Academics at the UCLA Anderson School of Management and Business recently published a study and research paper on Southern California Theme parks, most noteably the Disneyland Resort. You can find it at the link here.
I was reminded that Walt Disney heavily relied on the expertise and research of Stanford University in selecting the location for what became Disneyland.
With all the talk about building new "E-ticket" and other attractions, talk about hispanics at the park, and the children vs. teenagers vs. adults on the message board, I thought it was worth going over some of their findings, especially since they address misconceptions that are common, even within the industry.
Conclusion one is that Population Growth drives Attendance Growth. (They note that Economic Factors Cause only Annual Variations). Fair enough. This means, as others have noted, that it's the growing population in Southern California that makes the biggest difference as to the Disneyland Resort, not tourists.
Quote: "For Southern California attendance, just two variables predicted 77% of the annual variation in attendance: the population of California, and the California unemployment rate."
Conclusion two is that "Weather Has a Minimal Impact on Attendance." This is denied, even repeatedly, by those in the industry, and they have some great quotes from industry insiders supporting the myth that weather affects attendance, especially regarding DCA. (("Bad weather was cited as one of the reasons that Disney’s California Adventure had a disappointing first six months after its grand opening." (footnote 44)).
The study states that, "Given the certainty within the industry that weather is a major factor, we were surprised to find no evidence that weather affects annual attendance in Southern California", and they support their findings with data and a great chart. So why are people in the industry so convinced that weather keeps people away?
Quote: "A simple explanation is that on a rainy day, everyone can see that the parks are very empty. [...because everyone is INSIDE]. It is much harder to observe the slight increase in attendance when the sun comes out and the locals return."
Conclusion Three: Higher prices Do NOT Deter Attendance. Clearly this is true as to Disneyland, where prices have increased rapidly, and attendance is at all time highs, according to their study, based upon interviews with attendees, and a 1999 Los Angeles time study. The study found, amazingly, that the higher FUEL prices rose, the greater the attendance at theme parks in Southern California.
Quote: "Over the past two decades, the price of a theme park ticket in Southern California has risen much faster than inflation. (See Figure 15). In 1986, an average adult theme park ticket cost $15.75. If that price had risen with inflation over the past two decades, today the average adult ticket would cost $27.15 – but the actual average today is $47.59. The parks raise their prices $1 to $2 every year, regardless of attendance patterns or the state of the economy. Ticket increases are lead by Disney, with the other local parks following its lead."
Conclusion Four: The Industry has Many Misconceptions of What Drives Attendance Levels. The study again mentions weather, and fuel prices (above), but goes on to examine other factors, that are ignored by park management in many cases, but are substantial factors in park attendance:
A. Male teenagers are the driving force in park attendance. Quote: "Males consistently had a more positive correlation with Southern California theme park attendance than females, and that teenagers showed the strongest correlation with attendance (see Table 15). ... However, it was surprising to see this result for Southern California, where the industry has a broader focus. Disneyland attracts many families with young children as well as adults without children, and Legoland focuses very specifically on a younger audience."
B. Attendance at theme parks is highly correlated, and thus driven by, Hispanic Families, and Hispanic population trends may be a better attendance predictor than the total California population. Quote: "...attendance in Southern California was very strongly correlated to the Hispanic population during those years (see Figure 16). ... It may be that people with a Hispanic background find theme parks particularly appealing. If so, it would be valuable to the industry to understand why ... Hispanic population growth may reflect the regional population growth in Southern California, because Southern California is home to more Hispanics than Northern California. This would make the Hispanic population a better attendance predictor for Southern California’s parks than the total California population."
C. Building new attractions do not help drive attendance. (Also referred to as "Indiana Jones was a more important ride than you thought). This is bound to be controversial among Micechatters, where rampant speculation on future attractions is par for the course.
Quote: "Although the theme parks clearly hope that big new attractions will boost attendance, the data gives no evidence that they have any lasting effect. Throughout our project, only one attraction stood out as having a noticeable impact on a park: Indiana Jones and the Temple of the Forbidden Eye at Disneyland. Disneyland attendance was slowly declining in the early 1990’s, and the opening of the Indiana Jones attraction in 1995 caused a noticeable and lasting increase in Disneyland’s attendance and market share (see Figure 17)."
More lengthy quote ahead:
"The bad news for the parks is that in the past 19 years only this one attraction appears to have had a significant and lasting effect. Many popular attractions opened during this time with little or no impact:
• In July 1989 Splash Mountain opened as the tallest flume ride in the world. This was a very good year for the park – but also for all of the other parks in the region. Attendance dropped back to normal in the following year.
• In January 1993 Disneyland unveiled Toontown, a whole new land within the park. Attendance for 1993 was lower than in the previous year.
• In June 1996 the Jurassic Park River Adventure debuted at Universal Studios. Attendance went up for a few years, but market share remained flat.
• In March 1997 Magic Mountain opened Superman: The Escape, the first thrill ride ever to top 400 feet, with speeds of 100 miles per hour. Attendance stayed flat.
• In 1998 Disneyland unveiled a completely remodeled Tomorrowland.
Attendance went down.
• In 1999 Knott’s Berry Farm opened Ghostrider, considered one of the top wooden roller coasters in the world. Attendance went up by 200,000, but just for that one year.
2004 should have been a big year for the industry in Southern California, with the opening of major new thrill attractions at four of the theme parks. (Tower of Terror at California Adventure, Revenge of the Mummy at Universal Studios, Journey to Atlantis at SeaWorld, and Coastersaurus at Legoland) However, attendance grew by just 3.1% in Southern California, as compared to 5.1% growth at the Central Florida parks.
A recent analysis by Buzz Price similarly found no relationship between the level of capital expenditures and attendance. ... There is no guarantee that a new attraction will be popular with the public, and a new ride concept can sometimes prove too expensive and problematic to maintain. Some examples of recent failures in Southern California include Disneyland’s Rocket Rods, which closed after 2½ years due to mechanical problems, and Superstar Limousine at Disney’s California Adventure, which was open for less than a year and received terrible reviews from customers."
D. Capacity may inhibit attendance growth. Quote: "It makes sense that capacity would be a big issue. It would be impossible for attendance to grow rapidly, given a fixed number of theme parks, because there simply would be no room for the additional customers. However, adding new parks is not a good solution for growing the size of the regional theme park industry. Construction of additional parks is a huge capital expense, and does not effectively increase the profits for the park owners in the region.
Instead, focusing on the capacity of individual parks might offer some insight toward growing the business. Parks have an effective capacity because once a park becomes crowded, long lines impact the level of customer satisfaction, and this in turn impacts consumers’ decisions on when to return to a park."
I'm sure this will spur some discussion, and the paper does have some recommendations to parks such as Disney, and some interesting comments on California Adventure, and other parks, as well as a great bibliography of supporting research. Check out the thesis and supporting research for yourself.