Silicon Valley – Adventure land

Buckets of fun for everyone!

ABSTRACT The perfect destination to spend a great holiday with your family, partner or friends while you enjoy the best entertainment that Silicon Valley has to offer.

Alisa Cosmina StanTourism Business Administration

BA – 3rd year of study – 1st semester –

Date: Jan 7, 2016

Location

Silicon Valley is in the southern part of the San Francisco Bay Area in Northern California in the United States. The region is home to many of the world's largest technology companies including Apple, Cisco, Google, HP, Intel and Oracle. The term originally referred to the region's large number of silicon chip innovators and manufacturers, but eventually came to refer to all the high-tech businesses in the area; it is now generally used as a metonym for the American high-tech sector. Despite the development of other high-tech economic centers throughout the United States and the world, Silicon Valley continues to be the leading hub for high-tech innovation and development, accounting for 1/3 of all of the venture capital investment in the United States.

Considering all this, an Adventure Park is the only thing missing to this place with lots of inbound, business, leisure or VFR tourists coming here.

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Other reasons for choosing Silicon Valley as location:

Population is between 3.5 to 4 million Area has the most millionaires and billionaires per capita in the

US Very famous area

Company profile, activities and services

Sector: Consumer DiscretionaryIndustry: Recreation Facilities & ServicesSub-Industry: Entertainment FacilitiesAdventureland Entertainment operates theme parks. The Company provides hotel, golf and aquatic parks, sports, shopping, reservation, and promotional services.

Corporate information:

Address:

955 Benecia Avenue,Sunnyvale, CA 94085 , United States

Phone: +1 650 556 965

Web URL: www.adventurelandSV.com

Board members Company

Alisa Stan Transiris Corporation

John O’Connor Abertis Infrastructures Inc

Courtney Macey HidroElectrical AG

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Made up of 6 worlds, Adventure Land offers endless thrills and spills for all ages. Oceania, Far West, Polynesia, China, México and Sésamo Adventure: six theme areas where, besides enjoying best attractions, tourists can see up to 40 daily and exclusive shows that will leave them amazed. Batteries can be recharged in any of the 15 restaurants located here and visit shops where souvenirs of the holiday can be found.

Record-breaking rides that provide a pure adrenaline rush for the boldest visitors can be found here. Talking about attractions such as Shambhala, world’s highest roller coaster in with a drop of 96 meters, Hurakan Condor, an amazing vertical free fall from 100 metres that will leave people breathless and Furius Baco, the fastest roller coaster in the world, accelerating from 0 to 195 km/h in just three seconds. And for the little ones, the incredible and magical world of Sésamo Adventure will be like a dream come true. In this area there is a multitude of fully-themed children’s attractions and games areas just waiting to be discovered by the younger members of families. A made-to-measure world in which both parents and children can enjoy the attractions and share experiences together.

A different side to Adventure Land theme park, are the special events, such as Thanksgiving and the White Nights, when the park keeps its gates open for fun until the wee hours of the morning.

During Halloween and Christmas the park is completely transformed and dressed for the occasion. Halloween at Adventure Land is a unique and spectacular time of year. Thousands of pumpkins and meticulous decoration turn the park into a dismal place inhabited by creatures from beyond. Shows are tailored to offer the most monstrous moments of Halloween at Adventure Land, a festival in which the whole family will enjoy a frighteningly fun adventure. Not to be missed!

Christmas at Adventure Land is the most magical time of year. The whole family can enjoy unique shows, full of enchantment. Christmas spirit permeates the theme park with millions of colored lights, giant gifts and lots of magic. You can even meet Santa!Adventure Land also has a fabulous water park: Bay Area Aquatic Park. It is one of the largest water parks in the US with 90,000 square meters filled with countless attractions, relaxation areas, food and drink outlets and more than 7,300 tropical plants. Bay Area Aquatic Park provides the ideal opportunity to cool down in the superb local

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Californian climate. Dive right into the fun as you glide down dizzying slides, practice rafting or ride the waves leading onto sandy beaches in this land of dreams, surrounded by palm trees and pools with crystal clear water. The little ones will not want to leave any of the areas that the park has prepared especially for them: children's pools and waves, hilarious games, water jets and slides to enjoy an experience with laughter guaranteed.

Adventure Land has four 4-star hotels. Staying at any of these Adventure Land hotels is the perfect guarantee of first-rate service and comfort while enjoying the parks and spending a few delightful days in the Bay.

Getting here It couldn’t be easier! Tourists can reach the park by car (own or rental), bus, train or plane.

Products in the Parks

To enjoy the park with less waiting time Adventure Land offers Express products that provide quick access to major attractions. These products are:

ADVENTURE LAND:

Express Max: allows 1 fast access per attraction. Does not provide access to the front row

Express Max Gold: allows 1 fast access per attraction and lets you ride 1 single time in the first row on each of the three main attractions.

Express Premium: bracelet that gives unlimited access to the main attractions without queuing. Does not provide access to the front row

Express Premium Gold: bracelet that gives unlimited access to the main attractions without queuing and lets you ride 1 single time in the first row on each of the three main attractions.

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BAY AREA AQUATIC PARK:

Express Oceania: direct and unlimited access to the main attractions in the Bay Area Aquatic Park

Express Oceania Premium: we have provided for guests a completely private area that includes tickets to Bay Area Aquatic Park, the wristband, cut fruits and a bottle of Cava, fan, fridge and private locker.

Market description and opportunities The US theme parks market is a mature one, having peaked from the late 1980s to early 1990s, before falling dramatically after the terrorist attacks of 2001. The IAAPA estimates that there are currently 450 theme parks in the US. The US theme park market comprises of three categories:

● local parks, which are often small, independently operated enterprises located in smaller towns or cities● regional parks, which are larger ventures offering bigger rides in comparison to local parks, but which traditionally are located outside of major cities or tourism destinations● destination parks, which are large-scale parks to which consumers will travel.

Although less than 2% of theme parks within the US can be classified as destination parks, this segment accounts for around 27% of total US park attendance and total park revenue, primarily owing to their practice of charging higher admission prices. After a brief hiatus, mainly due to poor economic conditions and wavering consumer demand, US theme park attendance climbed by 1.8% in 2004 to reach 328 million. However, this was far slower that the pace achieved during the mid- to late 1990s, when growth averaged 2.5%. Moreover, this growth this did not extend to all segments of the market, with the main destination parks in Florida and California gaining 6.1% at this time, versus just 0.4% at regional parks. The year 2005 was a bumper one for the US theme park market, as domestic and international visitors returned in force,

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pushing attendance up to 335 million, representing an increase of some 2.1%. Theme park revenue has doubled since 1995, partly owing to inflationary and operational cost pressures.

FIGURE 6: The US theme park market, by revenue and attendance, 1995-05

SOURCE: PricewaterhouseCoopers Global Entertainment and Media Outlook: 2005-2009

FIGURE 7: Major new rides and attractions in the US, 2006 State Park New rides/attractions

Arkansas

Magic Springs For 2006, the park is introducing the X Coaster, a multi-looping coaster that will feature a 150-foot upside down inversion – the tallest in the world.

California

Disneyland Anaheim

New for 2006 is Monsters, Inc. Mike & Sulley to the Rescue! at Disney's California Adventure. At Disneyland Park, Space Mountain will get a night-time-only makeover as Rockit Mountain with new music and effects. Pirates of the Caribbean ride is scheduled for a makeover.

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Knott's Berry Farm A Tornado funnel ride, Pacific Spin, is coming to Knott's Soak City, the separate admission water park adjacent to Knott's Berry Farm.

Legoland California The new Pirate Shores land will feature a Pirate Splash Battle attraction, a huge interactive water play structure, and a small flume ride.

Six Flags Magic Mountain

Tatsu touted as the world's longest, fastest, and tallest flying coaster.

Six Flags Marine World

A new themed area, Tava's Jungleland will feature kiddie rides and wet and dry interactive play structures. Also, the park is updating its killer whale show.

Connecticut

Lake Compounce The major new attraction is Thunder n Lightning, which is equipped with two giant swing arms, holds 32 passengers and catapults riders to heights of almost 100 feet at 60mph, reaching 4Gs.

Florida Busch Gardens Tampa

Haunted Lighthouse 4D film replaced with Pirates 4D.

Seaworld Orlando Three new rides for children including Shamu coaster.

Universal Orlando The Sky Seuss Trolley Train Ride debuts in June 2006. The attraction will feature scenes from Dr Seuss stories. The resort will debut Universal 360: A Cinesphere Spectacular in July 2006.

Animal Kingdom at Walt Disney World

US$100-million Expedition Everest coaster made its debut in April 2006. It has a top speed of 50mph.

Georgia Six Flags over Georgia

Goliath roller coaster which has a top speed of 70mph.

Idaho Silverwood Panic Plunge ride that extends to 140 feet and will plunge riders downwards at 47mph.

Kansas Joyland Park will reopen in spring 2006.

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Massachusetts

Six Flags New England

Introducing two new rides – Catapult and Splash Water Falls.

Michigan

Michigan's Adventure

Grand Rapids is a 1,500-feet-long raft ride.

Minnesota

Valleyfair US$6-million Xtreme Swing consisting of two 84-foot arms attached to a 103-foot tower.

Missouri

Silver Dollar City The Grand Exposition – the new area will be themed to the world's fairs of the late 19th century, and features ten new family rides, including a five-story Wave Swinger, a Tea Cups ride, and a junior roller coaster.

Six Flags St Louis Bugs Bunny National Park will include spinning teacups, a miniature train, and other rides, plus an interactive water fountain and tree house play structure. Superman Tower of Power is a 230-foot drop tower ride imported from Six Flags Astroworld, which closed in 2005.

Worlds of Fun US$14-million 149-foot tall inverted roller coaster Patriot with a top speed of 60mph.

Ohio Cedar Point Skyhawk, an extreme swing ride consisting of two 84-foot arms attached to a 103-foot tower. Top speed of 60 mph.

Paramount's King Island

Nickelodeon Universe (365 acres) will replace most of the Hanna Barbera attractions. It will feature 18 rides for younger children.

Pennsylvania

Hersheypark Reese's Xtreme Cup Challenge, an interactive dark ride, set up at a cost of US$5.1 million.

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Tennessee

Dollywood Timber Tower – the very first of its kind in the US. It features dual rotation, both from the tower and the passenger carrier. Fire Tower Falls, two 70-foot-tall twin free-fall speed slides, which will become the park’s tallest and fastest slides.

Texas SeaWorld Antonio New multimedia Shamu show and new 4D film attraction debuts.

Six Flags Over Texas

Ten new rides (some imported from Six Flags Astroworld), including the Sidewinder Scrambler and an interactive water play area.

Virginia Busch Gardens Williamsburg

Improved Curse of DarKastle. Refinements include extended footage and scene enhancements; intensified ride vehicle propulsion; and better acoustics.

Paramount's King's Dominion

Italian Job Turbo Coaster developed based on the final scene from the Paramount Pictures film, The Italian Job, which puts riders behind the wheel of a scaled down Mini Cooper S.

MARKET DRIVERS AND INHIBITORS

The economy and exchange rates

At one time, the theme park market was thought to be impervious to the vagaries of the economy. Attendance figures released by Amusement Business highlight the fact that growth averaged 3-5% throughout the 1990s, even during the 1990-91 slump, which was incited by the Gulf War. However, this was not the case during the recession of 2001, and year-on-year growth rates slumped to under 1% over 2000 and 2001. By 2002, the theme park market was performing below the 1990s average. Attendance figures dropped by 0.6% in 2003, as a direct result of the 5.4% dip in inbound visitors, as well as the global economic slowdown.

A weakened US dollar made visiting the US a less expensive option for international tourists, which in turn hastened the recovery of the

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US theme park industry in 2004 and 2005. Destination theme parks were the main benefactors of the decline in the value of the US Dollar. However, foreign visits to US theme parks have yet to return to pre-2001 levels. In fact, the number of inbound visitors to theme parks has dropped by 15.8% since 2000.

Inbound and domestic tourism

Generally, the performance of the US theme parks market is closely tied to the fortunes of the US tourism sector, and over the last five years, the inflow of visitors to theme parks has tailed that of inbound arrivals and domestic trips, as illustrated in Figure 8.

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FIGURE 8: Percentage change in US inbound arrivals, domestic trips and theme park attendance

SOURCE: Office of Travel and tourism studies, PricewaterhouseCoopers Global Entertainment

ECONOMIC IMPACT OF TRAVEL IN CALIFORNIA

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Projected 2014 Highlights 

Total direct travel spending in California was $117.5 billion in 2014, a 3.6% increase from 2013.

Travel spending in California directly supported 1,027,000 jobs, with earnings of $38.1 billion.

Travel spending in 2014 generated $4.2 billion in local taxes and $5.1 billion in state taxes.

Approximately 78% of California's domestic leisure visitors in 2014 were residents of California (source: TNS Travel America)

Top states for in-bound leisure travel were: (source: TNS Travel America)

o Nevada (3.1%)o Arizona (3.0%)o Texas (1.5%)o  Washington (1.2%)o Oregon (1.2%)o Illinois (1.02)

California had 16.5 million international person-trips in 2014 (source: Tourism Economics) 

o 7.3 million were from overseas origins

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o 7.6 million were from Mexicoo 1.6 million were from Canada

 

California's top overseas markets in 2014 (source: CIC Research Inc.) 

o China (996,000)o United Kingdom (686,000)o Australia (589,000)o Japan (575,000)o France (445,000)o Germany (439,000)o South Korea (397,000) o India (262,000)o Brazil (220,000)

DYNAMICS OF THEME PARK DEVELOPMENT BY WORLD REGION USA-

CanadaEurope Asia/The

PacificRest of the

world 1950 Start1960 Developmen

tStart

1970 Expansion Development

Start

1980 Maturity Expansion Development

Start

1990 Concentration

Adaptation Expansion Development

2000 Diversification

Repositioning

Selective growth

Expansion

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Source: Salvador Anton Clave, 2007

INDUSTRY STATISTICS

• There are more than 400 amusement parks and traditional attractions in the United States alone.

• The industry generates $57 billion for the US economy

• In 2008, amusement parks in the United States entertained 300 million visitors who safely enjoyed more than 1.7 billion “rides.”

• There are more than 300 parks in Europe with overall attendance of 150 million visitors and revenues of 10 billion Euros

• Amusement parks globally generated $24.0 billion in revenues in 2007.

• Family Entertainment Centers (FECs) host an average of 381,000 guests annually, with the larger facilities hosting up to 622,000 guests annually.

• FECs also experience comparatively high levels of repeat visitation—more than three visits per season

• The United States amusement park industry provides jobs for approximately 500,000 year-round and seasonal employees.

• 28 percent of Americans surveyed visited an amusement park last year, with 50 percent of Americans indicating that they plan to visit an amusement park within the next 12 months

TOP 10 AMUSEMENT PARK CHAINS WORLDWIDE Park # Attendance 000’sWalt Disney Attractions

1 120.6

Merlin Entertainment Group

2 41

Universal Studios Recreation Group

3 26.3

Parques Reunidos 4 25.8Six Flags Inc. 5 24.3

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Cedar Fair Entertainment Co.

6 22.8

Busch Entertainment 7 22.4Oct Parks China 8 19.3Herschend Entertainment

9 9.6

Compaigne des Alpes 10 9Total 321.1

GLOBAL THEME PARK REVENUES (2014)Region Revenue US $ millions %USA $11,990.00 49.85%

Europe $4,946.00 20.56%Asia Pacific $6,367.00 26.47%

Latin America $261.00 1.09%Canada $487.00 2.02%

Total $24,051.00 100%

*PWC Global Entertainment and Media Outlook 2007-2014

TRENDS AND TENDENCIES

Mature market Higher expectations Consolidation Building destinations Hybrids

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Branding rules Changed demographics

Demographic changes Theme parks are targeted primarily at children and teenagers, with rides and attractions designed and molded to meet their preferences and wants. When assessing the prospects for the theme park market, it is therefore imperative to examine the number of US citizens under the age of 18.

FIGURE 10: Population of children in the US, 2000, 2005 and 2010

2000 2005 2010 (proj)

% change 2000-05

% change 2005-10

Age (years)

Total % Total % Total %

0-4 19,218 23.9 20,495 25.0 21,426 25.7 +6.6 +4.55-9 20,483 25.4 19,467 23.7 20,706 24.9 -5.0 +6.410-14 20,608 25.6 20,838 25.4 19,767 23.7 +1.1 -5.115-19 20,250 25.1 21,183 25.8 21,348 25.6 +4.6 +0.8

Total 80,560 100 81,983 100 83,247 100 1.8 1.5

SOURCE: US Census Bureau, International database

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From 2005 to 2010, the US Census bureau projects that the number of Americans under the age of 19 will increase by 1.5%, representing 1.2 million more children, having increased by 1.8% from 2000 to 2005. The 5-9-year-old segment will see the greatest growth over the 2005-10 period (6.4%), followed by that of the 0-4-year-old age group (4.5%), who are fundamentally too young to enjoy many of the rides and attractions offered at theme parks.

In contrast, a key segment for theme parks, the ‘tweens’ – those aged 11-14 years – will see a drop of some 5.1%, providing a not so promising prospect for the industry in the near term. Another critical sector is teenagers, who tend to be keen users of extreme amusement rides. This sector will post only a marginal rise of 0.8% over the stipulated period. Again, this does not bode well for the theme park segment as a whole.

Children and teenagers have long been the prime segments that theme parks have sought to reach. Whilst this holds true, with the likes of Six Flags and Disney continuing to pursue tie-ups with brands and characters to which children and teenagers can relate, anticipated changes in the demographic make-up of the US has meant that theme park operators have been looking at other avenues.

According to the National Institute of Health (NIH), the US population aged 65 years and over is expected to double in size within the next 25 years. By 2030, almost one out of every five Americans, or 72 million people, will be 65 years or older. With an ageing population, and 83 million baby boomers expected to retire in the next 30 years, the implications for the amusement park industry are colossal.

Many of the seniors in the US today grew up in a time marked by the proliferation of amusement and theme parks across the country, spurred by the success of Disneyland. Hence, given that they have been exposed to the concept of theme parks from a young age, the Baby Boomers of today are now heading to parks because they want to, and not simply to chaperone their children or grandchildren. An NIH study also pinpoints that senior Americans are now healthier and living for longer, with fewer dying from chronic ailments, a fact attributed to a higher proportion adopting healthier lifestyles.

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In light of this, numerous players have reformulated their marketing strategies, as well as their facilities, to appeal to the senior market. At Disneyland, Anaheim and Walt Disney World, Florida, for example, in order to cater to both senior and disabled guests, the parks provide motorised scooters as well as Assisted Listening Devices. Disney launched the ‘Magical Gatherings’ holiday planning service in October 2003, bolstered by an advertising campaign that screened imagery depicting multiple generations enjoying theme park rides and attractions.

Competition from the entertainment and media sector Theme parks must now contend with numerous rivals, most notably video-gaming companies, the Internet, and other home-based entertainment technology such as DVDs that are constantly vying for the short attention span of youngsters, and the resultant revenue garnered from their eager to please parents.

In response to such keen competition, US theme park operators spent a total of US$750 million in 2005 to upgrade rides and add new ones, a number of which were designed to offer tweens, teenagers and young adults extreme thrills or family entertainment. Investment in new rides, and targeted marketing strategies – such as tie-ups with established brands or films – have paid off seemingly, with most major destination and regional parks posting rises in attendance during the 2005 season.

DESTINATION PARKS

The US experienced its worst recession in history in 2001. Recovery was slow and, as a result, consumer sentiment remained low. From 2001 to 2003, domestic tourists were heading to local and regional attractions in a bid to cut down on travelling and holiday costs. In addition, the number of international visitors decreased by 14.9%. For destination theme parks, the period was marked by a 3.5% drop in attendance, and a 1.2% decline in sales. The long-awaited dramatic turnaround did not arrive until 2004 when the US economy registered its highest growth rate in five years, and improved economic conditions boosted attendance at destination parks in Florida and California. Overall, despite a tumultuous five years, from 2000-05, revenue generated by destination theme parks rose by 6.8% to reach

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US$4 billion.

FIGURE 11: Attendance at US destination parks, 2003-05

2003 2004 2005 % change 2003-05

000s 000s 000s

Florida: Magic Kingdom at Walt Disney World

14,044 15,170 16,160 +15.1

Epcot at Walt Disney World

8,621 9,400 9,917 +15.0

Disney-MGM at Walt Disney World

7,871 8,260 8,670 +10.2

Disney's Animal Kingdom at Walt Disney World

7,306 7,820 8,210 +12.4

Universal Studios, Orlando

5,877 6,700 6,130 +4.3

Islands of Adventure at Universal Studios

5,575 6,300 5,760 +3.3

SeaWorld Florida, Orlando

5,385 5,600 5,600 +4.0

Busch Gardens Tampa Bay

4,300 4,100 4,300 -

California: Disneyland Anaheim 12,720 13,360 14,550 +14.4Disney's California Adventure Anaheim

5,311 5,630 5,830 +9.8

Universal Studios Hollywood, Universal City

4,630 5,000 4,700 +1.5

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Total 81,640 87,340 89,827 +10.0

SOURCE: Amusement Business

All 11 destination parks in the US posted an increase in attendance during the 2003-05 period, owing mainly to a recovery in inbound and domestic visitor numbers. A key factor behind the recovery in attendance figures was the decline in value of the US Dollar, and despite ticket price hikes during this time, destination parks remained affordable for international visitors. Total attendance at US destination theme parks increased by 10%, with theme parks in California outperforming that of those in Florida, albeit marginally (0.8 percentage points).

Although Disney was affected adversely by the events that occurred over 2001-03, all of its parks have experienced strong attendance growth rates since 2004. The addition of new rides, the implementation of a multi-generational marketing strategy, and its 50th anniversary celebrations were the principal drivers behind the increase in the number of visitors to Disney parks in the last two years.

Disney’s Magic Kingdom, the most popular theme park in the country, received 16.2 million visitors in 2005, facilitated partly by the opening of new attractions such as Stitch’s Escape ride, as well as robust Orlando’s tourism growth. Attendance at Disneyland in Anaheim, California, the second most popular theme park in the US, reached an all-time high of 14.5 million in 2005. New rides alongside a rebound in Los Angeles area tourism were the main factors behind the year-on-year 8.9% increase in attendance at the park.

In spite of a 4.3% increase in attendance since 2003, Universal Studios Orlando is still receiving far fewer visitors than it did pre-2001. In fact, it attracted 8.9 million visitors in 1998, a figure almost double that recorded for 2005. Attendance declined dramatically in 1999, as competition intensified in Orlando with the opening of Disney’s Animal Kingdom Park. Attendance at Universal Studios Orlando increased by 14% in 2004, due wholly to the addition of the US$45 million Revenge of the Mummy ride, which replaced the

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Kongfrontation ride that closed in 2002. This rebound was short-lived, and attendance dipped by 8.5% in 2005 as a direct result of hurricanes. Universal Studios Orlando continues to face strong competition from Walt Disney World. Its sister park, Islands of Adventure, which is also located in Orlando, faces similar problems, and over 2004 and 2005, its attendance dropped by 8.6%. Universal’s California park, Universal Studios Hollywood, did not fare well either, as attendance dipped by 6% due to bad weather in the first quarter, as well as competition from neighbouring Disneyland’s 50th anniversary celebrations.

Seaworld Florida has had a better track record since 2003, given how it has differentiated its focus from both Disney and Universal Studios. Attendance at the park held steady over 2004 and 2005, and it escaped the devastating effects of the 2005 hurricane season. Busch Gardens Tampa Bay is now performing below pre-2001 levels, as strong competition continues to bite into its attendance and sales figures.

REGIONAL PARKS

Attendance at regional parks grew at almost twice the pace of destination parks from 2000 to 2005 (6.5% versus 3.7%). Poor economic conditions as well as fear of terrorist reprisals dampened attendance at destination theme parks over 2001-03. Subsequently, by virtue of their location, regional parks naturally became the more attractive alternative for domestic visitors who were keen to reduce their expenditure on theme parks, but who were not ready to give up going to theme parks altogether.

Per capita spending at regional theme parks actually increased from US$41.76 per head in 2001 to US$42.80 in 2003 as that of destination parks declined. This trend indicated that visitors who were making their way to regional parks as part of a day out during this period were, in fact, spending more on ancillary services and products such as souvenirs and food. Uncertainty and security fears were rife during the first half of 2003. Regional parks took full advantage of this and played heavily on consumer emotions by marketing themselves as safe, nearby destinations. Consequently, attendance rates at regional parks in 2003 did not decline as sharply as they did for destination parks.

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However, this trend had reversed by 2004, as the US’s economic recovery accelerated, and the number of international tourists jumped by 11.8% after three years of successive decline. Actually, over 2003-05, attendance rates at regional parks increased by only 2.1% compared to 10% at destination parks. The rift in terms of sales was just as stark, with the growth in revenue generated by destination parks outstripping regional parks by almost three times.

FIGURE 12: Attendance at regional parks, 2003-05

SOURCE: IAAPA, PricewaterhouseCoopers, Wilkofsky Gruen Associates

Weather has more of a detrimental impact on regional parks than destination parks, because plans to the latter are usually made far in advance, whilst travellers to regional parks can more readily adjust their plans on the basis of local weather conditions. Attendance growth at Knott’s Berry Farm, Santa Cruz Beach Walk and Six Flags Magic Mountain was dampened by wet weather in 2005.

FIGURE 13: Attendance at major regional parks, 2003-05

2003 2004 2005 % change

000 000 000 2003-05

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Adventuredome at Circus Circus, Las Vegas, Nevada

4,300 4,400 4,500 +4.7

Seaworld California, San Diego, California

4,000 4,000 4,100 +2.5

Knott's Berry Farm, Buena Park, California

3,480 3,580 3,470 -0.3

Paramount's King's Island, Kings Island, Ohio

3,278 3,510 3,330 +1.6

Morey's Pier, Wildwood, New Jersey

3,230 3,100 3,130 -3.1

Cedar Point, Sandusky, Ohio 3,300 3,170 3,110 -5.8Santa Cruz Beachwalk, Santa Cruz, California

3,000 3,000 3,000 -

Six Flags Great Adventure, Jackson, New Jersey

2,800 2,800 2,968 +6.0

Six Flags Great America, Gurnea, Illinois

2,300 2,300 2,852 +24.0

Six Flags Magic Mountain, Valencia, California

2,750 2,700 2,835 +3.1

Hersheypark, Hershey, Pennsylvania

2,551 2,500 2,700 +5.8

Busch Gardens, The Old Country, Williamsburg, Virginia

2,400 2,400 2,600 +8.3

Dollywood, Pigeon Forge, Tennessee

2,150 2,100 2,360 +9.8

Six Flags over Texas, Arlington, Texas

2,288 2,200 2,310 +1.0

Paramount's King's Dominion, Doswell, Virginia

2,100 2,180 2,220 +5.7

Knott's Camp Snoopy, Bloomington, Minnesota

2,469 2,590 2,200 -10.9

Total 46,396 46,530 47,685 +2.8

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SOURCE: Amusement Business

Six Flags, the largest regional park operator in the US, remains financially unstable, and is currently US$2 billion in debt. From 1998 to 2004, attendance as its top four parks were either flat or had declined from the previous year. Attendance at Six Flags Great America improved significantly in 2005, its position strengthened primarily by the opening of Hurricane Harbour, a US$35-million, 13-acre in-park addition that made its debut in spring last year. Other top regional Six Flags parks – Great Adventure, Magic Mountain and Over Texas – also posted increases in attendance in 2005, all of which were significantly greater than the industry average (2.1%). Six Flags Great Adventure welcomed a new in-park addition in spring 2005. The 12-acre ‘Golden Kingdom’ features ‘ Kingda Ka’, the fastest and tallest roller coaster in the world. However, the ride was closed for weeks in midseason, clipping the rate of attendance growth. Six Flags Astroworld, one of the company’s smaller assets, closed for good in October 2005, when attendance hit 1.3 million, 5% less than that achieved in 2004.

Attendance at Cedar Point in 2005 lagged behind its rivals despite the debut of the maXair ride. Poor local and regional economic conditions hampered its recovery, and the park actually lowered ticket prices by US$5 this year in a bid to boost attendance and sales. Knott’s Camp Snoopy was the worst hit over the 2003-05 period, owing to a lacklustre local economy and a lack of new rides and attractions.

Paramount Parks was purchased by another major US operator, Cedar Fair, for US$1.2 billion in May 2006, leading to another round of consolidation within the industry.

MARKETING AND PRICING STRATEGIES Competition between theme parks has intensified to such a point that rides are now getting larger, faster and taller, with new technology enabling theme park operators to offer their guests bigger and better thrills. In the last three years, some major theme parks have widened their target audience to Baby Boomers and seniors. However, many players are still focused solely on traditional sources, such as families and teenagers. Marketing strategies have therefore focused primarily

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on promoting new rides, parades, celebrations and ticket deals aimed specifically at families and seniors, via various media, including television, billboards, newspapers and magazines.

Advertising Age estimates that Disney alone spends close to US$2 billion on advertising each year, making it one of the top 20 spenders on advertising in the world. ‘The Happiest Celebration on Earth’ is perhaps the best example of how Disney currently approaches marketing. This campaign marked Disney’s paradigm shift from traditional park-specific tactics to utilising a unitary global marketing strategy, which enabled classic Disney themes and storylines to connect with audiences worldwide on a grander and more emotional level. Every Disney Park offered new attractions and entertainment specifically for the 18-month long event, which kicked off on 5 May 2005. In the US, a series of commercials (‘Coming Home’) were broadcast. People could also tune into podcasts of the opening ceremony at Disneyland Anaheim.

Six Flags signed a marketing agreement with National CineMedia in March 2006. The tie-up will enable Six Flags to screen customised content segments on 13,000 movie screens across the US. In addition, participating theatres will distribute special Six Flags print promotions and coupons with the sale of every movie ticket, giving the Six Flags brand a presence in every theatre lobby in multiple formats, including posters and window displays.

Disney has endeavoured to utilise technology to keep up with lifestyle trends. The ‘Magical Gatherings’ programme was launched in October 2003 to meet the needs of people wanting to reconnect with their friends and families. This dynamic online programme permits family members in cities across the country, and their travel agent, to plan a resort visit together online. ‘Magical Gatherings’ is based on research that highlights that family and friends are the primary area on which to focus when it comes to travel marketing. According to Yesawich, Pepperdine, Brown & Russell’s (YPB&R) 2003 National Leisure Travel Monitor, approximately 69% of active US travellers cited spending time with family as very important or extremely important, up from 57% in 2000.

Co-branding with major retailers and manufacturers is another method utilised by the US theme park industry to boost attendance

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and sales. The Walt Disney Company is generally resistant to price discounting, and instead offers its visitors hotels and package perks, be it free gifts or benefits offered through its marketing partners (eg Alamo, American Automobile Association, Coca-Cola). It also utilises its other divisions and interests, such as movies, television and cruises to promote its theme parks. Six Flags also works hand in hand with a range of retail brands (eg Coca-Cola, Sunkist, Hawaiian Tropic, Spring). In the first quarter of 2006, the company launched a strategic marketing alliance and sponsorship agreement with the pizza restaurant operator, Papa John’s.

New attractions are now a requisite part of sustaining attendance and spend at theme parks. With theme park operators spending as much as US$100 million on a new park ride, and as rides become bigger, faster and taller, it comes as no surprise that admission prices have to rise accordingly. In 2006, according to International Theme Park Services, the average US theme park adult ticket was priced at US$43.32, up 4.4% from last year’s US$41.60.

In the last ten years, ticket prices at theme parks have increased at a compounded annual rate of 6%, which is more than twice the rate of consumer prices on the whole. Meanwhile, pricing has become extremely complex, as theme park operators now offer numerous options that target specific segments, and are adjusted according to periods. Some operators are also looking at charging visitors per ride. Indeed, according to industry analysts, nine out of ten visitors to parks do not pay the full posted price. Theme parks also frequently offer exclusive ticket promotions through manufacturers and retailers. Online discounts have been an extremely popular means to distribute discounted tickets. On average, a ticket purchased online can be bought for around 16% less than one bought at the gate. Six Flags and Paramount Parks have been the most generous operators when its comes to online discounts, with both companies offering cuts ranging from 20-40% in 2005.

Parks have also been experimenting with various pricing structures in order to maximize revenue. In January 2005, Disney raised its one-day ticket price by US$5 to US$59.75, making this its largest increase in 15 years. It subsequently launched ‘Magic your Way’, which encompassed a wide range of ticket options, offering guests discounts for longer stays. Under the previous pricing structure, a five-day Park Hopper Plus cost US$266. However, under the new system, an

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additional US$2 would enable visitors to stay for seven days, meaning the company can extract more revenue per head, via merchandise or food sales. That same year, Universal Studios Orlando and SeaWorld matched Disney’s one-day price. Busch Gardens Tampa, on the other hand, decided to raise adult ticket prices by only US$2 to US$55.95, undercutting the parks in Orlando by US$4 per one-day ticket. Knott’s Berry Farm in California adopted a similar ploy in spring 2006, lowering its single day admission by 11% to US$39.95.

BUSINESS PLAN The project will define much of its own values as there is no competitor in the market in Silicon Valley. Possibilities are to be explored in future for similar entertainment and amusement facilities. The growth trend is vital for the success of the amusement park, thus appropriate marketing and promotional activities will be under taken.

PRODUCT SALES

Revenue: Joy Rides

Average Duration of Rides in Minutes - 3

Loading-Off Loading Time for Each Ride in Minutes - 7

Total No. of Rides per Hour – 6

Virtual Capacity of the Amusement Park - 46,440

Visitors per Day (At 5% of Virtual Capacity) - 2,322

Average No. of Visitors Expected Per Annum - 835,920

Revenue: Others facilities

Monthly Average Rentals per Esq. in Rs - 50

Total Area of Signboard in Sq ft - 1,000

Monthly Rentals of Signboards in Sq ft. in Rs – 4

Visitors Entrance Fee in Rs - 10

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Average Fee for Rides in Rs - 60

Vehicle Parking Fees in Rs - 10

Annual Sales - 27,520,000

RAW MATERIALS

The main requirement is that of electricity, this is readily available. Also other supplies such as water and store and spares are available at low prices.

DISTRIBUTION CHANNELS

Marketing and branding of this amusement park will play a key role in the mobilization of targeted number of customers. Major marketing options include, site advertisement, cable ads and handbills among other traditional marketing channels. Marketing budget and strategy would be based on the change in the number and type of visitors to the park overtime.

PROJECT FINANCIALS

OPERATIONAL DATA

Growth Rates per year

Annual Increase in Visitors’ Entrance Fee - 5%

Annual Increase in Vehicle Parking Fee - 5%

Annual Increase of Monthly Rentals - 10%

Annual Increase in Visitors’ Entrance Fee - 5%

Age Annual Increase in No. of Visitors - 13%

FIXED COST

The fixed cost is expected to be Rs 44.914 Million as described below.

Amount Rs (000)

Land 13,800

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Building & Civil Works 8,586

Plant & Machinery 14,675

Tools, Equipment, Computers & Telephones 331

Electric Installations 4,196

Vehicles, Furniture & Security System 758

Contingencies 571

Deferred & Pre-Operating Cost 1,427

Interest During Construction 570

Total Fixed Cost 44,914

WORKING CAPITAL

The investment in the initial working capital is of Rs 100,000

OVERHEAD COSTS

In the first year following overhead cost are estimated.

Administration Expenses 354,400

Utility expenses 228,292

Traveling 124,000

Office Vehicle and running 102,800

Office stationary 14,800

Insurance expenses 186,491

Miscellaneous expenses 14,965

Total 1,025,748

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