by Michael Collins, Leisure Development Partners
The theme park industry has largely grown and evolved from outdoor garden parks, amusement parks and seaside parks in Europe and North America. Most markets where early parks were established faced relatively benign weather, and the traditional outdoor park was the mainstay of the industry. Closing for the worst of the winter has generally been seen as the solution to climatic woes.
As the theme park industry rapidly continued its evolution and growth, we have seen ambitious ventures break the mould. Indoor parks started to pop up as anchors for retail destinations, creating year-round, all-weather fun to drive footfall. Indeed, Mall of America and West Edmonton Mall were created around anchor indoor parks. For industry history buffs, Old Chicago was an indoor park and mall combination that opened in 1980.
While indoor parks are by no means new, the proliferation of parks in areas with more extreme climate conditions is driving growth and innovation in indoor theme parks. In the Middle East, indoor parks like Ferrari World and IMG Worlds of Adventure led the charge. And SeaWorld recently opened in Abu Dhabi as another industry first.
In LDP’s theme park feasibility work, we are seeing growing interest in large indoor park developments across the Middle East and some Asian markets, as well as in markets with colder weather, such as Eastern Europe.
With this growing interest and new entrants, we feel it is good timing to explore the topic. We have noticed that some clients assume an indoor theme park will behave very similarly to an outdoor one. Yet our experience shows that this is not always the case. In this article, LDP busts some myths regarding indoor parks and what makes them a different proposition for both the guest and the operator.
Myth 1: The capex for indoor theme parks is the same as for outdoor parks
OK, it may be obvious that it is more expensive to put rides and shows in a building rather than outside. However, we find clients are often not prepared for how much this choice can impact the overall level of investment. It is hard to make a direct comparison. Still, the investment per attendee (a benchmark we like to use to gauge overall capital expenditure) can easily be doubled for an indoor park.
Not all buildings bear the same cost. Some indoor parks have been created in simple, cost-effective buildings with relatively modest capex. Of course, we would always rather as much of the capex as possible be where the visitor notices it and where it drives visitation and repeats.
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Capital is generally better spent on the experiences rather than on the building, which, in most cases, will not be the motivating factor for a visit. Ferrari World Abu Dhabi is an exception, as its iconic roof and branding may have been enough to motivate visits from those seeing it from the air and in promotional materials.
It’s not all bad news, though. Generally, indoor parks have a smaller footprint. Therefore, land costs may be lower (although, given the economic impacts parks deliver, LDP believes parks should not be paying for their land, and we can help demonstrate why to governments or landlords).
Myth 2: An indoor theme park will mean flat seasonality
Of course, climate control does increase the potential for year-round visitation. Yes, some of the parks with the flattest seasonality are indoor parks, but seasonality is still very much present. School holidays and typical leisure patterns still apply, and even with fully indoor parks, there are still peaks in demand.
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In general, seasonality is flatter, but it still exists and needs to be considered based on the benchmarks. The median peak month seasonality for indoor parks in the GCC compared to European outdoor seasonal parks is nearly a whopping ten percentage points lower. Nevertheless, there is a peak.
Myth 3: The visitor will behave the same way in indoor theme parks
One of the most interesting observations of visitor behaviour at indoor parks is around the length of stay. Visitors generally have a much shorter stay at indoor parks, even very large ones. Some outdoor parks average 7 or 8 hours of stay. Indoor parks generally don’t keep visitors in the park for this long, and most have a shorter sub-6-hour stay.
This can impact spending, most obviously on food and beverage, where a shorter stay can remove a meal or snack from many guests’ spending. A shorter stay can also impact perceived value and, therefore, willingness to spend on admission. Plus, it can make people less likely to spend money on souvenirs. There are exceptions, but generally, when looking at an indoor park, it is important to consider the length of stay and its impact on spending.
Myth 4: I will need the same number of rides if I build indoors
As mentioned, indoor parks tend to have shorter stays than outdoor parks, but the visit itself is quite different. At large outdoor parks, visitors spend much of their day walking between rides in landscaped and themed environments. Indoor parks naturally compress the space between attractions to keep the footprint and cost of the buildings down.
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In a typical outdoor ride-based theme park, visitors may average around 1.5 experiences per hour (of course, much less for parks with long-form shows). However, with indoor parks, that can be much higher, at up to 3.0 rides an hour. People quickly move the short distances between one ride’s exit and the next ride’s entrance. This can mean that a rather high hourly ride capacity is required despite a shorter stay.
In practical terms, when preparing a feasibility study, the combination of these busted myths means that with flatter seasonality, we may have fewer visitors in the park on our design day. The shorter stay may reduce the peak on-site number of visitors we are designing for. But, by contrast, the compact footprint means they will do more experiences per hour, pushing ride capacities up. There are many factors to look at in a nuanced way. There is no copy-and-paste of an indoor park in sight.
Beyond the rides, some other obvious design distinctions exist. For instance, greater thought is required on lighting, disguising infrastructure, including ceilings, considering sound, and addressing echoes and reverberation in indoor spaces.
Myth 5: Operating profit is the same
One final myth to bust is that operating performance is the same for indoor and outdoor parks. There are many similarities but also some key differences. Utility costs are often much higher in climate-controlled indoor parks. Staff costs are very different, with often more year-round employees than seasonal parks—not necessarily higher costs, but different structures.
Maintenance costs can be improved for rides that don’t have to face the elements. On the flip side, you have a roof to look after. With the typical closed period for an outdoor regional park, you can do planned maintenance and major projects. With a year-round indoor park, you have to work around your visitors, which has challenges.
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We have seen indoor park results with high-profit margins in some markets and indoor parks that fall below their outdoor equivalents in others. What is for sure is that nuanced business planning and strategy is a must to explore each specific case.
In busting these myths, LDP’s intention is not to make a case against indoor parks. They are a growing and important offer within the industry. Indoor theme parks can make sense in certain climates and with certain development goals. However, they need careful thought and business plans honed based on the right indoor benchmarks.
SeaWorld Abu Dhabi is a great example of a concept carefully adapted for indoor delivery. Although the building blocks of marine shows, rides, experiences, and aquariums are familiar SeaWorld territory, the execution, visitor experience, and business have all been adapted significantly and with great results.
We’re excited to see where developers go with innovations in indoor parks. We love being a part of this journey for feasibility studies for the next generation of parks worldwide.
Top image: Mall of America: Nickelodeon Universe
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