Two-Thirds of Consumers Believe Theme Parks Are Ignoring This Key Feature

Theme park revenue more than doubled between 1990 and 2007, but they could be hurting their growth by not tackling this key issue.

May 31, 2014 at 2:25PM

With Memorial Day officially in the rearview mirror summer has been given the all-clear to take shape and blanket much of the country. Heading into the summer means an increase in outdoor activities, vacations, and trips to the local, or even far away theme park for families around the country.

Understanding the theme park business
The theme park business can be very lucrative for those companies that truly understand how to cater to consumers' desire to be entertained. Of course, there is no magic formula from one person to the next, or even from state to state, so theme park operators need to be dynamic with their approach to entertainment, ensuring that they strike a solid balance between the price they charge for admission, and the entertainment level and experience they provide. Businesses that understand how to cope with this balance can be quite successful.

Investors, for instance, don't need to look too far to find success stories in the theme park sector. Disney (NYSE:DIS) is perhaps the poster child of success with its 11 Disney theme parks at five different locations around the world. With a rich history behind the brand that transcends multiple generations, from great grandparents to children today, Disney is able, through its various multimedia channels, to forge an emotional attachment with consumers on many levels.

Source: Massachusetts Office of Travel & Tourism, Flickr.

But, the downside of theme parks is that they're also highly capital intensive. In other words it takes a boatload of money to get one off the ground in order to make a profit. Theme parks don't simply pop up overnight – or I should say at least the good one's don't! Theme parks take years of planning, then there's the capital to build the attractions, pay the employees, and provide constant maintenance to the park. And, of course, don't let me forget the money needed to fund the marketing campaign needed to attract visitors to the park in the first place. This high barrier to entry gives theme park operators some degree of exclusivity, but it also can make survival tough.

Six Flags Entertainment (NYSE:SIX), an operator of 16 thrill ride and water-themed parks in the U.S., for example has seen its share price soar since 2010 with the rest of the market. However, much of this has to do with its reemergence from bankruptcy which it declared in 2009 due to its heavy debt load. Just to give you some idea of how much of a burden debt can be for theme parks, Six Flags posted record revenue in 2008, the year before it declared bankruptcy, but found its $2.4 billion in debt simply unsustainable.

Theme parks have huge growth potential, if they'd just listen to consumers!
According to the International Association of Amusement Parks and Attractions, attendance and revenue growth in theme parks, with the exception of remarkably cold winters, has steadily grown between 1990 and 2007. What this shows is that theme parks are constantly evolving their entertainment platform to draw consumers and that their pricing power is also improving, as is signified by the steady increase in estimated theme park revenue in the U.S.

Graph by author. Revenue figures estimated in billions of U.S. dollars. Source: International Association of Amusement Parks and Attractions

However, based on a study released last year from the Thinkwell Group, kwown as the Guest Experience Trend Report, theme parks actually aren't doing everything they could to be entertaining consumers. In fact, with the exception of one company which we'll get to shortly, two-thirds of survey respondents believe theme parks are coming up short in one critical area.

Before I reveal this key theme park shortfall, would you care to venture a guess as to what you think it might be? I'll go ahead and start the Jeopardy music and give you a moment...

Got your answer?

If you wagered it all and ventured a guess that theme parks aren't doing everything they should be with mobile integration, then you've hit the nail on the head!


Source: Loren Javier, Flickr.

According to the Thinkwell Group 67% of respondents proclaimed that they'd prefer to see increased mobile integration in theme parks and believed it would improve their experience. Thinkwell's survey notes that more than three-in-four people brought their smartphone into the theme park with 72% of those people spending at least a few minutes on their phone throughout the day. Only 15% of those who brought their phone into the theme park noted spending no time at all on their mobile device. Further, Thinkwell notes that more than a third of mobile device users searched for park info while on their phone while most used their phone to take photos. What this demonstrates is a missed opportunity for theme parks to truly enhance the experience of these guests and keep them entertained.

Thinkwell's study dug a bit deeper, though, and looked at what specific aspects of mobile integration consumers would like to see theme parks implement in order to improve their overall experience. Based on the responses, having front-line access to rides, shows and attractions topped the list and was followed very closely by the ability to check line wait times within the park and locate family in the park via GPS.

Source: Thinkwell Group

Ultimately this speaks to one of the more prevailing themes in America: convenience. Consumers up until now have been willing to deal with steadily rising theme park prices, but they're also expecting that theme parks will get with the times and enhance their experience by getting more tech-friendly. With the exception of one theme park operator this simply hasn't happened yet.

The exception to the rule
Although the project is still in its infancy, one theme park operator is listening to consumers' requests and has had a mobile integration project in the works for some time. Would you really be surprised if I told you that this exception to the rule was Disney?

Source: Emily Burnett, Flickr.

The pioneer of theme parks and the so-called House of Mouse is expected to have its MyMagic + program fully integrated in all of its theme parks later this year (it's suffered through some technical setbacks early on). Perhaps the most intriguing aspect of MyMagic + is that it'll soon allow the replacement of paper FastPass tickets, which allow Disney guests to scoot to the front of the line, with digital FastPass + reservations. Not only will these reservations be more efficient, but you can literally reserve your place in line weeks in advance and potentially optimize your Disney experience by planning your day around your reservations. If anything it beats the sometimes two-hour-plus waits for select Disney rides.

But, keep in mind that you won't be allowed to reserve your spot in line for every ride in the park. The program will cap reservations at a maximum of three rides, though it will really depend on the theme park they're visiting and the time of the year they choose to attend (presumably it'll be tougher to reserve a spot in line during peak attendance times).

Don't discount the intangible factors here, either. MyMagic + will also work for shows and restaurants which fill up just the same during peak hours. There are few things consumers value more than their time, and while I don't have any kids myself, I've seen that look of frustration on a parent's face when they're told they must wait an hour for a table and they have three rowdy and hungry kids that demand food and entertainment. 

MyMagic + has the potential to revolutionize how Disney interacts with parkgoers, and it could prove valuable enough to lure guests who've previously shied away from Disney theme parks due to wait times to give the House of Mouse another try. I do expect there to be a bit of a learning curve as Disney implements this new feature, but its first-in-class position in theme park mobile integration along with its esteemed history should make for a fun combo for families and investors going forward.

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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of, and recommends Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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