Study of amusement and theme park industry in India

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Methodology
Data collection and hypotheses
Detailed secondary research was conducted to develop an understanding of the current global amusement and theme park industry. The international markets to be profiled were determined, based on discussions with IAAPI and the availability of relevant data. Further discussion points and hypothetical situations were arrived at using input from the core committee members of Indian Association of Amusement Parks & Industries (IAAPI) and Ernst & Young’s industry knowledge and experience.

Based on this input, a questionnaire was developed that comprised a mix of detailed closed and open-ended questions. It was used for the interviews conducted with leading industry players. Detailed face to face, telephonic and online interviews were conducted with CXO- level executives of leading amusement/theme/waterparks, manufacturers/suppliers of equipment to these parks and family entertainment centers (FECs) in India.

Due to the exploratory nature of the research, certain aspects of the information collection process were optimized during the course of the discussions.

Analyses of data
The information gathered from the interviews was aggregated and analyzed for various interpretations and an estimation of industry numbers. This estimation was then extrapolated, based on quantitative input, to forecast developments in the industry. This process was followed by rounds of discussions with IAAPI to corroborate and test the analyses/findings.

Important
The market study was conducted in a rapidly changing economic environment. The global financial crisis and the related liquidity crunch may have a bearing on consumer spending on entertainment. This may affect the amusement and theme park industry in India in the short run. In the short to medium terms (one to five years), the following changes may occur, which may impact the amusement and theme park industry in the country.

1.

Consumption of amusement and theme park industry products may be affected as
consumers change their spending patterns.

2.

The industry may see a short-term reduction in capital expenditure budgets due to the liquidity crunch in the economy.

3.

Regulatory changes such as levy of additional taxes may affect industry margins.

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Executive summary
This report seeks to provide an insight into the current scenario of the amusement and theme parks industry in India. It also aims to study the development patterns of key peer companies from matured and emerging geographies across the globe to enhance learning and a draw up a future roadmap for the Indian industry. The global amusement and theme park industry (the global industry) traces its origins to the pleasure gardens of medieval Europe. These gardens provided live entertainment including rides, games, dancing and fireworks. The modern concept of an amusement park was developed in the US during the late 19th century, but the industry saw a decline in the 1930s because of the impact of the depression, the rise of the movies and the advent of World War II. The formation of Disneyland in 1955 heralded the era of theme parks, which continue to dominate the industry landscape even today.

The entertainment factor in these parks is mainly derived from the excitement of being in a different atmosphere with rides ranging from simple carousals (merry-go-rounds) to high-end roller coasters. The key differentiation factor of different park offerings lies in their ability to offer active entertainment, which involves the participation of customers.

At present, the global industry is dominated by large corporate groups. Walt Disney leads the market with the highest recorded footfall in 2008. Other major players include the Merlin Entertainment Group and Universal Studios. Over the past few years, footfall growth has slowed down in mature markets such as North America and Europe. Consequently, many leading players have proposed major investments in Asian markets (South Korea and the Middle East), which are expected to drive global industry growth. With the advent of new technologies, new themes for parks have also emerged. Now, with the help of technology, it is possible to develop a snow park in extremely hot weather or to operate a water park in very cold weather. As new themes and concepts generate customer interest by providing them with a unique and differentiated experience, the growth of the industry depends on the development and introduction of innovative themes and concepts.

Park operators, worldwide, have focused on diversification of revenue streams to enhance growth. Leading players are also increasingly looking for expansion opportunities in emerging Asian markets. They have consistently focused on providing the customer with unique experiences and other offerings to generate increased footfalls.

The global financial crisis, which has resulted in an economic slowdown across the world, is the most prominent challenge faced by the industry at present. There is lower consumer expenditure and decreasing tourism. Operators with high debt levels may face refinancing problems in an environment that is seeing reducing bank credits. Amusement and theme parks also face competition from a diverse set of recreational activities. The Indian amusement and theme park industry is at a nascent stage of its development. Most parks provide entertainment through rides and other attractions. So far, only very few parks have attempted to base their offerings around unique Indian themes for ride designs, etc. The industry is currently experiencing a trend of development of parks that focus on novel themes that have not been offered in India before. Various players are planning or have announced their intention of designing parks based on Bollywood, mythology and sciencebased themes. With the liberalization and growth of the Indian economy, the industry has grown significantly over the last three decades. Yet, in terms of revenue and footfall, the Indian amusement industry is relatively small when compared to key global markets.

Various factors have contributed to this rapid growth, including increasing urbanization and healthy economic growth. Globally, parks have many sources that contribute to revenues such as admission fees, food and beverages, merchandizing, rentals, accommodation, etc. In India, the most prominent revenue stream for a park is its income from admission and rides. Food is another major contributor to its revenue. Parks have other revenue streams as well, but their contribution is not as significant as in global markets.

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Apart from revenue generation, another major area of concern for a park operator is capital and operating expenditure, which affect cash flows and profit margins directly. Generally, global amusement and theme parks operate on a very large scale and have stronger financial management systems as compared to Indian parks. Efficient financial management in Indian parks can reduce operational expenditure and ensure better returns on capital. Detailed information on trends in the Indian amusement and theme park industry related to various key revenue streams and expenditure is discussed in the following sections. The Indian amusement and theme park industry is witnessing a wide variety of changes even as it tries to establish itself in the global arena. Park operators have recognized the opportunities presented by the rapidly growing and consuming Indian middle class. Some very large parks are being developed across the country in collaboration with global players to meet this demand.

Ride manufacturers are witnessing a growth in exports to countries including the US, France, Bangladesh, Sri Lanka, and the Middle East. The industry is also seeing a trend of collaboration between Indian and foreign players to develop parks and manufacturing facilities.

India is known around the world for its rich cultural heritage and the amusement and theme park industry in the country can differentiate itself at the global level by the use of India-specific theme parks. The industry has huge potential in attracting domestic and international tourists. However, currently, Indian amusement parks lack the presence of large players providing unique experiences to generate adequate customer interest in amusement parks as an entertainment option. The industry requires determined and dedicated efforts from players by creating differentiated offerings that provide unique entertainment experiences to customers. This is critical for stakeholders to ensure survival and growth in the face of the global economic slowdown and emerging global trends. The industry is expected to nearly double in size by 2020 in terms of the number of parks with an enhanced portfolio of offerings. Increasing urbanization and changing customer preferences will have positive impact on the industry footfall.

Apart from providing entertainment, the growth of parks will act as a stimulus for the development of ancillary industries by building a social infrastructure within suburban and rural areas where these parks are generally located. Amusement parks are also known to create opportunities and generate employment in related sectors including raw material and equipment manufacturers, suppliers, transporters, etc.

Study of amusement and theme park industry in India

1. Global industry overview
As mentioned earlier, the global amusement and theme park industry traces its origins to the pleasure gardens of medieval Europe. These gardens provided live entertainment including rides, games, dancing and fireworks. The modern concept of an amusement park was developed in the US during the late 19th century, resulting in a substantial increase in the number of the parks in the early 20th century. But the industry experienced a decline in the 1930s due to the impact of the depression, the rise of the movies and the advent of World War II. The formation of Disneyland in 1955 heralded the era of theme parks, which continue to dominate the industry landscape even today.

Amusement and theme parks are an integral part of the global leisure and entertainment industry. They can be broadly divided into amusement parks, theme parks and water parks. Amusement parks offer rides such as roller coasters, giant wheels, etc., for adults and children; theme parks have rides and attractions built around a common theme; water parks provide water-based attractions such as slides, waves, artificial beaches, etc. These parks may also provide accommodation and live entertainment along with food and beverage facilities to their customers.

The entertainment factor in these parks is mainly derived from the excitement of being in a different atmosphere with rides ranging from simple carousels (merry-go-rounds) to high-end roller coasters. The key differentiation factor of different park offerings lies in their ability to offer active entertainment, which involves the participation of customers.

As mentioned earlier, the global amusement and theme park industry is dominated by theme parks operated by corporate groups. Walt Disney leads the global market with a footfall of 118 million in 2008. Other major players include the Merlin Entertainment Group and Universal Studios. In 2008, the top 25 parks of the world attracted a total of 186 million visitors. Over the past few years, footfall growth has slowed down, especially in mature markets such as North America and Europe. As a result, many leading players plan major investments in Asian markets (China, South Korea and the Middle East), which is expected to drive growth in the sector. Family entertainment centers (FEC) comprise another emerging segment in the overall leisure and entertainment domain. FECs are entertainment zones targeted at families and have attractions such as video games, bowling arcades, go-carts, miniature golf, air hockey, bumper cars, etc.

Industry segmentation

Amusement and theme parks worldwide can be broadly classified into three categories, based on their target audience and products/services:1
1.

Destination/Resort parks: These parks operate primarily as resorts. They feature themed rides and water parks, offer on-site hotels and charge the highest ticket prices. Domestic and international tourists form a major customer segment at these parks. The main operators in this space include Disney and Universal.

2.

Regional parks: These offer a combination of thrill rides, water parks and on-site accommodation. Ticket prices at these parks are generally less than at destination/resort parks. The visitor catchment area in such parks covers around 350–400 kilometers.

3.

Local parks: These parks generally offer rides and other attractions, but seldom provide on-site accommodations. Visitors to these parks primarily come from within a distance of 150–175 kilometers, typically for a day’s
visit.

1

Source: “Leisure Industry Overview,” Wachovia Capital Markets, 13 November 2007, via Thomson Research

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Global amusement and theme parks can also be categorized on the basis of the theme or concept around which a park and its offerings are designed. Some major themes/concepts include: 1.

Thrill and adventure: These parks offer sophisticated rides and attractions such as fast roller coasters, safaris, Ferris wheels, etc., as well as advanced games and adventure sports to provide thrilling experiences. Some major parks in this category include ESPN’s Wide World of Sports (in the US), Magic Kingdom (in the US) and Wild Wadi (at Dubai).

2.

Spirituality and wellness: Parks in this category focus on spirituality, peace and health. Their offerings include spiritual centers and therapies, spas and gyms along with sports facilities. Champneys (in the UK) is a major player operating in this category.

3.

Fun and learning: These parks focus on providing a combination of education and information through entertainment, also known as “edutainment.” They may be based on concepts such as history, nature, art and culture, science, music and dance, film and theatre and sports. Some of the major parks in this category include Madame Tussauds (in the UK), Europa Park (in Germany), Legoland Discovery Park (in Denmark), Universal Resorts (in the US), the Epcot Center (in the US), Ripley’s Entertainments (in the US) and Gulliver’s Eco-Park (in the UK).

4.

Environment and nature: The main focus of parks in this category is on nature, animals and environmental awareness. This category generally includes nature based waterparks, marine life based parks, animal based parks, gardens, eco-parks etc. Major players in this category are Ocean Park (Hong Kong), Sea World (the US), and Animal Kingdom (the US).

5.

Lifestyle: Offerings of these parks revolve around lifestyle components such as fashion, films, shopping, themed restaurants, concert halls/theatres, spas, nightclubs and bars. Key players in this segment include Sentosa (in Singapore) and Champneys (in the UK).

6.

Fiction and fantasy: In this category, offerings include cinema, museums and fiction-based themes. These players use new digital technologies such as Bluetooth, radio frequency, GPS, robotics, mobile devices, etc., to bring their characters to life. Key players in this category include Warner Brothers Movieworld (in Australia), Ripley’s Entertainments (in the US) and Madame Tussauds (in the UK).

Several innovative themes have emerged for parks with the advent of new technologies. Now it is possible to develop a snow park in extremely hot weather, for instance, the Ski Dubai Snow Park, or to operate a water park in very cold weather. As new themes and concepts generate customer interest by providing them with a unique and differentiated experience, the growth of the industry depends on the development and introduction of fresh themes and concepts.

Study of amusement and theme park industry in India

Source: TEA/ERA Attraction Attendance Report 2008

The number of visitors at top global amusement and theme parks, region-wise, shows that North America has the highest footfall followed by the Asia- Pacific region, Europe and Latin America. The top 20 parks in North America saw an approximately 123 million visitors in 2008. However, the overall growth of footfall in North America has slowed due to the maturing of the industry. With the presence of large parks, e.g., Disney Magic Kingdom, Disneyland and Universal Studios, the US is the largest market in this region. In fact, of the top 25 global parks worldwide, 13 are in the US. The top 20 European parks witnessed a footfall of nearly 57 million visitors in 2008; approximately 5.7% lower as compared to 2007. At present, Disneyland Paris is the largest park in Europe with a footfall of around 13 million visitors. Other large European parks include Europa Park (in Germany), Tivoli Gardens (in Denmark) and Port Aventura (in Spain).

During 2008, the top 10 parks in the Asia-Pacific region received about 67 million visitors. Japan is the largest market in this region with its top five parks seeing a footfall of nearly 43 million. Tokyo Disney Resort is the most popular park in the region with an annual footfall of around 27 million. South Korea and China are the other two large Asian markets. The largest Asian parks outside Japan are Everland in South Korea and Ocean Park in China.

The Asia-Pacific region has been the hub of recent activity in the global amusement and theme park industry. Some of the biggest parks in the world have opened in recent times in Asia. Tokyo DisneySea (part of the Tokyo Disney Resort) opened in 2001, while Hong Kong Disneyland opened for visitors in 2005. New amusement and theme parks are being planned in South Korea and Dubai. Disney and Universal Studios have also recently announced their plan to open parks in China. In the near future, the Asian market is slated to be one of the key growth drivers for the global amusement and theme park industry.

Ancillary offerings

Apart from rides and attractions, amusement and theme parks across the world offer a variety of ancillary services to generate additional revenues. These products and services generally depend on the profile of the park’s target customer segment and their spending pattern. Some of the key facilities include: 1)

Hospitality

a) Accommodation/Hotels
b) Themed restaurants/Cafes and bars/Food pavilions
c) Convention centers
2)

Retail

a) Souvenir shops/Shopping malls/Shopping complexes/Factory outlets 3)

Global amusement and theme parks: key growth drivers

Park operators, worldwide, have focused on the diversification of revenue streams to enhance growth. They are consistently looking to provide novel experiences to customers as well as other services to generate an increased footfall. Leading players are also increasingly looking for expansion opportunities in emerging Asian markets. The key factors driving the growth of the global industry include: 1.

International expansion: Increased competition and maturing of markets in North America and Europe are resulting in reduced growth in footfall. In the future, international expansion is expected to be a key growth driver for major global players. For example, Disney benefited from its expansion in Tokyo and Paris during the 80s and 90s. Although the Hong Kong theme park, built recently by Disney, has been facing challenges, it has not deterred park operators from embarking on plans in emerging markets such as South Korea, China and the Middle East.

2.

Innovation in attractions: Parks sell experiences to customers and new attractions act as a trigger to generate their interest. Most large operators continuously improve or add new attractions to garner an increased customer footfall. Disneyland Japan, which has been consistently investing around USD80-90 million annually on new rides and other attractions, has reaped the benefits of its investment. Even as other parks in Japan faced a slowdown in the new millennium, Disney saw increasing footfalls. Flexibility in revamping their offerings with changing customer preferences and cultural shifts provides a competitive advantage to parks.

3.

Focus on ancillary offerings: Parks are increasingly focusing on ancillary businesses including near/off-site hotels, restaurants, merchandizing, etc. Apart from enhancing the customer experience, these act as a driver to increase the duration of visitors’ stay at the park and increase their spending. This diversification of revenue sources will be one of the key drivers for revenue growth, especially in emerging markets.

4.

Project management services: Some players have been diversifying their business to plan for and set up amusement and theme parks. They generally tie up with small parks or new entrants and use their experience to guide them to develop and run new parks. Knowledge-sharing provides exposure to new markets without exposing players to risks in the market. It is also an additional source of income for park operators. For instance, Everland, a leading player in South Korea, formed an alliance with a park in China in 2006, to share its operational expertise.

5.

Government support: Realizing the potential of amusement and theme parks to generate employment opportunities and improve tourism, various governments across the world have supported the development of large parks. This has been done through special incentives (land at rebate) and tax exemptions. The French government provided tax exemptions and land to set up Disneyland, which has now become one of the major tourist attractions in France. More recently, Hong Kong Disneyland was developed in collaboration with the local government and Disney.

Key imperative for growth
Need for focused positioning: In an increasingly competitive leisure and entertainment landscape, focused positioning plays a critical role in generating and sustaining customer interest. An appropriate match of offerings with the target customer segment is essential for the growth of park revenues. For instance, in Japan, with its increasing elderly population, parks have started offering discounts to the elderly. A well-conceived marketing and promotion strategy helps parks to increase brand awareness and recognition among their customers.

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1.5

Global amusement and theme parks: key challenges

The global financial crisis, which has resulted in an economic slowdown across the world, is the most prominent challenge faced by the industry today. The industry also faces lower consumer expenditure along with a fall in tourism activity. Operators with high debt levels may face refinancing problems in an environment of decreasing bank credit. Amusement and theme parks also face competition from a diverse set of recreational activities. Some of the major challenges faced by this industry include: 1.

Global economic slowdown: The financial crisis has reduced consumer
confidence and has the potential to decrease discretionary consumer expenditure. As a result, visits to destination-oriented parks with high ticket prices are expected to take a hit. In comparison, regional parks with strong price/value alternatives may not suffer a large reduction in footfall. Parks may have to re-price their services, which may further impact their margins. Already, in the US, Walt Disney Company and Universal Studios have announced discounted pricing and special packages to maintain their customer footfall. Disney has also recently announced its plans to combine its backend operations for its US-based parks to control its costs even as it faces decreasing footfalls, while Busch Entertainment Corporation has delayed the construction of its Worlds of Discovery theme parks at Dubai.

2.

High debt levels of park operators: The elevated debt levels of some theme park operators (especially in the US and Japan) present another significant challenge. Although the operators are focused on improving their leverage ratios, the crisis will make it difficult for them to roll over their past debt. Operators may find it difficult to raise money in the present scenario. Capital expenditure on new rides and attractions may also be hampered. For instance, Six Flags faces redemption of its convertible shares in August 2009 along with potential delisting from the New York Stock Exchange (NYSE).

3.

Diverse set of recreational facilities: The increasing use of video games and other recreational facilities is a major challenge for the industry. Other leisure and entertainment sources such as malls and multiplexes are closer to the customer as compared to parks. For instance, the Mall of Emirates at Dubai not only boasts of a huge shopping mall, its biggest claim to fame is the Middle East’s first indoor ski slope, Ski Dubai. Such destinations are a convenient outdoor entertainment avenue on weekends. Operators will have to provide newer attractions to overcome this challenge to continue enticing customers to visit their parks. They will have to develop and market their unique experiences in an increasingly competitive market.

4.

Dependence on tourism: Tourists comprise the major customer segment in the industry. For instance, domestic and international tourists together contribute more than 50% of the footfall in Walt Disney World, a major Disney theme park. The global economic slowdown is expected to affect tourism, which may affect park revenue growth in the near future.

1.6

Key markets

We will now analyze some key international amusement and theme park markets to understand their growth and development patterns. The US and Japan are among the biggest hubs of amusement and theme parks in the world. South Korea is one of the major emerging markets, like the Indian market, in terms of the social and economic setup in the countries.

Germany is one of the key markets in the Europe region and has been growing at a fast pace due to the government’s support in the industry’s promotion and development.

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1.6.1
1.6.1.1

US amusement and theme park market
Evolution2

Amusement parks in the US can be traced back to the late 1800s. By 1910, around 2,000 amusement parks were operating in the US. The stock market crash and the subsequent depression caused the closure of many parks. By 1933, their number decreased to less than 500.

Disneyland, America’s first theme park, opened in 1955. This was a milestone for the amusement park industry worldwide. Till then, developing an amusement park in the US needed huge investment. During the 1970s, large corporate-backed theme parks came into being, and, as a result, many small family-owned traditional parks faced competitive pressure.

Exhibit: Evolution of amusement and theme parks in the United States „ Disneyland opened (1955)

„ Railroad construction at

„ Race to build largest

Coney Island (1875)

and fastest roller
coasters (1990’s)

„ Ferris wheel and
Midway introduced in

„ Consolidation and

Chicago (1893)

closures (2000s)

„ Chutes Park opened (1894)

1900-1930s

Late 1800s

1960-1980s

1940-1950s

„ Presence of a large number
of parks (1910)
„ The Industry hit by the
Depression (1933)

1990-2000s

„ Emergence of large
corporate-backed theme
parks (1970’s)
„ Increased pressure on
small traditional familyowned parks (1970s)

Source: National Amusement Park Historical Association (NAPHA)

In 1977, the first outdoor water park opened in Orlando, offering water-based rides. The industry saw another wave of development during the late 1980s and throughout 1990s. Many new parks and attractions were built during this period. During the 1990s parks competed with each other to build the biggest and fastest roller coasters. Major players also started developing parks outside the US to tap the potential of other markets around the world (Disneyland, Tokyo (1983), Disneyland, Paris (1992)). Post 2000, the industry has been experiencing a wave of consolidation and park closures, driven by the saturation of the amusement and theme park industry and the financial problems of several park operators.

The US market is primarily dominated by theme parks, which contribute the highest to industry revenues. Most amusement and theme parks in the US operate in a season which generally spans May to October. Parks that generally remain open throughout the year are mostly located in Florida, California, Texas and other areas where the tourist footfall is high throughout the year.

During 2008, the top 20 US amusement and theme parks experienced a growth of around 2.6% in attendance over the previous year. The growth in the number of domestic and international tourists was the key driver of this growth.

Walt Disney, the largest player in the US market, experienced higher footfalls during 2008, due to the success of its “Year of Million Dreams” marketing campaign.

Study of amusement and theme park industry in India

Wide gap in footfall (India vs the US)
There is a huge gap in the footfall generated by top amusement parks in India in comparison with leading international parks worldwide. Most popular international parks see an average annual footfall that is over 10 times greater than that generated by the any of the larger amusement parks in India.

Currently, the US has more than 1,000 water parks, which operate either as
standalone parks or as a part of a larger complex. Typhoon Lagoon and Blizzard Beach, part of the Walt Disney World complex at Florida, were adjudged the top two water parks in the US by attendance in 2008. The overall attendance growth at Walt Disney World and Universal Studios also helped to increase the footfall at the water parks mentioned above.

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Recently, the US market also saw a spurt in the number of indoor water park resorts from 24 in 2002 to 107 in 2007. These parks have become one of the fastest areas of growth in the US market. The added attraction of accommodation facilities further enhances their year-round appeal for tourists. Revenues from amusement and theme parks in the US have grown at a CAGR of 3.57% from 2002 to 2007. This was largely due to the inflation in ticket prices, since the average footfall at US parks within this time frame has grown at a CAGR of only 0.97%. The increase in park admission ticket prices has compensated for the slower growth in customer footfall.

The small rate of footfall growth highlights the level of maturity and saturation of the industry. Operators depend on newer attractions, rise in prices, marketing and ancillary services for revenue growth.

Source: “Market Size,” Freedonia Focus on Amusement Parks, October 2008, p.2.

Trade analysts feel that destination theme parks were squeezed harder by the recession in 2008 than regional amusement parks because the former typically cost more to visit and also because seasonal parks had closed down for the year when economic conditions began to rapidly deteriorate. Over the next three to five years, US theme parks and attractions are expected to see a decline in their business as their counterparts in emerging destinations,
such as the Middle East, Africa and Asia, are expected to grow due to planned investments by large global players.

In the opinion of Charlie Bray, President and CEO, International Association of Amusement Parks and Attractions, “the majority of the growth will take place in the Middle East, particularly in the booming markets of Dubai and everywhere in the United Arab Emirates. Most, if not all, of these projects are part of superdestinations and mega-resorts, whose rise within our industry have taken themed immersion to a whole new level and will likely influence its development for years to come.” 4

The US amusement and theme park market is the largest in the world. Walt Disney and Universal Parks & Studios are its top two players, while Six Flags and Cedar Fair are the key regional players in the market. ► The Walt Disney Company5

Disney is the world leader in the amusement and theme parks industry. Its US-based parks witnessed a footfall of around 73 million in 2008 (65% of its total footfall was from the US market alone). Walt Disney World Resort, located in Orlando, Florida, and the Disneyland Resort located in Anaheim, California are the largest parks owned and operated by the group. In addition, the company also has ownership interests in Disneyland Resort Paris (51%) and Hong Kong Disneyland Resort (43%). The operation of the Tokyo Disney Resort in Japan has been licensed by the company to Oriental Land Company. Theme parks and other associated facilities operations are conducted round the year with the highest visits during school vacations. The company has recently announced its plans to build a Disneyland theme park at Shanghai (China).

Disney also owns Disney Vacations Clubs, the Disney Cruise Line (owns two cruise ships with two more under construction) and ESPN Zone (interactive sports entertainment areas). In addition, vacation tour packages are offered through the company’s “Adventures” by its Disney division. The Walt Disney Imagineering Unit takes care of park development by designing new attractions and providing production support.

Source: The Walt Disney Company 2008 annual report.

During 2008, the company’s revenues from Parks and Resorts grew by 8% to reach USD11.5 billion over the previous year. Most of the growth was contributed by increased attendance and guest spending at the Walt Disney World Resort. The weakening of the US dollar also resulted in a favorable translation of foreign exchange earnings, especially from Disneyland Resort Paris.

Labor comprises the highest factor in terms of cost at Disney parks. Depreciation, cost of merchandize, food and beverages, marketing, sales, repairs and maintenance are some other major expense items. The global financial crisis has begun affecting the footfall at Disney parks. In the fourth quarter of 2008, it witnessed a year-on-year reduction of 5% in the quarterly attendance at its domestic parks. The company has consequently begun combining the operations of its two major domestic resort parks. This move is expected to result in a reduction in jobs at Disney parks and resorts.

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Disney’s cost management strategy

Disney employs the majority of its workers on a contractual basis (they are paid on an hourly basis) to reduce labor costs which comprise its highest cost component. Accordingly, during lean sales periods, the company is able to scale back its excess workforce to reduce costs effectively.

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► Six Flags6
Six Flags is the third-largest US player in terms of footfall and ranks among the largest global regional theme park operators. The company operates 20 parks across North America. Six Flags parks generally operate from May to September (approximately 85% of park revenue comes from attendance during the second and third calendar quarters of the year). They are also open on weekends, before and after the operating season, generally in association with themed events. The company is among the biggest providers of thrill rides in the industry with around 120 roller coasters. It also holds exclusive licenses for theme park usage of certain DC Comics and Warner Brothers characters.

In 2007, the company sold seven parks to PARC 7F-Operations Corporation at a price of around USD312 million. Six Flags’ New Orleans Park has been closed since Hurricane Katrina in 2005. Six Flags has been pursuing a series of long-term initiatives to improve its performance. Its initiatives have focused on improving the overall guest experience at its parks, investments in IT infrastructure and a reduction in operating expenses by cutting down on its number of full-time employees.

► Cedar Fair L.P.7
Cedar Fair L.P., a publicly traded, limited partnership, is managed by Cedar Fair Management, Inc. It is one of the world’s largest regional amusement park operators. Its portfolio of properties consists of 11 amusement parks, 6 outdoor water parks, 5 hotels and 1 indoor water park. Cedar Fair acquired Paramount Parks in 2006 in a transaction valued at USD1.24 billion, which resulted in the addition of five parks to its existing portfolio of properties. The company’s parks operate in a season, which generally begins in April/May and extends till September/October. This limits its operating season to around 130–140 days.

The company mainly targets young people (12–24 years’ old) and families. It advertises actively on television, radio, newspaper and internet during its operating season, specifically focusing on its target segment.

The company plans to invest approximately USD62 million in 2009, of which a major portion will be allocated to the development of a roller coaster at its Kings Island park in Cincinnati (USD22 million). A new 350,000-gallon wave pool is also expected to be developed at Valleyfair Park at Minnesota.

► Universal Parks & Studios
Universal Parks & Studios was ranked the world’s third-largest theme park chain by attendance in 2008. It is the theme park business unit of NBC Universal that handles NBC’s parks worldwide (in the US and Japan). It recorded an estimated annual footfall of around 26 million in 2008. Universal Parks & Studios operates two theme parks and one water park at Orlando in Florida, one theme park at Hollywood in California and one theme park in Japan. Moreover, it is in the process of setting up new Universal Studios theme parks in Dubai, Singapore, China and South Korea.

Policy and regulatory overview8

Safety regulations in the US amusement and theme park industry do not fully come under the purview of the federal (central) government. Generally, states have separate rules stating ride safety and inspection conditions. The states typically appoint qualified safety inspectors for annual ride inspection. The International Association of Amusement Parks and Attractions (IAAPA) is the trade association for amusement and theme parks worldwide. Amusement Industry Manufacturers & Suppliers (AIMS) International is the association of manufacturers and suppliers for the amusement and theme park industry.

These associations regularly work in coordination with the American Society for Testing and Materials (ASTM) to develop newer and up-to-date safety standards for the industry. In this section, we have mentioned key industry bodies that help members (park operators and ride manufacturers) to improve their efficiency and safety standards. We have also discussed safety regulations adhered to by major amusement parks in the US.

International Association of Amusement Parks and Attractions (IAAPA, www.iaapa.org/): IAAPA is the largest international trade association for permanently situated amusement facilities worldwide. It represents more than 4,500 supplier and individual members from more than 90 countries and helps its members improve their efficiency, marketing initiatives and the safety measures adopted by them. World Waterpark Association (WWA, www.waterparks.org/): WWA is the leading global trade association for water park owners and equipment suppliers. It conducts industry-specific training for its members and also publishes a magazine, which provides information on recent developments in the industry.

American Society for Testing and Materials (ASTM, www.astm.org): ASTM is an organization related to international standards. It develops and regularly publishes consensus technical standards for a wide range of products and services. It has set up a technical committee on amusement rides and devices (F24) in 1978, which develops standard methods of testing, performance specifications, practices and guides for the industry. The International Standards Harmonization Group of IAAPA works with ASTM to establish worldwide consistency in important areas of ride safety.

National Association of Amusement Ride Safety Officials (NAARSO, www.naarso.com/main.htm): This is a non-profit organization, which provides education and resources for safety professionals working in the amusement park industry. It has a certification program for amusement device inspectors.

► Amusement park safety regulation
Amusement and theme park safety in the US is regulated through a combination of state and local laws along with industry-specific voluntary standards.
The US Consumer Product Safety Commission, at the federal level, monitors the safety of portable amusement rides, investigates serious accidents and works with manufacturers to improve designs to correct defects. In the US, amusement park rides and water slides are exempt from federal safety oversight.

Around 24 states in the US have government officials with ride safety training and some oversight authority, while 11 states rely on insurance companies or third-party inspectors to audit industry compliance with safety standards.

Under the Permanent Amusement Ride Safety Inspection Program, enacted by the State of California, qualified safety inspectors inspect rides on an annual basis. Ride-related accidents or injuries must be reported to the state officials operating under the program. An insurance policy for at least USD1 million per occurrence must also be obtained by ride owners.

In Florida, parks that employ more than 1,000 people are exempt from the state’s regulatory program. However, those that employ less than 1,000 people are inspected by a state official semi-annually. The program mandates reporting of ride-related injuries, which require a visit to hospital, and also obtaining insurance of at least USD1 million per occurrence.

On the other hand, Ohio has an advisory council on amusement ride safety, which presents findings and recommendations relating to safety before the State Director of Agriculture. The laws require state officials to inspect permanent amusement rides twice a year. An annual inspection needs to be conducted for a permit to operate and there is another mid-season operational inspection as well. These officials have the authority to shut down unsafe rides they deem as unfit.

Study of amusement and theme park industry in India
Amusement parks in Japan can be traced back to the mid 1800s. In 1853, Hanayashiki, an amusement park, was opened as a flower garden. During its early days, it hosted live shows featuring animals. It also introduced Japan’s first domestically produced roller coaster in 1953. The Museum Meiji-mura in the Aichi prefecture11 (1965) and the Kyoto Studio Park (1975) were considered to be the pioneers of theme parks in Japan until Disneyland opened in 1983.The success of Tokyo Disneyland resulted in the growth of a variety of theme parks throughout the country. The concept of theme parks became popular during the 1980s due to various additional factors, which included the following:

Encouragement from local state governments to stimulate the local economy to provide job opportunities

Since the collapse of the economy in Japan during the 1990s, a large number of theme parks have been forced to close down or declare bankruptcy due to poor business. In 2003, Huis Ten Bosch, a theme park located in Nagasaki, which was suffering from a declining footfall and reeling under high interest payments, filed for bankruptcy protection. It had operated under loss ever since it opened in 1992. In 2008, the Expoland amusement park in Osaka filed for bankruptcy protection. In 2009, Tama Tech, another amusement park with motor vehicle attractions disclosed its plans to shut down. Even today, many parks are undergoing strategic and operational overhauling to improve their performance.

Market size12

The amusement and theme park landscape in Japan has been dominated by the Tokyo Disneyland Resort (Tokyo Disneyland and Tokyo DisneySea) and Universal Studios Japan due to the sheer footfall generated by these two players.

For the year 2008, Tokyo Disneyland generated a footfall of 14.29 million. DisneySea, which opened in 2001, received around 12.49 million customers (2008). With a footfall of 8.30 million customers (2008), Universal Studios was the third-largest park in Japan. The exhibit below highlights the attendance at the top five amusement/theme parks in Japan in 2008.
Source: “Operator of Tokyo amusement park dating to feudal era goes under,” Kyodo News, 19 January 2004, via Factiva

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Source: TEA/ERA Attraction Attendance Report 2008

During the first half of 2008, Disney theme parks saw their numbers of visitors increase by 7.2%, year on year, to reach nearly 13 million. The company attributed this to celebrations to commemorate its 25 years and the opening of a new hotel near the park in July 2008.

Theme parks dominate the Japanese market with a diverse range of parks using innovative themes. Some popular themes in Japan include,

Countries and cultures of the world: These theme parks feature specific countries and cultures. The theme to be showcased generally has some connection with the local landscape and heritage. Huis Ten Bosch, located in the Nagasaki prefecture, is a theme park modeled on a townscape in the Netherlands, a country with which Nagasaki had close relations.

c.

2.

Period theme parks: These parks preserve or reconstruct historical artifacts, structures and townscapes. They transmit the culture and wisdom of earlier eras with museum-like exhibits. The historical periods generally showcased by these parks include Edo (1603–1867), Meiji (1868–1912), Taisho (1912–1926) and Showa (1926–1989).

Space: Space Camp offers edutainment at its educational space experience facility in Kitayushu.

Environment and nature
a.

3.

Nature: Ashikaga Flower Park in the Tochigi prefecture uses the environment theme. Lagunasia, a marine theme park in Gamagori, has nature as its theme.

Fiction and fantasy
a.

b.

4.

Motion pictures: Universal Studios Japan and Kyoto Studio Park are two major theme parks, which provide facilities, allowing visitors to experience the excitement of the world of cinema. Universal Studios Japan, located in Osaka, offers attractions based on the theme of motion pictures with rides such as Sesame Street, Shrek, E.T., Terminator and Jurassic Park. Kyoto Studio Park brings to life the sets used to make jidai-geki (Samurai movies or costume plays based in feudal times). Characters: These parks feature children’s popular fantasy characters. The most notable among these theme parks are the Tokyo Disney Resort (the first Disneyland opened outside the US) and Sanrio Puroland (known for its character “Hello Kitty”).

Lifestyle
a.

Food: Food theme parks are generally indoor facilities, which serve a particular type of food, often with a distinctive food-related image or a townscape with a story. The New Yokohama Ramen Museum was the first food theme park, which was opened in Japan in 1994.

b.

Spa resorts: These are generally large tourist facilities with facilities such as jacuzzis, sauna and openair baths along with restaurants, beauty care salons, sports gyms, etc. Spa Resort Hawaiians (Fukushima) and the Great Edo Spa Town (located on Tokyo Bay)are among the top resorts in this category.

Study of amusement and theme park industry in India

23

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1.6.2.3

Overview of key players13

Tokyo Disneyland Resort is the largest themed complex in Japan. It attracted approximately 27 million visitors in 2008. Universal Studios Japan is the second-highest visited park complex in Japan. Other major players include Hakkeijima Sea Paradise and Nagashima Spa Land.

► Tokyo Disneyland and Tokyo DisneySea
The Tokyo Disneyland Resort was opened in 1983 and was the first Disneyland to be built outside the US. Tokyo Disneyland Resort, which comprises Tokyo Disneyland, Tokyo DisneySea and two Disney branded hotels, is located at Urayasu in Chiba (near Tokyo). The park has been constructed along the lines of Disneyland in California and the Magic Kingdom in Florida. It is owned by The Oriental Land Company. The theme has been licensed by The Walt Disney Company, which earns royalties on the revenues generated by the Tokyo Disneyland Resort.

Accommodation and other
Source: The Oriental Land Company, Company website

The total revenue of the company in FY08 highlighted an increase of more than 17% over the previous year. (When reported in USD, this increase in revenue is due to the strong position of the Japanese yen over USD in 2008 as compared to 2007.) it saw a decline of around 0.08% in its actual revenues, reported in Japanese yen (JPY).

► Universal Studios Japan
Universal Studios Japan opened in Osaka in 2001. The park is similar to the Universal Orlando Resort, with many similar rides, and had a footfall of about 8 million in 2008. The initial owners of the park included the Osaka municipal government (25% stake), Universal Studios Inc. of the US (24%) and a consortium of Japanese companies.

However, a few years after it opened, the park faced financial problems due to its high debt levels. It also faced increasing regulatory screening due to the sale of expired products and the use of more fireworks than permitted in its attractions. In 2005, Goldman Sachs became its largest stakeholder by increasing its stake to 41%.

The park has been implementing strategic measures, including bringing down its annual investment in equipment to USD30 million in 2007 from USD75 million in 2003.

► Hakkeijima Sea Paradise
Hakkeijima Sea Paradise is located at Yokohama Bay and is one of the top aquariums in Japan with over 500 different varieties of fish and more than 100,000 sea creatures. It is approximately 24 hectare in size of which the park zone of Yokohama City is 16.3 hectare and the leisure zone is 7.7 hectare. The park 13

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offers innovative rides such as Japan’s first surf coaster that swings out over the ocean and Blue Fall (107 meters high), a vertical fall amusement ride. Apart from rides and attractions, the park also has specialty shops, restaurants, a marina and a hotel.

► Nagashima Spa Land
Nagashima Spa Land opened in 1966 and is a major amusement park with thrill rides in Japan. Nagashima Spa Land has some well-known roller coasters such as Steel Dragon 2000 (one of the longest and tallest roller coasters in the world) and White Cyclone (one of the tallest and longest wooden roller coasters in Asia). The park includes a water park as well, which is recognized for its better space management with most of its slides accommodated within a limited space.

1.6.2.4

Regulatory overview14

The safety guidelines for Japanese amusement and theme parks are specified in the Japanese Industrial Standards (JIS) published by the Japanese Standards Association. The JIS requires park operators to conduct one or more safety checks every year to detect any cracks or other defects inside the parts used in their facilities.

External safety checks and inspections are also carried out by inspectors under the Japanese Building Standards Law regulations.

German amusement and theme park market
Evolution15

The evolution of the German amusement and theme park industry can be traced back to the growth and development of pleasure parks in Europe. The Tripdrill amusement park near Heilbronn, founded in 1929, is one of the oldest operating parks in Germany. Construction of modern theme parks began in Europe during the 1960s and 1970s, driven primarily by increasing car ownership as well as growing disposable incomes and leisure time. Since there are scarcely any travel restrictions in Europe, amusement and theme parks throughout the European Union are generally in competition with each other. The early 1990s and 2000s saw the growth of the ancillary services market in the region as players tried to diversify their revenue streams.

Germany is Europe’s largest single consumer market and has been positioning itself as a leisure travel destination with the aim to increase tourism in the future.
Germany’s 60 large and medium-sized amusement parks had a footfall of around 19 million in 2006 (around 60% of which were repeat visitors) with estimated revenues of USD586 million. Several global amusement park equipment manufacturers, including Zierer and Mack rides, are based in Germany.

► Europa Park
Europa Park is the largest theme park in Germany and was ranked second in Europe in terms of footfall for 2008. The park is located in Rust and is spread over an area of 70,000 square meters. It was opened in 1975 by the Mack family to act as a showcase for their different models of circus wagons and roller coasters. The family has been making circus wagons since 1880 and started manufacturing roller coasters in 1921.

The park is split into 14 different areas, mostly named after European countries and regions. It has nine roller coasters and has recently launched a new family coaster called Pegasus. Europa Park is also a major resort with four hotels, the largest of them being Colosseo, a recreation of the Roman Colosseum. The park has recently introduced an attraction known as “Terenzi Horror Nights,” which attempts to bring the idea of Halloween to Germany. It also plans to add a fifth hotel and a water park by 2010–11.

► Phantasialand
Phantasialand is the second-largest theme park in Germany and attracted a footfall of approximately two million in 2008. The park was opened in 1967 by Gottlieb Loffelhardt and Richard Schmidt. It started as a family park, but has recently added thrill rides. The park has two hotels — Hotel Ling
Bao, a four star hotel which was opened in 2004 and has restaurants, a bar, a pool, a sauna and a spa. The second hotel, Matamba was opened in August 2008.

► Heidepark
Heidepark is one of Germany’s largest theme parks and is located in Soltau. It opened in 1978 and is owned by the Merlin Entertainment Group, which is the biggest operator of parks in Europe and the second-largest worldwide after Disney. (The private equity company, the Blackstone Group, has a majority stake in Merlin.) The park has over 50 rides including roller coasters, water rides and child rides.

1.6.3.4

Regulatory overview18

Regulations for amusement parks in Germany come under its building laws that relate to standards and guidelines enforced in the DIN4112 standard, which focus on the design of rides. Directives for the operation and use of amusement rides, first issued in 1970, regulate the construction, operation, use and maintenance of temporary structures and amusement rides in parks.

TUV, a German technical inspection agency, is one of the leading bodies, which certifies equipment used in amusement parks. This certification is accepted by other European Union member states. Verband Deutscher Freizeitparks und Freizeitunternehmen E.V. (VDFU, German Trade Association for Leisure Parks) commissioned a manual around 2004 to ensure that its members met all legal safety requirements. At the European Union level, there is no legislation governing either the safety of amusement rides or to ensure the safe provision of service to consumers. The European Committee for Standardization (CEN) came

Source: Assessment of best practices in fairgrounds and amusement parks in relation to the safety of consumers, prepared for European Commission Health & Consumer Protection Directorate General by Risk & Policy Analysts Limited

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up with the first European standard on amusement park safety, EN 13814, in 2004. The standard specifies basic requirements that are important for the safe design, manufacture, installation and operation of rides.

South Korean amusement and theme park market
Market size19, 20

South Korean theme parks generated USD1.2 billion in annual ticket sales in 2006. The amusement and theme park market in South Korea is dominated by Everland and Lotte World. Everland, the largest theme park in South Korea, generated the 10th-highest footfall in the world in 2008. For the year 2008, four Korean water parks were adjudged among the world’s top 20 water parks (in terms of footfall). Caribbean Bay, a part of the Everland Resort complex, is ranked the third-largest water park in the world. Deoksan Spa Castle is among the first spa-themed resorts in South Korea and offers facilities such as a healing therapy center and other water- based attractions.

Other Asian amusement and theme park markets

Asian countries have been identified as the strongest regions for amusement industry growth, with many major attraction projects currently under construction. Japan, South Korea, China, India, Singapore, South Korea and Hong Kong each have multiple major destination parks in operation and/or being developed.

Amusement and theme park industry in China
China is one of the major emerging markets within the global amusement park industry. It boasts of the presence of some of the largest parks in Asia.
Ocean Park is the largest Chinese park with an annual footfall of about five million in 2008. It is followed by Hong Kong Disneyland, the first Disney venture in any Chinese territory. The park recorded a footfall of nearly 4.5 million in 2008. Both of these parks are in Hong Kong, which is away from the Chinese mainland. They are thus dependent on tourists from mainland China. Happy Valley Park in Shenzen comes next with a footfall of around three million in 2008.

Source: TEA/ERA Attraction Attendance Report 2008

The Chinese market has also seen significant activity in the water park domain. The Chimelong Water Park in Guangzhou, opened in 2007, has quickly risen in popularity to become the third most visited water park in the world.

► Ocean Park
Spread over an area of around 870,000 square meters, the marine theme-based Ocean Park is the largest park in China. The park comprises two sections, the Headland and the Lowland. They are connected with a cable car system, which offers a view of the South China Sea and southern Hong Kong. Headland has various thrill rides along with aquariums. Lowland has a children’s zone with a bird’s theater. ► Hong Kong Disneyland

Hong Kong Disneyland is located on Lantau Island, close to the Hong Kong International Airport, and is spread over an area of 311 acres. The park, which offers Disney-themed attractions along with two themed hotels, was opened to customers in 2005. The Walt Disney Company owns a 43% stake in the resort through its Hong Kong-based subsidiary; 57% is owned by the government of the Hong Kong Special Administrative Region.

The park has recently announced plans to expand its theme park area to improve customer footfall, which has fallen below expectations.

Other major parks in Asia
Apart from Japan, South Korea and China, the other emerging markets in Asia include Malaysia, Indonesia and the Philippines. Genting Islands (Malaysia) and Sentosa Islands (Singapore) are major resort destinations. In addition, a Universal Studios theme park is expected to come up in Sentosa.

The global financial crisis has begun affecting the amusement and theme park industry. Its impact is evident from the various restructuring initiatives announced by major players with a focus on controlling costs. Some players have postponed their projects in an uncertain economic environment. However, even at a time such as this, Asian markets are emerging as a crucial growth driver for the overall industry. The entry of Disney and Universal Studios in China indicates the growing importance of developing markets in Asia.

Globally, many countries recognize the ability of the amusement and theme park industry to generate improved tourism and employment opportunities. This has resulted in many governments supporting large plans and providing sops including lower taxes and land availability at affordable prices. Most countries also regulate safety practices in the industry through the enactment of laws and provision for annual ride inspection. Park operators across the world have also been focusing on improved marketing and diversification of revenue streams through expansion in emerging markets and a focus on merchandizing.

The following are the key learnings from a study of the global amusement park industry: 1.

Role of government: Governments across the world have been active in establishing and supporting the amusement and theme park industry. They have played an instrumental role in attracting large investments by inviting global players, providing them with incentives to set up projects in the country, subject to certain predetermined parameters such as the size of the investments, employment generation, etc. South Korean governments have been signing agreements with international players interested in setting up amusement and theme parks. Some major initiatives implemented by various governments include:
Incentives for the establishment of large parks: The presence of large players in the market is important for the overall development of the industry as it results in increased customer interest and participation. Before finalizing the location for its Disneyland in Europe, Disney was in negotiations with the Spanish and French governments. The French government won the bid with tax breaks, loans and land provided at below cost. For the year 2008, Disneyland Park emerged as the most popular theme park in Europe, registering a footfall of approximately 13 million.

b.

Government participation: Hong Kong Disneyland has been set up with the support of the local government, which has retained a joint equity stake in the project along with Disney. The government expects various economic benefits with the opening of the park, including employment and increased tourism.

2.

Regulation of safety practices: Several state governments in the US have enacted laws under which qualified safety inspectors need to inspect rides annually. This brings uniformity and aids institutionalization of safety standards. On the other hand, in Japan, the safety guidelines for amusement and theme parks are specified in the Japanese Industrial Standards (JIS). Under the JIS, park operators are obliged to conduct one or more safety checks every year. The development and dissemination of the industry-wide standards initiated by regulatory bodies improves customer confidence and safety.

3.

Focus on merchandizing: Merchandizing is an important source of revenue for global players. It has almost the same contribution as other revenue streams such as gate income and accommodation. Most global players monetize the
merchandising of brands owned by them or concepts developed by them, such as cartoon characters, superheroes, movies, etc.

4.

Prominence of theme parks: Theme parks dominate the landscape of the amusement park industry across the world although amusement parks are greater in number. The largest parks in the world are based on specific themes. Themes allow parks to connect to their customers and help the former to differentiate their offerings in the market. While Disney uses Walt Disney characters for its theme, other players use other major cartoon characters to entertain their customers. In Japan, there are a variety of other themes including motion pictures and world cultures.

5.

Innovative marketing strategies: Marketing and promotion of a park is essential for generating awareness and visibility among its target customers. Some leading players in the global industry have come up with innovative ways to increase the footfall in their parks.

a.

Walt Disney announced that its theme for 2009 will be “Celebration Vacations.” Its parks will host shows, parades and promotions focused on celebrating a special event.

Disney allows visitors to enter its parks free of cost on their birthdays.

c.

Many other parks offer multi-day tickets that can be used at a number of sister parks and are less expensive than buying individual admission tickets every day.

d.

Some parks have introduced tickets that are valid for a long period of time. For instance, a ticket at the Busch entertainment park in Florida is valid for 14 days.

6.

Financial management: The capital-intensive nature of the industry, along with its long gestation periods, makes a valid case for prudent financial management practices in the industry. High debt levels currently pose a challenge to the stability of some players in the US. The current financial crisis will make it difficult for them to roll over past debt. The credit squeeze may also affect capital expenditure on new rides and attractions, a key growth driver for the industry. In Japan, operators are restructuring to cut costs and improve revenues. Universal Studios Japan has been focusing on cost management and reduction for the past few years. Even Six Flags is facing redemption of its convertible shares in 2009 as well as potential delisting from NYSE.

7.

Expansion in international markets: Amusement park operators in the US have begun expanding in emerging markets to diversify their customer base. The amusement and theme park industry in the US is at a mature stage with a lower growth in footfall. Consequently, parks in the country intend to leverage their brand strength in other untapped markets that have huge growth potential. Some players in Asian markets have also forged alliances with smaller players in other countries to share the latter’s expertise in installing and operating amusement and theme parks. These initiatives will help players to diversify their revenue streams and also provide an opportunity for growth in untapped markets.

8.

Focus on diverse customer segments: To enhance repeat footfall and improved customer penetration, amusement parks around the world cater to different customer segments with specifically targeted offerings. Tokyo Disneyland has begun offering discount pricing to entice the elderly. Amusement parks operate in an environment of high competition with other leisure sources; therefore, their adaptability to changing customer preferences provides them with a significant competitive advantage.

Study of amusement and theme park industry in India

The inception of the Indian amusement and theme park industry can be traced back to 1984 when Appu Ghar, spread over 15.5 acres of land, was formally inaugurated in New Delhi. The park was named “Appu” after the mascot of the 1982 Asian Games held in New Delhi.

Over the last 25 years, the Indian amusement industry has grown to almost 120 parks. The growth of the amusement and theme park industry in India can be divided into three phases: the 1980s, 1990s and 2000s, according to the industry’s achievements during the period.

Exhibit: Evolution of amusement and theme parks in India
„ Strategic alliances with international players for themed entertainment along with rising interest of foreign players in the Indian market „ Emergence and growth of Family Entertainment Centers (mid 2000s) „ Opening of Appu Ghar in New Delhi (1984)

„ Development of larger parks — Essel World in Mumbai and Nicco Park in Kolkata
„ Emergence of equipment manufacturers and suppliers in India (1993) „ Opening of India’s first theme-based park (Kishkinta inChennai) „ Entry of large players such as VGP Universal Kingdom
(in Chennai), Ramoji Film City (in Hyderabad), GRS Fantasy Park (in Mysore), Ocean Park (in Hyderabad) marked by the introduction of new formats

Source: Ernst & Young analysis

After Appu Ghar, the entry of players such as Nicco Park and Essel World heralded the beginning of larger amusement parks in India. Nicco Park, spread over 40 acres of land in Salt Lake City in Kolkata was one of the first major parks in the eastern region of India and began operations in 1991. Essel World was developed on the coastal village, Gorai, in northwest Mumbai over 64 acres of land. It began its operations in 1992. The industry saw the emergence of equipment manufacturers and suppliers in India in the early 1990s. For example, Hindustan Amusement Machines, an equipment manufacturer, began its operations in 1993. During the 1990s, the Indian amusement and theme park industry also saw the development of its first theme-based park, Kishkinta, in Chennai. The park, inaugurated in 1995, is based on the legend of the monkey kingdom described in the Ramayana. In 1995, VGP Universal Kingdom, another major South Indian

Study of amusement and theme park industry in India

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amusement park, became operational. It was constructed as an addition to the existing resort facilities of the park operators.
The industry witnessed another round of development with the entry of players such as GRS Fantasy Park (in Mysore), Ramoji Film City (in Hyderabad) and Ocean Park (in Hyderabad) in the late 1990s. This round of development was marked by the introduction of newer formats (Film City) and the emergence of large parks in other major Indian cities, e.g., in Hyderabad and Mysore.

In the new millennium, the industry has witnessed the development of large parks with integrated offerings such as malls, hotels and convention centers. The Worlds of Wonder Park at Noida is based on this concept. The park has been developed on a 150 acre campus and has a large mall. It has also forged an alliance with Cartoon Network to use the latter’s characters for its themed attractions. The growth and development of the Indian amusement and theme park industry has also sparked interest among leading equipment manufacturers and park operators. For instance, Ripley Entertainment has partnered with an Indian firm to set up an amusement park in Bangalore. The growth in the expenditure on lifestyles and entertainment has also resulted in the growth of Family Entertainment Centers (FECs) in India. This segment gained momentum in the mid 2000s due to the mall revolution in India. In fact, FECs have become so synonymous with malls that customers consider them as essential offerings in malls and multiplexes.

Study of amusement and theme park industry in India

Amusement and theme parks in India can be classified as large, medium and small parks. This differs from global segmentation norms, partly due to the industry being in its early stages of evolution in India. We have briefly described some of the criteria used to classify the industry in India. Exhibit: Classification of the amusement and theme park industry in India

Classification of amusement and theme park industry

The Indian Association of Amusement Parks and Industries (IAAPI) is the industry body for amusement and theme parks and FECs in India. It was formed as a “not for profit association” in 1999. As of 2008, it has more than 170 members across the country. IAAPI’s members include amusement and theme parks owners and operators, designers and manufacturers of amusement rides, and other members from the amusement, leisure and entertainment business in India.

This association was formed to create a representative body for the Indian amusement and theme park industry on the international and government fronts. It was intended that this body would work continuously for the growth of this industry. The various activities of IAAPI include: ► Expositions and industry meets: IAAPI conducts an annual trade show, which provides a platform for different stakeholders in the Indian and international amusement and theme park industry to meet and exchange ideas. Each year, national awards of excellence are handed out to the best performing amusement and theme parks in India.

► Publications: IAAPI publishes a bi-monthly magazine, Thriller, which highlights important developments in the leisure and entertainment sector in India. It also publishes an exhibitor directory with contacts of all the major participants related to the Industry.

► Training: IAAPI conducts training sessions for various members of the Indian industry. It periodically conducts training on important topics including customer experience management, and safety and maintenance. It has also developed programs at regional and individual levels.

2.3.2

Operators

► Park owners/Operators: A large number of Indian amusement and theme parks are family-owned businesses managed by a new generation of entrepreneurs. Most park operators own single parks, with a few exceptions. Operators are
attracting new investment to expand their offerings and technology by collaborating with foreign and private equity players.

► FEC owners/Operators: The segment has gained momentum since 2003–04 in India, riding on the mall boom. The space allocated for FECs in malls has been increasing as they have proven to be footfall drivers. Earlier, FECs were used as filler attractions in malls. The organized segment consists of 40–45 FECs. Most FECs in India are owner- operated. This segment is witnessing the introduction of new business models, including franchising, outsourcing of FEC installation and creation of separate brands. Some large Indian players in this segment include Time Zone, Jammin Creations and Orama. ► Manufacturers/Suppliers/Consultants: The manufacture of amusement rides and attractions in India is still at a developmental stage, because of which most of the sophisticated rides are imported from manufacturers in Italy, Germany, Canada and the US. In the last few years, Indian manufacturers have made improvements in their manufacturing standards and standards of compliance with international safety and design norms. This has fueled the growth of demand in other emerging markets such as the Middle East, Asia and Africa, especially for water-based rides. Some manufacturers in India also import secondhand rides from foreign countries at a low cost and sell them in India after re-fabricating them. This is generally done to provide technically advanced rides to customers with low budgets. In recent times, some manufacturers have also backward-integrated into the production of rides and attractions. For instance, Wonder La Rides is the manufacturing arm of the V-Guard group, the operator of Wonder La Park (in Bangalore) and Veegaland Park (in Cochin).

Government

The amusement and theme park industry in India is primarily regulated by the respective administrative bodies at the state and local levels.
► State governments: State legislations generally impact direct and indirect taxes, entertainment tax, employment, safety, pollution control and disaster management. Approval for park project is generally given by the State Ministry of Tourism.

► Local governments: These generally include the municipalities of urban and suburban areas and Gram Panchayats (in rural areas). They give various licenses and approvals required for the commencement of park operations.

► Bureau of Indian Standards (BIS): This is the national standards body in India that has the mandate to issue product certification and develop standards for various processes of all industries. BIS introduced a code of practice for the Indian amusement park industry, along with guidelines for structural safety, in 2004.

2.4

Market overview

The amusement and theme park industry has grown significantly over the last three decades with the liberalization and growth of the Indian economy. However, in terms of footfall and revenue, the Indian industry is relatively small when compared to key global markets.

The key characteristics that generally differentiate one market from another include revenue, footfall, products and services, the number and type of rides in use, the type of customers and employment-generation opportunities. The industry has huge potential in terms of footfall and revenue generation, which makes it one of the world’s key emerging markets.

2.4.1

Industry size

According to industry estimates, there are currently around 90 amusement parks and 30 water parks in India. The Indian amusement and theme park industry generated annual revenue of approximately INR15 billion in 2008.The annual revenue from Indian amusement and theme parks is estimated to grow to at least INR40 billion by 2020.

Exhibit: Estimated annual revenue from Indian amusement and theme parks, INR billion 60

Annual revenue

Source: Industry estimates and Ernst & Young analysis

Manufacturers of rides for amusement and theme parks (including FEC attractions) in India have developed their competencies in water-based attractions, although they are still climbing the learning curve for other Study of amusement and theme park industry in India

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amusement rides, especially thrill rides. According to industry estimates, 8–10 large manufacturers hold around 70% of the total market share of the equipment and rides manufactured in the country. Arihant Industrial Corporation, Hindustan Amusement Machines, Black Diamond Amusement and Bombay Amusement Rides are some of the leading manufacturers in India. In the recent past, park operators have also diversified into the manufacture of rides, for instance, Nicco Parks and the V-Guard group. This segment is also seeing a steady increase in the export of equipment to developed and emerging markets worldwide. For instance, Arihant exports its equipment to players based in the US, France and Denmark. Other key export markets for Indian manufacturers include the Middle East, South Korea, Bangladesh and Pakistan. As of 2008, exports account for around 30% of the total revenue generated by ride manufacturers in India.

Economies of scale, the low cost of material and growing technical advancements provide Indian manufacturers with a key competitive advantage for the future growth of exports. Within the FEC segment in India, about 10 key players currently operate around 45 FECs and hold the majority of this market. This sector has grown on the back of the mall revolution in India. The average size of FECs in India is much smaller (around 2,000–10,000 square feet), as compared to 25,000–50,000 square feet allocated globally. The increasing popularity of FECs is resulting in an increase in the area earmarked for them in malls, especially in metros. There has been a significant shift in the mindset of mall operators over the years and FECs are now being alloted large prime locations at upcoming malls across the country, in line with international trends.

Comparison with global trends
The Indian amusement park industry currently lacks integrated entertainment destinations. As a result, the annual footfall generated at some of the leading Indian parks is only in the range of 0.75 to 1.5 million, while some of the large global parks witness an excess of 10 million visitors annually. This reflects the stage of evolution/development of the Indian amusement park industry.

2.4.2

Key products and services

Products and services in the amusement and theme park industry in India depend on the size of the park and its target customer segment. Traditionally, Indian amusement and theme parks have offered rides, F&B, live shows and events. However, with the increase in investment and the entry of large players in the market, the breadth of product offerings has also increased. Some players have begun offering integrated services such as accommodation, gaming zones, spas, sports activities, swimming pools, golf courses, etc. Ramoji Film City, for instance, has hotels (luxury and budget) to provide accommodation for different segments of visitors. Very few parks in India provide accommodation through in-house facilities currently. Accommodation needs to be booked by contacting nearby hotels. Of late, a new trend is emerging, where parks are promoting themselves as tourist destinations and providing all their facilities at one place, encouraging tourists to stay for two to three days.

Comparison with global trends
One of the key differentiating factors between popular international parks and their Indian peers are the unique entertainment experiences created by the former to attract customers from far and wide. The lack of unique offerings at amusement parks in India is proving to be a roadblock in the growth of the industry, since other entertainment destinations such as malls, multiplexes, gaming zones, etc., are closer to customers and hence provide stiff competition for parks.

2.4.3

Target customer group

The major target segment of the Indian amusement and theme park industry includes children and the youth. The middle class is the largest consumer of the services offered by such parks in India, occasional promotional pricing helps to attract people from lower income groups. Customers at Indian parks are primarily local residents. With increasing domestic tourism, tourists from other parts of the country are also expected to contribute to the industry footfall.

The typical target segments of FECs in India are middle and upper class families. Children and teens are the major spenders at FECs with the average spend per visit being in the range of INR70 to INR200 per person. Changing consumer preferences and awareness have resulted in an increasing demand for leisure and entertainment facilities in the recent past. With surging disposable incomes and a cultural shift, the expanding Indian middle class is becoming a strong potential market for various recreational and entertainment activities such as movies, tourism and amusement parks.

Since 2000–01, the per capita income of Indians has grown by about 9.9% per year from INR17, 000 to INR33, 000 in 2007–08. India is also undergoing a demographic change with its emergence as one of the world’s youngest nations. It is estimated that by 2020, the average Indian will be 29 years old, as compared to 37 in China and the US, 45 in Western Europe and 48 in Japan. This entails the creation of a large work force and subsequent spin- offs in terms of economic growth and prosperity. These factors will aid the growth of the amusement and theme park industry in India in the future. Study of amusement and theme park industry in India

1%

84%
Local residents

Domestic tourists

Foreign tourists

Source: Ernst & Young analysis

► Domestic tourists — an emerging customer segment: Over the last few years, domestic tourism in India has experienced a substantial rise due to an increase in incomes and the emergence of a dynamic urban middle class. Better and cheaper transportation options have also aided this growth. Domestic tourism has witnessed a steady growth to reach 526 million in 2007 from 269 million in 2002. Some large amusement and theme parks are already present in states with significant domestic tourism. For instance, Andhra Pradesh, which is the most frequented state by Indian domestic tourists, has parks such as Ramoji Filmcity, Snow Park and Ocean Park. Tamil Nadu, another state frequented by domestic tourists has parks such as VGP Universal Kingdom, Kishkinta and MGM DizziWorld. By specifically targeting tourists and catering to their varied needs, park operators can generate increased footfalls.

22

According to ASTM F 747-97, rides designed primarily for the use of children up to the age of 12 are considered children (kiddie) rides.

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Exhibit: Growth in domestic tourists in India — million (2002–07) CAGR = 14.3%

600
500
400
300

270

309

527

462

366

392

2004

2005

200
100
0
2002

2003

2006

2007

No. of domestic tourists
Source: Ministry of Tourism, Government of India

Comparison with global trends
Globally, domestic and international tourists comprise more than 50% of the footfall at popular amusement parks. However, in India, most amusement parks only draw local crowds. “Attracting tourists to amusement destinations requires a unique selling point (USP) initiative by park owners. None of the larger cities in India currently boast of such destinations.” – Large tour
operator

2.4.4

Rides in parks23

Most parks in India offer two types of rides —
children’s rides and adult’s rides. Generally, these
rides are customized according to the requirements
of the park. For most adult rides, an individual’s
height is used as a criterion to determine the
person’s eligibility to take the ride. Generally,
children’s rides are less expensive and have lower
capacity as compared to adult rides. However, since
children are the major influencers for a park visit,
almost every operator focuses on good children’s
rides. Overall, around 62% of the rides in Indian
amusement and theme parks are adult rides..

38%

62%

Adult

Children

Small and medium park operators in India generally prefer indigenously manufactured rides because of their lower initial prices and maintenance costs. However, most of the bigger parks prefer to source sophisticated rides from foreign manufacturers in Europe and North America

23

According to ASTM F 747-97, rides designed primarily for the use of children
up to the age of 12 are considered children (Kiddie) rides.

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2.4.5

Park planning

Various parameters are involved in deciding optimum facilities at amusement and theme parks at their development and innovation stages. A holistic approach toward park planning is necessitated by the capital intensive nature of the industry. Operators must undertake a detailed feasibility study through an analysis of the parameters that are the most critical for the survival and success of amusement parks.

Exhibit: Important parameters for the development of a park

Location
„
„
„
„
„

Metros
Tier 1 cities
Tier 2 cities
Satellite towns
Small towns

Paying capacity
of the target
segment
Park size
„
„
„

Large parks
Medium parks
Small parks

Park capacity
Regulatory
requirements
Alternative
sources of
entertainment

Land availability
Demographics of
the target segment
— “Entertainment
Appetite”

Source: Ernst & Young analysis

Key takeaway
It is extremely critical for park owners to consider a wide variety of factors while planning a park. The composition and outlay of offerings need to be strategized and designed, keeping in mind the target consumer group, competitive intensity and the creation of a unique entertainment experience for customers.

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2.4.6

Average industry footfall

The Indian amusement park industry generated an approximate footfall of 50 million in 2008. The footfall typically varies according to the size, location and offerings of a park. For instance, at large parks located in metros and tier I cities, the footfall could range from 0.5 million per annum per park on an average and go up to 1.2–1.5 million visitors for a mega park. These parks have high ticket prices because of their high capital investment to provide advanced rides.

Medium parks are generally located in satellite towns, the outskirts of metros and tier 1 or tier 2 cities. These parks generally achieve an average annual footfall of 0.3 to 0.5 million visitors. They have to price their offerings carefully and plan promotional activities to maintain visitor levels. Small parks make the lowest investments and largely cater to local catchments; they typically see a low average annual footfall of less than 0.3 million visitors. They are generally located in tier 1 or tier 2 cities or small towns. Park operators get some benefits by setting up parks in these areas as land is easily available at less expensive prices and act as easily accessible entertainment options for local residents.

2.4.7

Employment generation

The amusement park industry has huge potential to generate employment directly and indirectly. ► Direct employment primarily includes personnel on the payroll of park operators. ► Indirect employment includes job opportunities generated by the industry around park locations and at suppliers and service providers.

The Indian amusement and theme park industry directly employs at least 20,000 people according to the average estimates provided by large parks. At the ground level, parks employ ride operators and cash collectors reporting to the supervisors, who take care of rides and their operations in allotted sections of the park. Parks also employ managers who supervise the entire park and its operations. Marketing personnel engage in direct and indirect marketing initiatives relating to the parks. Ride maintenance is generally taken care of by technical staff including engineers and technicians. Parks may use in-house employees for Food & Beverages/Security or outsource these services.

At the global level, a large number of employees are recruited seasonally (due to shorter operating seasons, especially in the US). On the other hand, in India, parks recruit for a longer term and engage seasonal employees only during peak seasons. According to industry estimates, around 80–85% of the workforce directly employed at Indian amusement parks is permanent, while globally it is limited to 10–15%.

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Exhibit: Indicative employment generation from amusement and theme park industry (key heads including operators/manufacturers/consultants)
„

Administration
„

Direct employment categories

„
„
„
„
„

Managers

„

Accounts

„ Human resources
Marketing
Ride operators
Cash collection staff
Life guards
Technical staff
„

Engineers

„

Diploma holders

„

Welders

„

Food & Beverage

„

Housekeeping

„

Security

„

Indirect employment categories

Transport providers

„

Merchandizing

„

Equipment suppliers (manufacturers)

„

Raw material suppliers for the
manufacture of rides

„

Consultants/Planners

„

Infrastructure developers

Source: Ernst & Young analysis

Over and above directly employed personnel at parks, a large number of people get employment due to the mere existence of a park. This category primarily comprises the contracted food and beverages, security services and housekeeping staff. It also includes the innumerable employment opportunities generated for other industries linked to amusement parks such as tour and transport operators, labor involved in the construction of roads and other infrastructure in the park vicinity, industries engaged in the manufacture of raw materials and rides, equipment for use at the park, etc. Equipment manufacturers, on the other hand, primarily employ technical staff members who are involved in the design, construction and installation of equipment. Welders and diploma holders occupy the entry-level positions in these companies and are supervised by engineers. The engineers report to managers who oversee operations.

It is difficult to provide a numerical estimate of the indirect employment generated at amusement parks. However, with the expected growth of amusement parks in India by 2020, the employment potential of this industry is expected to grow exponentially with the emergence of huge destination parks.

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2.5

Financial overview

Globally, parks utilize multiple revenue streams such as admission fees, food and beverage sales, merchandizing, rentals, accommodation, etc., to generate revenue. Players such as Disney have substantial contribution from merchandizing and accommodation as well as admission fees. On the other hand, income from admission and rides is the most prominent contributor to revenues in India. Parks also have other revenue streams, but their contribution is not as significant as in global markets. Capital and operating expenditures are the other areas that require management as they affect cash flows and margins directly. Maintenance and staff cost are the most significant operating costs for Indian parks.

2.5.1
2.5.1.1

Revenues
Key revenue streams of amusement and theme parks

The various revenue streams of Indian amusement and theme parks can be classified under different heads, as shown in the following exhibit. Park owners utilize them to support round-the-year revenue generation. Gate income primarily comprises income from the sale of tickets for admission to parks. Park operators use either of the following two pricing models:

► Pay one price: In this format, parks charge the customer a single, large admission fee. The customer is then entitled to use the different attractions available in the park (most widely used format). ► Pay as you go: In this format, customers buy tickets for different rides individually. Park operators also charge entry fees to various live shows and events, which are organized within their premises. Parks generate Food & Beverages (F&B) revenues from food kiosks, restaurants and food courts in the park. Self-operated F&B facilities earn a higher operating margin as compared to outsourced stalls. Parks also generate revenues from merchandizing through the sale of souvenirs and other products that are generally related to park
offerings or the concept on which the park is based. For instance, internationally, Disneyland’s merchandize carries pictures or logos of its cartoon characters. Similarly, Universal sells merchandize based on its movies. Major parks around the world also offer accommodation facilities, e.g., hotels (on site/off site) and resorts. However in India, this revenue stream is not currently utilized by parks. In certain cases, park operators provide direct marketing opportunities for other companies at their premises, either in the form of hoardings or joint marketing activities. In India, some park operators generate rental income by letting out their premises for live shows or occasions such as corporate events, weddings, functions and other ceremonies. In the case of water parks, revenue is also generated from the rental of costumes and lockers. These are not known to be focus areas internationally.

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Exhibit: Indicative contribution of the major revenue streams for amusement and theme parks to total revenue

Gate income

Food & beverages

Income from ticket sales for
„ Admission/Rides
„ Live events

80%

Income from sale of eatables from

„ Food kiosks
„ Restaurants
„ Food courts

15%

Merchandizing

„
„

Sale of souvenirs
Other branded products

Revenue split: comparison with global peers

Globally, the revenue generated by large amusement and theme parks is roughly equally split between gate income, F&B and merchandizing and accommodation. In stark contrast to global trends, gate income primarily drives the revenues of Indian amusement and theme parks. This highlights the potential of F&B, merchandizing and accommodation for Indian operators.

Indian parks currently generate a large proportion of their revenues from gate income, while global trends reflect an equal contribution coming from revenue streams such as merchandize and accommodation. This indicates the heavy revenue loss suffered by Indian parks in terms of losing out on the opportunity to generate increased revenues through additional streams.

Indian park operators clearly need to focus on their revenue strategies and attempt to connect with their target customer groups through focused positioning of their ancillary products and offerings. Source: Ernst & Young analysis

The costs incurred by amusement parks can be divided into two heads, capital and operating expenditure. Capital costs consist of expenditure on developing and upgrading fixed assets at the location, i.e. land, equipment, etc. Operating expenditure comprises costs incurred in maintaining the annual operations of the park and includes staff and administration costs, repair and maintenance costs, power and fuel costs, etc. These two types of costs in the context of the Indian amusement and theme park industry have been explained in further detail below.

Capital expenditure

The amusement and theme park industry is highly capital intensive and has a long gestation period. The initial capital expenditure in the industry is primarily allocated to land and equipment for the facility. To maintain customer interest and a steady footfall, parks are also required to periodically upgrade their products and services. This periodic upgrading (including redesigning of rides and the addition of new rides and services) also adds to the capital costs incurred by the players. These costs go up further for the development of a theme park. Industry experts attribute the lack of large theme parks in India to the associated high capital expenditure and low per capita returns in the form of consumer spend on amusement and theme park facilities. The total capital investments made in the amusement and theme park industry in India till date are more than INR40 billion (excluding investment on land). This includes investment on rides, attractions and the development of the park. Investments made on land to develop parks vary, based on factors such as location, inherited properties (family-owned land), local regulations, etc. The size of the investments is expected to at least double and continue to grow substantially over the next few years due to the keen interest shown by prominent international players and large Indian players in developing huge destination parks in India. Typically, initial investments on rides and equipment (excluding investments on land) for a large park with around 30 to 40 rides would be at least INR500 million. Similarly, the initial investment for a medium-size park with 15 to 30 rides would be in the range of INR200–500 million. On the other hand, for a small park with only 10–15 rides, the investment would be around INR200 million. These investment estimates are based on industry benchmarks and may differ on a case to case basis, depending on the location of the park, the targeted customer group, the origin and nature of the rides installed and the overall landscaping of the park area.

Study of amusement and theme park industry in India

The high initial capital outlay by park operators is followed by the annual costs that have to be borne to run the parks efficiently. The major heads under operating expenditure include the cost of maintaining the equipment and park surroundings, the salary costs of employees and other administrative expenses. The largest contributor to the operating expenditure of Indian amusement and theme parks is maintenance at 40%. It includes the expenses borne by parks to conduct scheduled maintenance and repair work on installed rides, comply with safety regulations and have regular inspections by third parties. In addition are staff and administrative costs with a contribution of 22% and 17%, respectively. Staff costs include the salaries paid to the employees at the parks including supervisors, ride operators, and housekeeping and security staff. Administrative expenses include establishment and marketing costs. Renewal of licenses and water (for water parks) together contribute around 6% of the overall operating expenditure. Exhibit: Split of operating expenditure (%)

Source: Ernst & Young analysis

Comparison with global trends
Effective financial management has become extremely critical for survival in the current uncertain economic scenario. This is substantiated by the initiatives taken by global players in terms of the cost reduction techniques applied.

It is imperative for park operators to focus on containing costs and optimally utilizing capital to generate an adequate return on their investments in the long run.

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2.6

Policy and regulatory overview

The amusement and theme park industry in India operates under various regulations and procedures laid down by different governing authorities. The industry primarily comes under the purview of the Ministry of Tourism of respective states and local authorities and the laws enacted by the state governments. A brief description of the existing regulations and policies under consideration for amusement parks is provided in the following sections, along with the role of the various government bodies involved and the safety practices followed in this industry.

2.6.1

Current state of policies

The amusement and theme park industry is primarily regulated at the state and local level in India. At the central level, the Bureau of Indian Standards (BIS), the national standards body in India, has come up with a code of practice for the Indian amusement park industry and has introduced guidelines for structural safety in 2004. IS24 15475 focuses on amusement ride safety while IS 15492 takes care of safety in water parks. The guidelines provide information about safety requirements, selection and training of operators and operation and maintenance procedures. They also highlight key points in the design, manufacture and setting up of amusement rides. There is no enforcing agency to oversee the implementation of these guidelines, which leaves a gap in the regulation of industry practices.

State regulations generally focus on direct and indirect taxes (including entertainment tax), safety standards, power, environment, pollution control and disaster management. The Shops and Establishment Act at the state level lays down guidelines for the employment and termination of service of employees and is applicable to amusement and theme parks. State governments appoint Inspectors or Assistant Inspectors to check the application of the Act. Parks in India need to obtain clearances from the state for electricity, water and sewage disposal connections. Amusement and theme parks are considered to be tourism units by the Ministry of Tourism at the state levels and need approval for commencement of project work. The key documents that need to be submitted for approval25 include:

► Project report
► Original plan approved by the Gram Panchayat/municipality/corporation ► Project estimates prepared by the authorized registered engineer ► License for construction obtained from the Gram Panchayat/ municipality/corporation ► Title deed of the land

► Encumbrance certificate

After the completion of the project work, operations commence after the completion certificate is received from the State Department of Tourism. The key documents required to receive a completion certificate include: ► Completion certificate from the Gram Panchayat/municipality/corporation ► Copy of approval letter (obtained from the Department of Tourism) ► Electricity bill

24

Indian Standard

25

Source: Karnataka Tourism Policy 2002-2007

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In India, administration at the local level is handled by different institutions at the rural and urban levels. Gram Panchayats take care of administration in villages in the country. Municipalities or Municipal Corporations are endowed with similar responsibilities at the urban or sub-urban levels. Parks have to take approvals from them before commencing on project work or commercial operations. The local authorities also give a “trade certificate “for parks. Park operators also have to obtain “No objection certificates” from the following departments at the local level:

► Police
► Health department
► Fire department
► Food department
► Medical department

2.6.2

Policies under consideration

The Central and State governments are also considering some policies, which may have an impact on the amusement and theme park industry.
1.

Single window clearance: While setting up an amusement park, the most tedious task for a park operator is to collect all the necessary approvals and licenses from the various authorities. The foremost problem here is lack of information about the relevant licenses and the lengthy procedure for approvals. For example, if a park requires 10 licenses, these have to be obtained separately in most cases. The amount of effort and time required makes it difficult to start a new venture. Some state governments such as Karnataka and Maharashtra are working toward solving this problem and have proposed the introduction of a single-window clearance system for new ventures. This will reduce the time taken to set up a new venture, which is critical in the capital-intensive amusement and theme park industry.

2.

Introduction of dual goods and service tax (GST): Recently, the Union Government formally accepted the state finance ministers’ suggestion to introduce a dual Goods and Services Tax (GST) system to adopt a uniform tax rate for indirect taxes. The dual GST model will subsume central excise duty, service tax and Value Added Tax (VAT). It will have two tax rates, one that will be charged uniformly across the states and the other by the Union Government. The rate will be decided by the empowered committee of state finance ministers. The introduction of this policy will rationalize tax rates across the country and make it easier to attract foreign direct investment in this sector.

2.6.3

Safety practices in India

High standards of safety and maintenance are of prime importance in the amusement and theme park industry. Accidents at parks generate negative publicity for the industry, which may eventually result in a decreased footfall. According to Industry players, accidents in a park may result in a decrease of up to 50% in its footfall. More importantly, it may result in a 20% decrease in attendance in other parks nearby. Safety practices in India are still at a developmental stage. Although BIS has developed a code of practice for amusement rides safety (IS 15475 and IS 15492), there is no enforcing agency that enforces the uniform application and regulation of standards throughout the country. Officials (generally from State Public Works Departments) are authorized to inspect amusement and theme parks to check installation and maintenance. However, according to Industry sources, they lack the required expertise and understanding of ride dynamics. Most large parks in India claim to follow the industry’s best practices in terms of safety. They conduct preventive maintenance of the rides every day before opening for the general public. Leading parks have also started applying for ISO 14001 (Environment management) and OHSAS 18000 (Occupational health and safety). For instance, Nicco Parks in Kolkata has a daily maintenance
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management systems) specifications. On the other hand, manufacturers are not required to follow any specific design standards for rides, although some have upgraded their design capabilities to meet Indian standards. With increasing exports, manufacturers are implementing the standards of other countries to improve their competitiveness. Wonder La rides, the manufacturing unit of the V-Guard group, follows EN 13814 norms to manufacture rides. (European Standards are facilitated by the European Committee for Standardization —CEN). Hindustan Amusement Machines, the Noida-based manufacturer of amusement rides, has affiliated with Saudi Arabian Standards Organization (SASO).

Overall, the application of international standards in India is sporadic and primarily prevalent among the leading players. Some players feel that the percolation of best practices in safety and maintenance among different categories of parks and manufacturers is of prime importance for the growth of the industry.

Comparison with global trends
Globally, safety of customers and employees is of paramount importance in the amusement and theme park industry.
State governments in the US regulate industry practices through inspection by well-qualified inspectors. Parks are also required to report accident incidents to state officials and obtain insurance against accidents. Despite the presence of safety standards relating to amusement and theme park rides in India, the lack of an enforcing agency is a major drawback for the uniform implementation of safety practices throughout the industry.

2.7

Key challenges

The Indian amusement park industry has grown impressively in the past 25 years and is expected to do well in the future. However, it is in a transitory phase where it is seeing substantial changes and facing some critical challenges, which are hampering its growth. These issues require the immediate attention of the various stakeholders involved. The key challenges are mainly in the form of the following: 1.

Variable entertainment tax: According to the industry, the high variation in entertainment tax across the country is a major challenge for the industry. It is a state government subject and varies from state to state in the range of 0–50%. Most park operators directly pass on these taxes to their customers in the form of increased ticket prices. This impacts the footfall in parks negatively. It is also one of reasons for a regional skew in the growth and development of this industry in India.

2.

Low per capita consumer spend on entertainment services: Indian customers are price-sensitive. This is the reason for lower ticket charges for entertainment activities in India as compared to other markets worldwide. In most mature amusement and theme park markets, park tickets are generally priced at around INR1, 500–2,000 with respect to purchasing power parity (PPP) with India, as compared to the highest ticket price at Indian amusement parks, INR500. The lower spend of Indian customers is another deterrent for the introduction of new rides and formats, since the operators are unable to recover their investments. This continues to form a vicious cycle, wherein consumers are not willing to spend on amusement parks due to lack of unique entertainment experiences, which results in lower revenues for the industry, and consequently, a slow pace of development.

3.

Social and supporting infrastructure: Due to large land requirements, most amusement parks are located on the outskirts of cities. In such a scenario, supporting infrastructure such as roads, buses and cab facilities become critical to improve accessibility for customers. Most cities do not have any approved land for entertainment activities such as amusement and theme parks in their master plans. If the land is on the outskirts, connectivity by road is a major problem, which enhances the cost of the project for park operators. Further, this limits the working hours of amusement parks.

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4.

Competition from other entertainment options: Other entertainment options such as movies, theaters, malls, concerts and live shows, themed bars and restaurants, pubs and clubs are proving to be a stiff competition for the amusement and theme park industry due to their easy accessibility for the consumer. The volume of footfall remains the key for the success of an amusement park. The only possible way of generating a high footfall and getting a notch higher, as compared to other entertainment options, is the development of differentiated features that will drive entertainment for customers.

5.

Funding: Availability of capital is very important in this industry with high initial costs and frequent upgrading required for the attractions. The Tourism Finance Corporation of India Limited financed some park projects across the country, but has reduced its exposure in this sector due to some
bad experiences. Bank funding is also difficult as most amusement and theme park projects are treated as isolated projects with maximum risk exposure, which increases capital costs.

6.

Land: Location is an important factor, which contributes majorly to the potential footfall a park can generate. High real estate costs discourage park operators from setting up new parks at attractive locations.

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3. Road map for the future
3.1

Emerging trends

The Indian amusement and theme park industry is witnessing a wide variety of changes as it tries to establish itself in the global arena. Park operators have recognized the opportunities presented by the rapidly growing and consuming Indian middle class. Parks are being developed in new locations, along with the addition of suitable ancillary services, to provide customers with improved experiences. However, Indian players are still hesitant to invest in large theme parks, primarily due to the high capital costs associated with such projects and low per capita consumer spends at parks in India.

Ride manufacturers are seeing a growth in exports to countries including the US, the UAE, France, Bangladesh and Sri Lanka. Further, the industry is witnessing a trend of collaborations between Indian and foreign players for the development of parks and manufacturing facilities.

Some of the major recent trends in the Indian market:
1.

Upcoming destinations: Satellite towns and tier 1 and 2 cities are emerging as hotspots for new investments by the industry in India. The economic growth and development of the country has exponentially increased the consumption of the middle class. New parks are being proposed around these cities as the local population wants newer avenues of entertainment. Amusement park projects are coming up in satellite towns such as Noida and Navi Mumbai. The attractive features of these cities include their proximity to larger cities and availability of large tracts of land required for park development. Players in the industry are also increasingly showing an interest in developing parks at major tourist and holy destinations such as Jaipur and Haridwar.

2.

Development of large parks: The Indian amusement and theme park industry is seeing a trend of increased investments and larger park sizes. These large parks aim to capture a larger footfall by offering newer and improved attractions. With facilities such as corporate centers, hotels and malls, these parks aim to increase the duration of customer stay and the quantum of spend. For instance, the Jaipur project (undertaken by International Amusement Private Limited) is being developed as a tourist city. It is expected to be spread over an area of 300 acres and has hotels, a golf course and other leisure facilities. It will be positioned as a tourist destination, aimed at generating customer stays of three to four days. Mumbai and its adjoining areas are also expected to be home to some of the largest amusement attractions in the country, driven by huge investments and international tie-ups. International Amusement Private Limited has already begun operating another large park located in Noida, which is spread over 150 acres. Wonder La, a large park near Bangalore, has been built on an 82
acres campus.

3.

Integrated development: The Indian amusement and theme park industry has been primarily dominated by amusement parks. Most players are now diversifying into water parks or are developing water parks along with amusement parks to their improve year- round footfall. Their low development and maintenance cost is another driver for the growth of water parks in India. Players in the industry are also increasingly clubbing their offerings with other entertainment and leisure options such as hotels and resorts, shopping malls, FECs and gaming zones to increase their footfall. This will enable parks to position themselves as holiday spots and tourist destinations. At this stage, it is most critical for park owners to focus on planning and feasibility analyses to enable the optimal development of facilities, which will help in achieving positive customer experiences.

4.

Increasing collaboration with global players: The amusement and theme park industry in India is witnessing a rise in the collaboration between local and global players. The entry of foreign players is expected to provide a huge boost to the growth of this sector. It is also important for Indian players,

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especially manufacturers, to proactively scout for potential partners in the global market. Some recent collaborations include:
a.

b.

5.

Ripley Entertainment has partnered with Innovative Studios Private Limited to set up its attractions at The Innovative Film City at Bangalore. The film city is expected to house Ripley’s Incredible Maze, Believe it or not Museum, Luis Tussaud’s Wax Works and the Guinness World Record Museum. V-Guard Group, the operator of the Wonder La and Veegaland parks, has set up its manufacturing unit, Wonder La Rides. It plans to enter technical agreements with its existing suppliers from Italy (the SBF Visa Group and Moser Rides) to design and manufacture hi-tech rides in India, negotiations for which are already under way.

Growth in FECs: FECs have generally been used as “balancing figures” (filler attractions) to utilize the remaining space in malls. Gradually, the area allocated for them in malls has increased as they have proven to be footfall drivers for malls. Timezone, a leading operator of FECs, has recently launched its grand arcade spread over 18,000 square feet at the Inorbit Mall at Vashi in Navi Mumbai. Realizing the potential of FECs, developers are now planning them as attractions in malls in tier 2 and 3 cities. For instance, the operators of Suraj Water Park at Thane are planning to set up an FEC in Junagarh in addition to its existing facility at Vadodara.

The segment is also seeing the introduction of new business models where project installation is carried out by a separate party while the FEC owner takes care of operations.

6.

Rising exports to emerging markets: Indian manufacturers of amusement and theme park rides are witnessing a rising demand from emerging markets such as Bangladesh, Pakistan, Saudi Arabia and countries in the Middle East. For instance, players such as Bombay Amusement Machines generate the major
portion of their revenues by exporting rides. Arihant, another leading player, has acquired customers in advanced markets such as the US, France and Sweden. According to industry estimates, this trend is expected to continue, resulting in a substantial growth in export earnings in the industry.

3.2

Key enablers for future growth

While these emerging trends reflect a promising future for the amusement park industry, the stakeholders will have to work toward achieving its true potential. Some of the key enablers required for future growth include: 1.

Government initiatives: The Indian economy has been growing since the liberalization of its markets. The government has been periodically taking steps to encourage the industry and create equitable social growth. In the future, the growth and development of the Indian economy will depend on the initiatives taken by the government to spur industrial growth. The industry, on the other hand, should also complement the government’s initiatives with competitive practices.

2.

Increased discretionary spending of Indian consumers: the Indian economy is expected to emerge as the world’s fifth-largest consumer market by 2025. The corresponding growth in consumption and income will result in the creation of various opportunities and challenges for government and business. The amusement and theme park industry can count on the projected increase in discretionary spending by consumers, especially on entertainment.

3.

Focus on improved performance: It is imperative for the industry to remain focused on improving its operations and safety practices. The leisure
industry is highly competitive and customer retention is a priority for future growth. The industry will need to continuously improve its offerings to entice customers and generate a “buzz” through focused marketing. Equipment manufacturers will also have to improve their manufacturing standards, while keeping costs low to generate a competitive advantage and gain international recognition and acceptability.

4.

Entry of realty players: The entry of major realty players will provide a huge fillip to the Indian amusement and theme park industry. With availability of land being a crucial factor in the development of amusement and theme parks, these players, with their large tracts of land in and around major cities, can provide land

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for amusement parks. Unitech has already joined hands with International Amusement Limited to develop integrated entertainment zones with amusement parks and other related offerings. 5.

Initiatives in the FEC segment: Improved technology is expected to be the key driver for the future growth of this segment in the country. Already, new technologies such as swipe cards are being increasingly used to replace token games. This will reduce customer waiting time and enable trouble-free access to games. According to industry players, foreign players such as Time Zone have announced their plans for alliances in India. This will also spark future growth and development in the segment.

Key imperatives

It is essential for Indian park operators to identify potential opportunities and threats in the fast-changing entertainment landscape. With the growth of electronic games and the proliferation of malls, and with FECs being closer to customers, parks need to think out of the box to generate and maintain customer interest.

3.3

Potential impact of the growth of this industry

India is known around the world for its rich cultural heritage. The Indian amusement and theme park industry has huge potential for attracting domestic and international tourists by using India-specific themes, which will help them to differentiate themselves globally. The growth of parks can also act as a stimulus for the development of social infrastructure in sub-urban and rural areas where these parks are generally located. 1.

Increase in tourism: The amusement and theme park industry has tremendous potential for generating additional domestic and international tourism in India. The growth in the number of parks and service offerings is expected to be one of the key drivers to achieve this. Some major India-specific themes, which can be tapped, include:

a.

Culture: India is recognized internationally as the land of diversified cultures and traditions. Park operators can showcase various regional lifestyles to generate consumer interest. For instance, Chokhi Dhani in Jaipur is already using this concept and similar parks have come up in the recent past. Parks that are based on culture can generate higher revenues by appealing to domestic and international tourists.

b.

Films: Movies are synonymous with entertainment throughout India. Ramoji Film
City is an example of an Indian theme park based on the film industry. It has movie shooting sets, artificial landscapes, gaming zones and accommodation. Innovative Film City in Bangalore is another integrated facility offering attractions such as museums, gaming zones and film studios. More theme parks on similar lines are expected to come up in the future. The Maharashtra Government is also planning to develop a “Bollywood” theme park in Mumbai.

c.

Mythology: The Sagar Group (an Indian media and entertainment group) is expected to come up with spiritual theme parks at Haridwar and Navi Mumbai. It aims to tap spiritual tourism and set up mythology-themed parks across other religious destinations (Mathura and Benares). The International Society for Krishna Consciousness (ISKCON) is also planning to come up with a park based on Indian mythology in Bangalore.

India has a diverse range of potential themes that can cater to various target customer segments. These themes can be monetized in the form of differentiated positioning for parks and create unique revenue streams for the owners and operators of such parks.

2.

Development of social infrastructure: Increased investments in amusement parks can be the key driver for the development of suburban and rural areas, where many Indian parks are located. Locations with amusement parks require improved civic amenities including roads, power and transport. This presents potential for public-private partnerships in building parks, roads and other connecting infrastructure. The

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economic development of suburban and rural areas will also decrease the pressure on urban regions. For example, the development of Disneyland in Florida provided a great fillip to the real estate in that area. It also resulted in the creation of a complementary social infrastructure in the region.

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3.

Employment generation: The majority of direct employment at Indian amusement and theme parks is in the areas of operations and administration. According to industry estimates, operations staff will contribute a larger proportion of the direct employment provided by Indian parks in the future. Manufacturers of amusement park rides also provide employment opportunities to qualified professionals such as engineers and diploma holders.

The creation of parks in suburban and rural areas will also generate additional indirect employment in transport, food and beverages (outsourced) and security (outsourced).

4.

Foreign investments: The Indian market has a great untapped potential, which presents a strong case for the entry of foreign players and can result in increased foreign direct investment into India. Global players such as Disney and Universal Studios have historically benefitted from expansion
into overseas markets. Tokyo Disney Resort is a major success story at the global level. Foreign operators have an advantage since 100% FDI is allowed in this sector.

3.4

Industry projections

The strong fundamentals of the Indian economy provide a great opportunity for growth to the Indian amusement and theme park industry in the foreseeable future. Moreover, increasing urbanization and changing customer preferences will have a positive impact on the industry footfall. Presently, the industry lacks the presence of large players to generate adequate customer interest in amusement parks as a whole. The amusement park industry requires the determined and dedicated efforts, in the face of the global economic slowdown, of its stakeholders to sustain its rate of growth and achieve future projections.

3.4.1

Current demand-supply gap

Currently, for a population of around 1.1 billion in the country, there are only 120 amusement and theme parks and 45 FECs in India. Therefore, the estimated population served per park is nearly five million, which is very high as compared to mature amusement markets. As per international benchmarks, one park can cater to around two million people in a city.

This indicates the future potential of the Indian amusement and theme park industry with the scope of a minimum of 200–250 entertainment destinations in the form of amusement parks and FECs. Further, the current population going to amusement parks largely belongs to urban areas. Rural and semi-urban potential is still untapped in the country.

3.4.2

Future industry size

The industry size in terms of revenues is expected to increase from around INR15 billion in 2008 to approximately INR40 billion in 2020, mainly due to the emergence of large entertainment destination-oriented parks and the inflation in ticket prices.

The current expense of an Indian household on entertainment and recreational activities is also expected to increase by 1.5 times by 2020, which will play a major role in the growth of this industry. The current footfall in parks in India is expected to increase from around 50 million in 2008 to approximately 70 million in 2020, largely due to the emergence of bigger parks with wider offerings and newer concepts attracting tourist visits. The economic growth over this period, increasing customer awareness and the willingness to spend will be the other drivers for the future growth of industry footfall. The amusement parks industry size in terms of the number of parks is expected to almost double from the present 120 to around 200 parks by 2020.

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concept in India and it is costly to develop a theme park as compared to amusement or water parks. Historically, the spending habits of the Indian population and industry statistics have not been conducive to the establishment of such parks in India.

However, with the changing preferences of the Indian consumers, by 2020, the number of theme parks in the industry is also expected to increase from 5–10% to 20–25% of the total industry size.

3.4.3

Demographic projections

According to industry estimates, the contribution of domestic tourists to the total park footfall is expected to increase, mainly due to an increase in awareness and the opening of larger parks in India. Currently, only 10– 15% of the footfall is contributed by domestic tourists. This is expected to increase up to 20–25% or even higher by 2020 for parks in metros. Visitor demographics in the future will continue to reflect the overall demographic ratio in a particular region. The middle class is expected to be the largest visitor class to parks, although the footfall of the upper class is also expected to increase with the opening of larger parks.

3.5

Next steps for stakeholders

Based on the global trends and factors driving the growth of the Indian amusement park space, certain steps emerge as most essential to support development in this industry. These will be required in the form of initiatives from key stakeholders within the Indian amusement parks industry.

3.5.1

Government bodies

1.

Recognition as a separate industry: This industry has huge potential and can contribute significantly to India’s growth story, including generation of FDI and increase in tourism (domestic and international). However, lack of recognition is a major impediment in the growth of the industry; it does not allow it to avail of capital from financial institutions at competitive rates. As a first step toward the future development of this industry, the government should grant it industry status. Some states have already started recognizing the potential of the industry. This will also help to initiate steps for the creation of uniform policies across states in this industry.

Single-window clearance: Park operators have to take multiple approvals and licences from various authorities before commencing operations. Inordinate delays in getting relevant licences result in escalation in the cost of projects. Amusement and theme parks are capital-intensive in nature and cost escalation can render projects unattractive. The introduction of single-window clearance is likely to introduce more transparency and allow park operators to focus on their core operations. Some state governments (Maharashtra and Karnataka) have already proposed this step.

Funding support: The amusement and theme park industry is highly capital-intensive. Apart from the initial expenses on land and equipment, operators have to continuously overhaul their facilities through regular maintenance. To generate a continuous increase in the consumer footfall, parks need to periodically introduce new and upgraded attractions. The government should initiate newer channels for improved and easy funding of the industry in collaboration with IAAPI. The Tourism Finance Corporation of India provides finance for amusement park projects, but according to industry players, this has reduced in recent years. Improved access to capital would specifically aid smaller and medium players in the industry.

Improved regulation of industry safety practices: BIS has introduced
guidelines for amusement and theme park safety, but the absence of any enforcing agency has hampered the spread of uniform practices across the industry in India. Self regulation is a crucial factor in amusement and theme park safety management, but it is primarily limited to large players. The provision of proper training and guidance to relevant authorities (inspection engineers) would improve the regulation of practices at various levels

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across the industry. The government can utilize IAAPI expertise in identifying key areas in safety management, where training can be provided to the relevant authorities. 5.

Representation of IAAPI in various government bodies: The Central and state governments in India have various committees and councils with industry representation. For instance, the National Tourism Advisory Council (NTAC) advises the Union Ministry for Tourism and Culture on various matters relating to tourism. The inclusion of IAAPI in other related committees will give the Indian amusement and theme park industry a platform to voice industry concerns.

Promoting India as a manufacturing hub: India can be marketed as a strategic manufacturing base due to its cost (low labour and raw material) and location benefits (proximity to fast-emerging Asian/Middle East markets). The government should promote the development of a manufacturing hub for amusement and theme park equipment manufacturers and suppliers. The industry is already witnessing a trend of increased collaboration between Indian and foreign players. Policy initiatives such as these will help in the growth of manufacturing of rides in the country.

Industry-wide safety standards and best practices manual: It is crucial for IAAPI to aid in the percolation of global best practices and safety standards throughout the industry. Accidents can lead not only to a reduction in the footfall at parks due to decreased consumer confidence but also park closure, which could be fatal to the growth of the industry. By introducing industry-wide safety standards and a best practices manual, IAAPI can help to standardize industry-wide practices in various areas. a.

E-initiatives: The use of the internet in India as a tool for planning vacations has increased over the years. IAAPI can promote itself on the websites of leading travel companies to improve visibility among domestic and foreign tourists. It can also promote itself on other websites that are frequented by different segments of its target customer group.

The IAAPI website can also provide information about various amusement and theme parks across the country on its website. This will help customers (including domestic and international tourists) to make informed decisions about their park visits. IAAPI should also start sharing industry-wide annual footfall and injury statistics, which will increase transparency about the industry.

Collaborations with technical institutes in India: The design and safety standards of Indian amusement and theme park ride manufacturers require further enhancement to achieve international recognition. Improved manufacturing standards and products can be instrumental in achieving the future growth potential of the industry. IAAPI can collaborate with leading research institutions in India, including the Indian Institutes of Technologies (IITs) and other leading institutes to improve equipment safety and develop new products.

Preferred partner list for safety and other related issues: To improve amusement and theme park planning and development in India, IAAPI should come up with a preferred partner list. It can identify leading institutions for the delivery of industry-related activities (safety certification/consultancy). For example, The Tea board of India has approved TUV India (an inspection and certification agency, headquartered in Germany) as an authorized certification body.

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Developing industry awareness: The amusement and theme park industry in India needs to differentiate itself in the highly competitive leisure and entertainment industry. Some of the leading players in the industry feel there is a lack of awareness about the industry among Indian consumers. IAAPI should develop a strategy to increase industry awareness among targeted customers. a.

Customer analysis: The cost of customer acquisition grows with the increase in competitive pressures. It thus becomes essential to understand customer preferences and analyze their feedback on industry offerings. IAAPI can conduct a customer analysis to understand the present positioning and recall of the industry among customers, which will enable it to help its members develop products according to customers’ profiles and present a more customized solution to cater to its target audience.

b.

Branding and positioning initiative: Advertisements and promotions should be
conducted, especially during the peak season, to create enhanced awareness about the industry and its offerings. Strategic advertisement locations and avenues, such as airports, railway stations, radio, etc., should be identified to target potential customers.