The coronavirus pandemic has forced many theme parks across the country to close or, in cases where they have been permitted to reopen, drastically change operations. Significantly reduced capacities, increased sanitization and mask requirements for guests have become the new normal.
Equally impacted are vendors who are less visible to the public but are critical for the financial health of the parks: The manufacturers and suppliers who design and fabricate the attractions.
The supply side of the theme park industry was the topic of discussion on the inaugural “I’m 4 Fun” podcast, hosted by Dennis Speigel, founder and CEO of theme park consultancy International Theme Park Services. Speigel’s guest was Jim Seay, president of Premier Rides, which supplies parks with amusement rides and attractions.
Due to Covid-19, Seay said, many park operators’ revenue is at around 10% to 15% of normal.
“The last thing you’re thinking about, and the last thing you should think about, is what our next big capital project is going to be, or even what are our next small capital project’s going to be,” Seay said.
Seay reported that a theme park CEO told him he doesn’t believe anyone in the industry will be making buying decisions in the next year or two, or for perhaps even longer. It’s a jolt to the suppliers, who have enjoyed 10 years of growth fueled by the success of theme parks.
“Our industry was doing phenomenal,” Seay said. “We were just kicking it. And now, you have a situation where you have an almost instantaneous downturn of maybe 80%, 90%, and that is going to flow down to the suppliers.”
Seay has focused his company on being ready to work again when theme parks do bounce back. He encouraged other suppliers to do the same, but he fears skilled workers (welders, for instance) will leave for other industries that are more profitable at the moment.
At the same time, the pandemic has created something of a silver lining: The cost of materials has fallen. Premier has an ongoing project that will cost less than before the pandemic, he said, specifically because material costs have come down. Suppliers have also benefited in some cases by pivoting to providing attraction maintenance and vehicle rehabilitations for park operators that have reduced maintenance staff.
The lack of capital expenditures in the near term will likely impact guest experiences, Speigel said in an interview after his podcast.
“Our industry lives on repeat visitation, and repeat visitation is driven by capital expenditures,” he said. “[This includes funding for] new product, expansion, second gates, third gates for operators. We’re not going to see that go away, but we’re definitely going to see it slow down, very much so.”
That is already evidenced in recent moves by the largest park operations. For instance, Disney said it was postponing a planned renovation of its Spaceship Earth attraction at Epcot as well as a new Mary Poppins-themed attraction in the same park. Universal Orlando Resort’s planned new park, Epic Universe, has also been delayed.
Speigel estimated that the pipeline of new attractions planned for the next three years will be extended into the next six years, or perhaps beyond.
But there have been some positive developments for parks and their guests. Contactless payment options are expanding, which is good for the parks’ bottom lines and improves guest experiences, he said. He also predicted that guests will benefit from a rash of discounting expected to last into 2021, perhaps even carrying into 2022.
“We’re all familiar with the term zero-based budgeting,” Speigel said. “But [the pandemic is] making us go back to zero-based planning and look at everything from scratch — not only the financial side, but the operating side, as well.”