5 Intensities of the Leisure Industry

The industry has always been associated with various intensities. Firstly, it is weather-intensive. Recent years have demonstrated how extreme wetness and extreme heat can adversely affect attendance patterns, particularly in the United States. Springtime rain patterns have caused slow park openings, and while early season rain can be recovered during the regular season, follow-up heatwaves pose more significant challenges. The 2023 season saw several parks grappling with this weather pattern. Therefore, the timing of extreme weather intensities can have varying impacts.

Operators generally prepare for adverse weather conditions, incorporating historical weather patterns into their operating models. Weather remains a constant factor that parks must consider, hoping to avoid catastrophic or extraordinary patterns during the season.

Secondly, the industry is labor-intensive, with labor expenses typically constituting about 50% of a park's operating costs. Labor hours represent the most significant expense, and labor costs are not decreasing. The minimum wage in the USA keeps rising, causing substantial increases in operating expenses for parks. Despite the industry's special dispensation for minimum wage, competition from other employment opportunities forces parks to pay at or above minimum wage, solidifying its status as a labor-intensive sector.

Thirdly, the industry is capital-intensive. Theme parks rely on repeat visitation, both within and between seasons, and capital expansion plays a crucial role in attracting visitors cost-effectively. However, major attractions, such as large steel coasters, can cost tens of millions of dollars. To sustain growth while managing expenses, parks must protect their existing market and diversify their product offerings to appeal to various demographic segments. Continued capital reinvestment is essential for maintaining and expanding the business.

Fourthly, the industry is fuel-intensive, and fluctuations in gasoline prices significantly impact attendance at both destination and regional theme parks. High gasoline prices can deter visitors, causing attendance slowdowns.  Both automobiles and airlines are affected by rising fuel costs, which can impede park attendance.

Finally, the industry has become discount-intensive as a response to economic challenges and high fuel prices. Many parks rely on heavy discounting to counter declining attendance, resulting in lower per capita spending and revenues. The strategy of accepting dilution in exchange for volume has proven unsustainable, eroding profitability. The industry must explore alternatives like "Yield Management/Dynamic Pricing" to control and replace discounts effectively.

To achieve growth, expansion, and improved profitability, the industry must remain vigilant and adaptive to these various intensities. Organizations that effectively manage these challenges will be poised for a successful and promising future.