Special 2014 Large Parks Preview

By Chad Emerson

Over the last two decades, the domestic large park industry has largely stalled in terms of building new theme parks.  While there are several exceptions like the 1999 opening of Islands of Adventure at Universal Orlando, domestic large park expansion has primarily been limited to mini-parks inside existing parks (think Universal’s Wizarding World of Harry Potter and Disney’s CarsLand) and expansions short of full-fledged theme parks (think Seaworld’s Aquatica waterparks).

Internationally though, the trend is decidedly different with new parks and planned new parks continuing to be built, with much of that growth seen in Asia.  The reasons for large park operators limiting their domestic expansion is multi-fold with much of the focus on market saturation within the United States.

That same reason is reversed in the international market with many large population countries experiencing dynamic growth in the middle class, a segment that is tempting to park operators because of their expanded capacity for discretionary spending.

This issue, The Large Park Report goes international and examines the current state of domestic large parks and their foreign offerings.

Asia is an Expanding Market

From Japan to South Korea to China, United States large park operators are expanding their reach at an impressive rate.  Disney and Universal have been especially active with each calling at least two Asian countries home for international versions of their theme parks.

In Japan, both companies have namesake parks with the Tokyo Disney Resort and Universal Studios Japan in Osaka.  While both are operated under licensing agreements, the namesake companies still exercise large amounts of creative control.  This began in 1983 when Disney and the Oriental Land Company entered into an agreement that resulted in Tokyo Disneyland.  Little changed over the next two decades until the construction of Tokyo DisneySea in 2001 along with a Downtown Disney-like entertainment district known as Ikspiari.

Widely considered to be one of the world’s most immersive and impressive theme parks, Tokyo DisneySea represented a license agreement where the Oriental Land Company provided much of the financial capital and Disney provided the lion’s share of creative capital.

Universal took a similar approach for its Osaka property, which opened in 2001 and includes many popular attractions from Universal’s domestic parks including an upcoming Harry Potter-themed world.

Beyond Japan, the Asian growth has primarily been focused on China with Disney opening theme parks in both Shanghai and Hong Kong and Universal planning a Beijing resort.  Universal is also cultivating theme parks in South Korea as well as Southeast Asia with a Universal Studios park in Singapore that opened in 2010.

All in all, the cumulative results show strong past, present and future growth for large U.S. park operators in these parts of Asia.  The picture is decidedly less clear in other international markets.

Outside of Asia

When it comes to international versions of U.S. theme parks, the industry has long looked to Disneyland Paris as one of the stalwarts.   Just a short train ride away from Paris, the resort originally debuted as EuroDisney and nearly suffered a brilliant flameout resulting from, among other things, a general misunderstanding of the European theme park market.  Fortunately, Disney executives, including long-time Disney World operations guru Lee Cockerell, were able to test and adjust the park through the early troubles to the point that Disney re-invested in the resort by opening Walt Disney Studios Park in 2002, roughly 10 years after the resort originally opened.

The results were not nearly as favorable for Busch and Universal’s foray into Europe with the Barcelona-based Port Aventura resort.  Originally conceived as Busch’s signature international move, the park stumbled out of the gate.  Universal later invested but its efforts (like its widely panned Universal Mediterranea branding, echoes of the failed Universal Escape mess in Orlando) never panned out.  The result is that, while the park remains in operation, both Universal and Busch have essentially retreated from Europe.

Even more interesting is the fact that few, if any, other United States operators are looking to expand into Europe.  While explanations are again complex, several industry insiders we spoke to for this article mentioned a strong “domestic” European park culture along with the easy access to Orlando as two key reasons for this ongoing challenge.

Are There Emerging Markets?

With Asia representing growth and Europe representing a short history of challenges, the logical question is what, if any, markets represent growth opportunities for U.S. large park operators?

Rumors and even announcements point to the Middle East with a proposed Universal Studios Dubailand but, beyond the extravagant expenditures of the emirates, the lack of population base presents very real problems.  The same holds true for almost any African effort with South Africa offering the only potential exception.

This leads to South America.  Both Disney and Universal have been linked to rumors about Brazilian and, to a lesser degree, Argentine parks.  While Brazil presents an intriguing possibility, its proximity to Orlando offers an equal challenge.  Why invest $1 billion plus into a major resort when much of that same money could be invested into attracting South American visitors to the short flight and favorable economics that Central Florida offers?

So, with Europe and North America saturated, Central Asia increasingly so, and South America/Middle East/Africa representing practical economic difficulties, that leaves two potential markets as relatively underserved.

The first is Australia.  While it is somewhat closer to the parks in China and Japan, it is not so close as to represent a big travel difference from the myriad of California’s large parks and resorts. (Note: Just check the number of direct flights to Los Angeles.)  Still though, the cumulative lack of population density presents real challenges.

Which leads us to India. Though in Asia, India is typically viewed distinctly from China, Japan, Korea and the like.  Two major factors offer opportunities in India:  a growing middle class and an extreme distance from both existing Asian and North American theme parks.

This combination may explain why the Internet is replete with Universal, Disney and even Six Flags rumors of expansion into India.  Whether any of these prove accurate, the fact remains that distance from existing large parks, combined with increasing disposable income, makes the region around India a potentially compelling growth opportunity for U.S.-based large parks and resorts going forward.

(Reach Contributor Chad Emerson at chaddemerson@gmail.com.)

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