie World developed a new
ment parks that attract international visi- amusement park in the Australian Queens-
tors, such as Walt Disney World and Univer- land coast in 1992 and is about to open two
sal Studios, and regional and minor amuse- parks, a working film and television studios
ment parks is noted in terms of exchange rate in Germany and the UK.
fluctuations. While this variable has been The sudden expansion into international
critical for Disney’s success, it has generally markets has resulted in a decrease in the
caused a minimal impact on local and amount of capital available for new invest-
regional amusement centres. ments, thus enhancing competition for the
From the demand prospective, the recession remaining available funds. Asset productiv-
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resulted in wide cuts on trips and leisure ity and asset performance seem to be the
expenses. This decline in demand along with criteria on which investment feasibility is
the heavy costs related to the amusement evaluated. Amusement park managers have
industry’s major capital improvements been responding to this challenging trend by
caused many undercapitalized cash flow increasing park patronage, improving repeat
companies to suffer from poor debt load. Some visitations, and augmenting per capita expen-
of these companies were forced to merge or to ditures. The aim of these tactics is to improve
be acquired by other more financially consoli- overall company financial performance.
dated corporations (See Table II). The amusement industry, which requires
Another consequence attributed to the high initial investments and continuous
economic recession was the decrease in cus- reinvestment capital, is not favoured by this
tomer purchasing power. Consumers were trend that is progressively leading higher
becoming, more than ever before, price value return expectations on investment capital.
conscious. The increased bargaining power Conversely from the 1980s, where acquisi-
on the consumer side allowed amusement tions and takeovers were common practices
parks’ visitors to be more demanding and in order to increase gross revenues, the cur-
more focused on the quality of products and rent trend is driven by cost-control and is
services offered. Park managers have pursued through out-sourcing and strategic
attempted to satisfy these increasing expecta- alliances (Deckard, 1993b). In fact, the major-
tions by adding new captivating attractions, ity of the top 40 amusement parks are owned
special rides, shows, and entertainment fea- by only a few mega-corporations.
tures. At the same time, aggressive pricing
strategies were adopted by all-size theme Political environment
parks to attract local visitors and out-of-state During 1994 a new socio-political movement
travellers. has turned hundreds of passive US residents
The extraordinary changes in the inter- into organized groups. This movement is
national scenario, such as the fall of the Com- referred as “Not In My Backyard” and
munist bloc and the economic growth of the describes a type of lobbying effort against
Asian countries situated in the Pacific Rim, projects involving massive construction and
have also influenced the economic stability of heavy changes of land use around their
the first part of the 1990s and the consequent communities. The idea of the group’s
mediocre monetary performance of the US members is to protect their communities
amusement parks. In fact, while the recession from the threats of massive developments,
was the buzzword used by US economists which could result in pollution, congestion,
between 1990 and 1993, some overseas coun- and a decrease in safety. The amusement
tries, such as those in the Pacific Rim, were business has been heavily affected by these
witnessing their greatest economic develop- special interest groups’ campaigns in Carls-
ment in decades. The economic growth of bad, California and Manassas, Virginia
these developing countries was possible where they were successful against the
because of capital investment decisions made projects proposed by Lego and Walt Disney
by investors from developed countries. Owing Co. respectively.
to the saturation of the US amusement park In order to determine the future develop-
market, investors have allocated their capital ment of the “Lego World Theme Park,” city
to expand this industry abroad, particularly officials and citizens of Carlsbad, have been
in the emerging Asian countries and in South asked to vote in favour of or against the con-
America. India, Korea, Malaysia, and struction of the park. This represents the first
[ 302 ]
 Sandro Formica and case in which residents are asked to vote on distance from the patrons’ home, which will
Michael D. Olsen such an issue to appraise the community be more attractive to potential visitors. Six
Trends in the amusement interest on a project that will have major Flags has proved to be very sensitive to this
park industry impacts on the community. The “Not In My trend. In fact, its parks are strategically
International Journal of Backyard” coalition was successful in resist- located in areas where 85 per cent of the over-
Contemporary Hospitality ing the creation of Disney America in Manas- all American population can reach them
Management
10/7 [1998] 297–308 sas, Virginia: a 100-acre theme park that was within a drive driving lasting one day.
supposed to be built next to a famous Civil The US population, together with the popu-
War battlefield. lations of developed countries, will grow at a
The “year round schooling” reform is one of slower rate. The yearly incremental percent-
the hottest topics in the political environment age of births will be 0.7, which represents the
that has been constantly threatening the lowest since the 1930s, and the overall Ameri-
amusement park industry over the last decade. can population will only increase from 246
The increase of printed articles addressing million in 1990 to 268 million by the turn of the
this issue in most recent times clearly shows century mainly with the help of immigrant
that this issue is still alive. In fact, a shift flows. The natural consequence of this demo-
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towards the adoption of this new educational graphic trend is that households will shrink
schedule would cause harsh economic from 2.66 to 2.48 persons per family. In addi-
damages to all amusement parks. In particu- tion, the Baby Boomers’ effect is dragging the
lar, many smaller parks, which are more population into older median ages. The
dependent on local and state residents may be median age will rise sharply from 33.2 to 36.3
forced out of business. In Texas, for example, years and the most significant growth will be
where the school calendar changed in 1991, in the 45-54 age-group during the decade of the
and classes began in August, water and 1990s. Married couples, which made up about
amusement parks have experienced a decline 58 per cent of all households in 1990, will be
in business. As a consequence, August is no represented by only 53 per cent of the entire
longer the best month of the year for Texan household population by the year 2000.
parks. Attempts to retain the lost business These trends represent the major concern
with aggressive promotion campaigns, more among amusement park operators. Indeed,
appealing attractions, and extended opening many amusement parks have attempted to
hours have achieved poor results. retain their customer market (McClung, 1991;
Municipally-managed amusement and Thach and Axinn, 1994). This is the major
water parks are a reality that may impose reason why managers in this business are
threats to the public or private investments in continuously changing the focus of their
this sector. Normally, municipal amusement strategies to appeal to potential customers
parks contain limited facilities and do not while holding on to current ones.
represent a real threat to the private enter- The amusement park industry, which has
prises. However, the problem still remains been created to satisfy the needs and wants of
because municipal parks do benefit from children and teenagers, will encounter major
some political and economic advantages that problems in order to change its target market
are not allowed for their private and public successfully and maintain a clear identity in
counterparts. Hyland Hills Parks and Recre- the customers’ mind. Thus, demographics
ation District’s Water World, in Denver, Col- speak clearly, the traditional family market is
orado, is an example of municipal state of the progressively shrinking, therefore other
art water amusement attraction against markets should be targeted if the amusement
which it is extremely difficult to compete. park firms want to survive.
But there is more. The traditional family,
Socio-cultural environment[1] composed of the husband earner, wife home-
Major shifts in demographics, socio-cultural maker, and two children under the age of 18
trends, and attitudes have heavily affected the represented a modest 5 per cent of all US
amusement parks industry. Indeed, many families in 1987. Instead, more families will
changes in lifestyles have caused different be headed by women (22 per cent increase
approaches to travel and tourism activities. from 1987 to 2000). The non-family house-
The fact that more women have entered the holds, which represented 27.9 per cent of total
workforce and the typical household is households, will increase to 34.7 per cent by
composed of two wage earners has forced the end of the decade. About 85 per cent of the
Americans to engage in shorter but more members of non-family households live alone.
frequent trips. As a consequence, the distance Table V shows an analytical perspective of
factor becomes critical in order to determine household trends in terms of family/non-
the vacation destination. This is likely to family households and age of householders.
result in higher economic performance for The trend towards multi-segmentation strate-
amusement parks located at a reasonable gies to attract older visitors, singles, and
[ 303 ]
 Sandro Formica and Table V
Michael D. Olsen Number of households, by type from 1987 to 2000
Trends in the amusement
park industry 1987 (in Percentage 2000 (in Percentage 2000/1987
International Journal of thousands) of total thousands) of total per cent of change
Contemporary Hospitality
Total households by type 89,479 100 105,933 100 18.4
Management
10/7 [1998] 297–308 Family households 64,491 72.1 72,277 68.2 12.1
Married couples 51,537 57.6 56,294 53.1 9.2
Other male householder 2,510 2.8 3,282 3.1 30.8
Other female householder 10,445 11.7 12,701 12.0 21.6
Non-family households 24,988 27.9 33,656 31.8 34.7
Male householder 10,652 11.9 15,452 14.6 45.1
Female householder 14,336 16.0 15,204 17.2 27.0
By age of householder
15-24 5,197 5.8 4,442 4.2 –14.5
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25-34 20,502 22.9 18,004 17.0 –12.2

35-44 18,704 20.9 25,339 23.9 35.5
45-54 13,211 14.8 21,603 20.4 63.6
55-64 12,868 14.4 13,903 13.1 8.0
65-74 11,250 12.6 11,516 10.9 2.5
75+ 7,748 8.7 11,126 10.5 43.6
Source: Bureau of the Census

couples without children evolved in the mid- young workers (20-24 and 25-34 years old) is
dle 1980s, under the pressure imposed by going to decrease dramatically by 11 per cent
demographic trends. The main goal focuses and 8.5 per cent respectively (Table VII).
on actively involving adults with the attrac-
tions, instead of passively participating in
their children’s entertainment. In order to Table VI
achieve this, management is actively pursu- New workers entering the workforce between
ing “live entertainment,” shows, and a wide 1985 and 2000
range of foodservice facilities. Indeed, signifi- 1985 labour Net new workers
cant capital expenditures occurred in the force 1985-2000
early-mid-1990s and were spent in entertain- US workers (per cent) (per cent)
ment and foodservice structures and equip-
Native white men 47 15
ment, such as stages, live presentation and
movie theatres, and specialty restaurants.
Native white women 36 42
Disney is about to offer three completely Native non-white men 5 7
new products that will mainly appeal to the Native non-white women 5 13
empty nesters’ market segment and to those Immigrant men 4 13
who are aged 60 or more. These three products Immigrant women 3 9
are the following: two cruise ships that will Source: Hudson Institute
offer a ship-line from Florida to a recently
purchased island in the Bahamas, the “Disney
Institute” which will focus on education-based
vacations in Orlando; and “Disney’s board- Table VII
walk” which is a resort with convention Number of US workers by age in the years 1986
facilities and adult entertainment. and 2000
The shrinking number of births is causing a
long, unprecedented trend towards a labour 1986 2000 Percentage
shortage. During the late 1980s, the practice of Age (in thousands) (in thousands) change
hiring more women was the most immediate 16-19 7,926 8,880 12.0
solution to this problem. Table VI illustrates 20-24 15,442 13,751 –11.0
that the increasing trend of women joining 25-34 34,592 31,655 –8.5
the workforce is enforced by an entrance of 35-44 27,233 38,571 41.6
minorities and immigrants in the workplace. 45-54 17,740 30,552 72.2
To be specific, women that composed 39 per 55-64 11,894 12,970 9.1
cent of the total US labour force in 1972, will 65+ 3,010 2,394 –21.0
grow consistently to 47.3 per cent by the turn Total 117,837 138,773 17.8
of the century. Conversely, during the time
span between 1986 and 2000, the number of
Source: Bureau of Labor Statistics

[ 304 ]
 Sandro Formica and These demographic trends are likely to affect the hole in the ozone layer, the “greenhouse
Michael D. Olsen the amusement park industry. This industry is effect,” poor air quality, waste issues, defor-
Trends in the amusement characterized by low wages and limited profes- estation, forest fires, and water pollution are
park industry sional growth opportunities. The exceptional among the factors that intensify the public
International Journal of turnover rate of 500-600 per cent in this indus- awareness of ecological issues.
Contemporary Hospitality try (Miller, 1992) contributes to the gravity of Amusement parks involved with marine
Management
the labour shortage problem. The scarcity of water are increasingly emphasizing the study
10/7 [1998] 297–308
human resources was not considered an issue and protection of rare life species. Sea Life
during the first years of the 1990s. The reces- Park in Honolulu, Hawaii, is a typical exam-
sion temporarily moderated concerns about ple of an environmentally conscious amuse-
the labour shortage. However, when approach- ment attraction that is engaged in the protec-
ing the middle 1990s this problem appears to be tion of animals such as the Hawaiian monk
more acutely felt by amusement park man- seal and the green sea turtles. Sea World in
agers and operators. Unfortunately, because Orlando features a manatee exhibit to illus-
this industry needs a large number of flexible trate the damages of pollution and congestion
lower-paid younger workers, it will be nega- on animal life. Disney has demonstrated a
tively affected by the decreasing number of
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particular interest for animals and conserva-

births. In fact, due to the seasonality of the jobs
tion as well. For example, the theme of the
required and the moderate wages offered, over
new Disney park Wild Animal Kingdom is
80 per cent of people employed in this industry
geared towards the preservation and protec-
are young workers (Graff, 1990). The increasing
tion of animals and nature as a whole.
opportunities for skilled workers to have work-
Disney parks are the only ones that have
ing experience overseas in the emerging coun-
consistently developed environmental
tries may aggravate this already acute prob-
culture with the creation of “green teams”
lem. Indeed, many sources were increasingly
reporting a shortage of qualified personnel and incentives for employees that undertake
able to manage the sophisticated, computer- an environmentally sensitive behaviour.
controlled, equipment. Disney received an award in 1995 for its effec-
Some companies in this industry have tive policy concerning recycling and water
already begun to recruit workers from the conservation programmes. Since 1991 Disney
growing segment of the older population was able to improve its recycling activities by
(Graff, 1990). This segment is prone to accept 3,000 per cent.
flexible schedules and are generally not
money dependent. However, many jobs in the Technology
amusement parks require physical activities Technology is leading the major changes in
that cannot be performed by the elderly. the amusement park industry. It seems to
Currently, labour shortages represent one offer a solution to many of the challenges that
of the most significant threats that this indus- this industry is currently facing, such as
try will face in the future. This trend is health and safety, labour shortages, distribu-
expected to challenge all the industries oper- tion channels, management control, manager-
ating in the service sector, which will be the ial decision support, product improvement,
only sector in stable growth, at least until the and energy conservation. Roller coaster and
turn of the century (Rukeyser, 1988). other high-risk rides have seen reduced
probabilities of accidents thanks to computer-
Natural environment controlled equipment. Computers are facili-
Natural uncertainties are often undervalued in tating the solution of technical problems, thus
the overall economic risk evaluation of a busi- reducing the need for on-site staff assistance.
ness project. However, in this specific industry, Reproduction of motion picture characters,
the importance of natural events is paramount. such as the dinosaurs of Jurassic Park, have
Variations in rainfall, hurricanes, floods, and vastly improved with the help of computer-
earthquakes are generally accounted as the assisted technology. Smart card systems are
causes of bad or good economic performance. being extensively used by an increasing num-
In the term year end reports of the major ber of amusement parks. Their versatility
companies dealing with the amusement park allows for saved time and more organizational
business, rainfall and cool mid-season tem- efficiency. The card is multipurpose and acts
peratures are always reported as major as a cash register, time clock and debit card
causes of their poor economic performance. which is used by both employees and visitors.
The number of printed articles reporting
Ecological environment companies’ endeavours to invest in tech-
The growing concern for ecology, often nology have been growing exponentially
labelled as “ecosensitivity” or “ecophobia,” is since 1993. Interestingly, among the techno-
another trend that is likely to gain momentum logical issues reported between 1991 and 1993,
in the future. Environmental issues such as the majority of printed articles referred to
[ 305 ]
 Sandro Formica and computer-driven high performance mecha- family with young children, has clearly set
Michael D. Olsen nisms to complement and enhance rides and the stage for a future market reduction. In
Trends in the amusement gigantic features, three dimensional movies, fact, the diminishing number of traditional
park industry automatic ticketing, and safety issues. Since families coupled with a constantly decreasing
International Journal of 1994, the use of technology in amusement birth rate are forcing the majority of amuse-
Contemporary Hospitality ment parks intended as family entertainment
parks shifted from the purpose of an amelio-
Management
10/7 [1998] 297–308 rating tool for traditional rides and amuse- to reposition their strategy and image to
ment attractions to a new, futuristic concept appear more suitable to the needs of singles
of amusement centres. These futuristic and older segments. Otherwise, they will be
attractions will reshape the concept of amuse- forced out of the market. This trend will be
ment parks as wide land extensions featuring likely to encourage hoteliers managing units
outdoor rides and entertainment. In fact, they located in amusement park areas to
will require a relatively limited amount of strengthen the co-operation with the amuse-
space and mostly consist of indoor centres. ment park industry and change marketing
In 1994, Walt Disney World opened a perma- strategies and services offered accordingly.
nent pavilion featuring all the technological However, amusement park corporations
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innovations available in the market. Cine- have effectively reacted to this major threat
tropolis, which is a chain of high technology using a number of competitive methods.
entertainment centres booming in the USA Owing to economic restraints and in order to
and in Asia, opened its first futuristic amuse- be closer to potential visitors, the early 1990s
ment centre inside a casino, featuring special- have witnessed a growing interest in reduced-
ity theatres and a number of simulator-ride size, easily accessible amusement parks.
technologies. Sony targeted the San Fran- These entertainment centres are less expen-
cisco Bay area in 1995 as a pilot market to sive than the traditional amusement parks,
develop a chain of high tech cyber-parks that require a limited amount of time for a visit,
will look to older consumers and will offer and encourage visitors’ active participation.
stage productions, interactive, and virtual A growing interest is geared towards the
reality rides. The new technologically-driven association of mega-malls, casinos, and
amusement parks will be named Sonycity amusement parks. Six Flags is investing in
and Sonystation. These parks have already this smaller type of entertaining parks and is
been built in Japan and have successfully locating them close to malls and casinos. This
attracted the older segment of the market. idea allows adults to shop and teenagers to
The company that seems to have a competi- have fun at the same time. The joint venture
tive edge over its competitors in terms of between Six Flags and New Plan Reality
high-tech futuristic amusement parks is Sega Trust for a theme park to be opened close to a
Enterprises. This company’s market strength mall in New Jersey offers “shop and safari”
is due to its solid background in the tech- packages targeted specifically at adults.
nology-for-fun market. However, Sega has The competitive methods that were adopted
recently decided to de-emphasize its competi- to avoid environmental threats and benefit
tion on home computer games – which has from market opportunities were mainly cre-
become a saturated market – and has invested ated and developed by Disney. The other
its resources in the futuristic amusement major corporations have generally emulated
park business. The first example of a Euro- this market leader. A crystalline example is
pean Sega futuristic park was scheduled to offered by the synergy between film produc-
tions, amusement shows and rides themed by
open by the end of 1996 in London. In the
popular movies. This has proven to be the
meantime this company has signed a deal
most widespread response of the major corpo-
with the Asian Wywy Group for the opening
rations to threats imposed by demographic
of the first Japanese indoor high-tech theme
trends. Their goal was to exploit the fame of
park featuring virtual reality and interactive
popular action movies and reproduce them in
rides. Another 15 virtual reality theme parks
the amusement park with the visitors “in
are expected to be opened by Sega in Canada.
action.” The active participation of visitors in
popular movies was a valuable attractor of
visitors to amusement parks and was espe-
Current and future trends
cially effective in increasing the number of
The amusement park industry is experienc- repeat visitors.
ing the mature stage of its life-cycle. The Paramount Parks began offering in 1992
demographic environmental shifts that motion based simulators themed on the
occurred over the last two decades represent movie Days of Thunder and Top Gun. Time
the major challenge for this industry’s Warner proposed Police Academy as a theme
survival. The high dependence on one, well for a new action stunt show at Six Flags
defined segment, such as the traditional Astroworld. Disney reported a tremendous
[ 306 ]
 Sandro Formica and success featuring actions from Indiana Jones causes of poor company performance: bad
Michael D. Olsen and Jurassic Park in its amusement parks. weather. Besides, a stronger tie between
Trends in the amusement Universal Studios Florida reported an atten- amusement parks and technology is likely to
park industry dance increase of 52 per cent in 1991 – a rough result in cuts in personnel costs and a modest
International Journal of year for all its competitors – because of its investment in terms of land purchase.
Contemporary Hospitality new ride inspired by the popular movie Back The different channels existing in the infor-
Management
10/7 [1998] 297–308 to the Future. mation highway will contribute to raise
An emerging trend that is rapidly develop- attendance at amusement parks especially
ing in the USA and particularly in Europe, is because of the off-site ticket sales. The onsite
that of amusement parks themed on the coun- ticket purchases represent a psychological
try’s culture to attract an increasing number burden for visitors who want to be sure that,
of well-educated visitors. The first Eastern after engaging in a trip, they will not have
European post-Communist amusement park, surprises in accessing the park. The pre-
which was built in 1993 in Budapest, Hungary, purchase will also enable the organizations to
is geared towards three themes: historical serve visitors more efficiently. The Internet
events; past communist political figures; and will offer the opportunity to target minor
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liberation, peace, and friendship monuments. parks more effectively because of the modest
The idea to capitalize on history and empha- financial resources needed in order to be
size American heritage was conceived by promoted on the World Wide Web.
“Disney America” in Northern Virginia. Joint ventures and strategic alliances
With this operation Disney aimed to target became widespread in 1995. For example,
the baby boomer segment in one of the most Rank Organization plc, which is a British
populated areas of the USA. leisure development firm that owns Universal
Food operations are widely expanding in Studios in Florida, has reached an agreement
the majority of amusement parks. The offer- with MCA Inc. to build a US$2 billion amuse-
ing of speciality foods is regarded as an ment park and create the “Universal City
opportunity to provide customers with a Florida” by 1999. The mega-project also
unique experience. The fact that Knott’s involves the construction of themed hotels
Berry Farm offers its own food products to and convention centres. MCA has signed a
customers is seen as contributing to the strategic alliance with Studio Dream Works
company’s overall financial performance, SGK in order to benefit from live-action and
especially during the recession in the early motion pictures, home video, and music dis-
1990s. Amusement park managers, which tribution rights. The alliance states also that
tended to subcontract restaurants to the MCA will use the characters produced by the
major franchising companies operating in partner in its amusement parks. During the
the quick service segment, should rethink same year, Time Warner and MAI have cre-
this strategy in consideration of the fact that ated a joint venture to open an amusement
expenditures and visitors’ interest towards park and studio complex in England. Owing
foodservice are significantly increasing and to the high capital intensity that character-
demand for higher quality and healthier food izes this industry and the increasing capital
is growing. The trend towards more nutri- shortage that is occurring in the interna-
tious and healthy food is likely to increase in tional financial markets, the trend towards
the future since more amusement park firms business agreements requiring minor capital
will focus their attention on the eating habits investments is expected to progressively
of elderly visitors. Besides, in those amuse- replace the mergers and acquisitions that
ment parks theming international countries,
have taken place until recently.
exclusive destinations, and historical sites,
the match of food-ambiance will become a
must in order to attract visitors.
Concluding comments
Overall, technology offers the most compet-
itive advantages in order to survive in an The major trends in the amusement park
extremely competitive, mature, and uncer- industry revolve around two dominant
tain market, such as that of the amusement environmental changes: demographics and
parks. The goal of using technology in this technology. However, the environmental
industry is that of targeting new market seg- scanning analysis developed in this research
ments, since the traditional segment of the study has revealed that many other factors
family with young children is decreasing. In are dynamically evolving in the environment,
addition, the use of technology in terms of such as the new emphasis on learning
motion simulation and virtual reality may experiences while on vacation and a global
allow for the creation of indoor high tech capital shortage, are playing a significant role
futuristic amusement parks that will defeat in the future development of this industry.
one of the most threatened environmental Interestingly enough, technology, assets, and
[ 307 ]
 Sandro Formica and capital were reported among the major by US Travel Data Center and published in 1989
Michael D. Olsen driving forces that are shaping the hospitality by the Travel Industry Association of America ,
Trends in the amusement industry as well (Olsen, 1996). and (b) Workforce 2000 US Department of Labor.
park industry The analysis conducted in this study has published in 1987 by Hudson Institute.
International Journal of revealed enough evidence to support the fact
Contemporary Hospitality that the amusement park industry cannot References
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