CATCHMENT SERVICES

Serving the themed entertainment space

Consolidation:

Geographical distribution of park operators 

 

Mar 6, 2017

Investors and potential investors often ask about the likelihood of additional consolidation within the theme and amusement park space.  The related question of future expansion is not too far behind.  There are lots of interests motivating these two question.  But most simply put, investors are looking for an edge by trying to determine which operator has the greatest opportunity for growth.  Growth, as everyone knows, may come through “organic” revenue growth at existing facilities.   In the park business, organic growth comes from generating incremental attendance volume or developing new programs and products to capture more discretionary dollars from existing consumers.   Inorganic, or external growth, comes through acquiring other parks — or even operators — like Cedar Fair did when it purchased Paramount Parks in May 2006.  The revenue from the acquired properties fuels top-line growth.  An operator may also generate inorganic growth by building new facilities, such as Kalahari Resorts & Conventions, which just added a new indoor waterpark location in the Poconos and is planning another venue in Round Rock, TX.  Organic growth is, generally speaking, a less risky course, although it infrequently leads to huge growth in revenue and profits.  External growth almost always requires significant additional leverage to pull-off and is, for that reason, riskier.  Although there are plenty of operators who suffered indigestion due to the accumulation of too much debt to fund expansion, there are lots of success stories too.

 

It is within this context, opportunities for expansion and consolidation, that we provide the following map.  It shows the distribution of park operators across the United States.

The list of operators to the right is abbreviated, but should be pretty easy to figure out without an explanation.  The data base includes over 400 records, although we did exclude standalone attractions, FECs, animal parks without amusement rides, and Ski Resorts without waterparks and significant ride development.  There are actually more parks than can be easily seen on the map since multiple parks in the same zip code are stacked.  

 

The red dots denote independent parks and operators.  What is interesting is that independents far outnumber those parks that are part of a larger chain.  This implies that there is room for consolidation within the industry.  The map also clearly shows that the northeast is a saturated market, especially along the coast.  So Cal is also a well developed market, although that development is focused on LA in part due to tourism attracted by Disney and Universal to that catchment area.  The same is true of the Orlando market.  The data also imply that park  development has lagged the movement of the US population south and west.  In a future note, we will overlay park locations on a population density map using 2000 and 2010 Census data.