Effective Cost Management Strategies for Theme Parks

Introduction

The theme park industry is vibrant and thriving. According to the Themy Entertainment Association, attendance at the global theme park grew 3.8% annually between 2015 and 2017, with 509 million visits. Although theme parks can be a great source of entertainment and create unique experiences, they come with significant operational costs. Operating a theme park involves budgeting for several expenses, such as facility utilities, park staff salaries, advertising and marketing expenses, rides and attractions maintenance, parking and transportation, food and beverage services, insurance, security personnel and entertainment services.

Managing these costs can be complex, especially for independent operators without the same resources as large enterprises. Knowing and understanding the operating costs for theme parks is important for planning and budgeting, but can also be the difference between a breakout and a successful park.

Operating Expenses

Theme park operating costs involve a wide range of expenses that need to be considered. These include:

• Facilities Utilities
• Park Staff Salary
• Advertising and marketing costs
• Rides, attractions and overall maintenance
• Parking and transportation
• Food and beverage services
• Assurance
• Security staff
• entertainment services

By paying attention to the different components of these operating costs, theme park owners and managers can better understand how to control expenses and maximize profits.

Facilities Utilities

Theme parks often require immense costs to ensure they can operate at their peak. A huge area of expenditure is utilities for facilities. This includes electricity, water, heating, cooling, and other means of maintaining the functionality of a park. To put that into perspective, the global theme park industry spent an estimated .7 billion in 2019 on electricity, water, and other utility costs alone.

Different facilities require different amounts of utilities. For example, indoors will require greater use of air conditioning to ensure guest comfort, while outdoor areas are more likely to need more lighting and security. Moreover, a large park that offers several attractions, such as roller coasters, requires much more than a park consisting of a few attractions.

Utility costs can be divided into three main categories:

• Electricity – This includes lighting, audio systems, air conditioning and cooling systems, machine operation, etc.
• Water – This includes water for cleaning and maintenance, toilets, landscape features, etc.
• Gas – This includes heating and other fuel sources for power machinery and other fleet components.

The costs for each of these utilities can vary greatly. It is important for fleet operators to develop an energy strategy that minimizes utility costs while ensuring the best possible experience for customers. Examples of measures used to reduce utility costs include energy efficient lighting solutions, energy saving air conditioning options, improved water conservation measures, etc.

Utilities are a huge cost to theme park operators, but expenses must be managed to keep the park a success. Fortunately, there are solutions that fleet operators can use to reduce these costs. By implementing strategies such as energy-efficient lighting solutions and improved water conservation measures, theme park operators can ensure they remain profitable while providing guests with a safe experience. and agreeable.

Park staff salary

When it comes to running a successful theme park, one of the biggest operational costs is the salary of park staff. High quality customer service can often depend on the quality and experience of your staff, so it’s important to ensure that you pay them a fair and competitive salary.

The average hourly rate for a park staff salary in the United States is around .14. This may vary depending on condition, type of role and experience. States such as California and Massachusetts have a higher minimum wage than other states, increasing the wage accordingly.

Typically, park staff salaries spend between 3 and 8% of the total operational budget. This is an expense that should be considered when creating a budget. The lower end of the range (3%) is generally the minimum you should spend to guarantee a quality of service.

Managers often tend to be the highest paid payroll of park staff, due to increased responsibility and work experience. This can increase average pay rates, depending on experience.

Tipping money, if any, may also factor in the salary of park staff. Tipping is a common practice in many Western countries and can be an additional source of income for staff.

When budgeting for park staff salaries, it is important to consider the impact of higher salaries on the quality of customer service and staff morale. Investing in quality salaries for your staff will help provide a positive customer experience and increased customer satisfaction.

Advertising and marketing costs

Advertising and marketing costs for theme parks can greatly depend on the size, scope and budget of the park. Major franchises pour tens of millions of dollars into television, radio and digital advertising spots each year to promote their brand at scale. Companies that focus on local parks can choose to buy advertisements in local articles or limited radio and television spots.

According to Statista, the amount of money spent in the United States on theme park amusement and advertising was estimated at just under US.43 billion in 2017 , with estimated growth well beyond that. by 2 billion by 2022. In 2018, SeaWorld reported spending more than million on advertising and marketing, more than any other park in the United States.

Overall, a theme park’s annual advertising and marketing budget will depend on many factors, including the size of the park, the number of rides and attractions, the number of visitors expected in the upcoming season, and the capacity overall expenditure for the Fleet Operator theme. One of the biggest investments of any business in advertising and marketing budget is the amount spent on sponsorships.

Sponsorship opportunities offer companies an ideal way to target their demographics. In the United States, deals with Coca-Cola, Hershey’s and Monster Energy are just some of the giant sponsorships seen at amusement parks. In these transactions, the company pays a fee in exchange for prominent branding in the park, including logo placement, promotional campaigns, and giveaways.

Theme parks are also investing in digital marketing, including search engine optimization, social media campaigns, influencer marketing, and content marketing. A successful online marketing plan would include updates and promotions through the theme park’s website and social media accounts, as well as creative uses of videos and other materials.

Rolling attractions and overall maintenance

Managing the operation of a theme park comes with several different costs; From rides and attractions to overall maintenance costs. According to “Statista” consumer market outlook, in 2019, the estimated revenue of theme parks in the United States is .1 billion . Estimated U.S. theme park admissions revenue in 2019 was .7 billion .

The costs associated with operating a theme park can vary greatly, depending on the size and type of the park. Some of the common expenses may include:

• Rides and Attractions: Theme parks invest in installing and maintaining rides and attractions, which can be one of the most expensive expenses. Oftentimes, theme parks have to undergo ride renovations and maintenance, which can cost an average of million.
• Facilities and Entertainment: This includes the costs of renting or renting venues and providing entertainment such as showrunners, bands, theater productions and other productions. This cost may vary depending on the city or the space purchased and the equipment needed.
• Labor: This includes labor costs such as payroll expenses for park employees. It could also include costs for staff recruitment, training and retention.
• Marketing and Advertising: Theme parks typically invest in marketing and advertising in order to bring in more customers and increase revenue. This may include costs associated with media campaigns, sponsorships, promotional gifts, etc.
• Management and administration: This includes costs associated with the management and administration of the park, including expenses associated with accounting and auditing of financial records.
• Maintenance: Maintenance costs are necessary to keep the park in good condition and safe for visitors. This includes costs associated with cleaning, painting, landscaping, building repairs and maintenance, etc.

In order to maintain the theme park smoothly and profitably, a theme park owner must consider many factors; from the cost of rides and attractions to labour, maintenance, marketing and advertising. Depending on the size and type of park, these costs may vary. As such, it is essential for a theme park owner to be aware of these costs and develop an appropriate budgeting and financing strategy.

Parking and transportation

For many theme park operators, the cost of providing parking and transportation are core parts of their operations and can rank among their largest expenses. According to an analysis of national data compiled by Rock Financial Group, the average annual spending associated with parking and transportation for theme park operators in the United States was .6 billion in 2019, making it one the most expensive costs for these companies.

The same source indicates that parking fees can account for around billion a year in operating costs for theme parks. Additionally, the cost of transportation infrastructure and associated rental and rental fees can further increase total parking and transportation expenses. This includes transportation services for visitors such as shuttles, crafts and luxury vehicles.

The cost associated with parking and transport depends on certain factors, such as parking capacity and availability, location, quality of vehicle supply and associated services. For example, providing electric car charging facilities in the car park would be an additional expense. On the other hand, ride-sharing options, automatic license plate recognition, and automated idle control systems can potentially reduce the cost of running a theme park by reducing parking congestion.

It should be noted that other indirect costs associated with parking and transportation must also be taken into account. This includes labor, maintenance and security costs. For example, the cost to manage and secure car parks may vary depending on the number of visitors served. Additionally, investments may be required to upgrade existing parking and transport infrastructure, such as widening roads near the theme park or investing in increased public transport links.

Food and beverage services

The cost to run a theme park can be astronomical. Moreover, it can depend on several factors, food and beverage service being one of the most important. According to the 2019 Annual Theme Index released by Themy Entertainment Association and The Economics Practice to AECOM, food and beverage costs in the United States totaled .06 billion . This accounted for more than a quarter of spending on themes and attractions worldwide.

When evaluating the cost of running food and beverage services at a theme park, the size of the park and the number of visitors should be considered. Operating costs should include the purchase, storage and maintenance of kitchen and catering equipment, the employment of kitchen staff and the cost of ingredients.

Finding a balance between offering competitive and quality food choices, while remaining profitable, is always difficult. Specializing in specific restaurant types and sizes can limit waste, improve speed of service, and make pricing competitive. Additionally, there are several methods to control food and beverage service costs. Some of them include:

• Buy in bulk: Buying ingredients in bulk helps to get the best deal and reduce expenses.
• Menu Engineering: A well-planned menu, with dishes that have easy-to-find, cost-effective ingredients and a healthy food cost percentage, can help control prices and stay competitive.
• Inventory: Keeping accurate and up-to-date records of stock helps track when items need to be reordered and can help reduce food waste.
• Business intelligence: Collating data through customer feedback and visitor surveys can help better understand customer preferences and optimize food offerings.

Managing food and beverage service costs is an ongoing challenge. Budgeting, menu engineering and cost control measures, when implemented together, can help theme parks stay competitive, while providing enjoyable experiences.

Assurance

Operating a theme park requires protecting the safety of its visitors and employees, as well as the property itself. Insurance is a key aspect of theme park operations and provides vital risk management. Insurance costs will vary greatly depending on the type of coverage and location of the park. Global theme park insurance premiums are estimated to have exceeded US billion in 2019 .

Major areas where theme parks may require coverage include potential liabilities related to:

• injury and death
• Water park attractions
• employer liability
• Site risks
• Environmental Risks of Attractions
• property damage
• cyber-localities

The cost per seat of insurance for a theme park will vary depending on the location, size and attractions of the park. It is estimated that the worldwide average insurance cost per venue for all types of theme parks was USD 2.3 million in 2019 .

It is important to consider the cost of theme park insurance when considering a new attraction. It is also important to shop around and compare policies periodically to ensure that the park is getting the best coverage available and that the insurance agency is aware of any significant changes or additions to the property.

Security staff

For many theme parks, security personnel are an extremely important part of the operation. Security personnel could include off-duty police, park professionals, uniformed security personnel, or plainclothes security personnel. These security professionals specialize in preventing, detecting and responding to disturbances, vandalism, theft and other varied emergencies.

In 2020, industry-wide security personnel costs in the theme park industry amounted to .1 billion in US market revenue. The average cost of a security guard is currently .72 per hour nationally, with this cost increasing significantly in states like California, where the average security guard salary is . ‘hour. On average, medium-sized theme parks can spend anywhere from ,000 to ,000 per month on security personnel, depending on the size and scope of their security needs.

For theme parks, it is of the utmost importance to have a strong security team that can keep guests and employees safe. The most successful theme parks have sufficient titles that can actively monitor and patrol the entire park. It is especially important for large theme parks to have a well-staffed security team, so that there is always someone available to respond quickly to any emergency. They must provide a visible security presence in the park to prevent theft, vandalism and other crimes.

Effective security personnel must be highly trained and certified in security protocols and have an up-to-date understanding of how to prevent and handle emergencies. Security personnel should be able to provide both proactive security measures, such as educating visitors on park policies or safety, or reactive measures, such as responding to incidents or providing first aid.

Additionally, having a unified and thorough security plan can contribute to a safer and more secure themed facility, which can help keep employees and customers safe. Many companies have invested in advanced security technologies, such as facial recognition technology, RFID wristbands, or real-time video surveillance, to help security personnel monitor security threats and risks.

entertainment services

Running a theme park can be an expensive business. The operating costs of such a business rely heavily on the entertainment services provided to customers. From roller coasters to water rides, the amount needed to keep these amenities running is quite substantial. According to the latest statistical information, the average operating cost of theme park entertainment services is between 35 and 45 million dollars per year.

Rides and Attractions: A good portion of operating costs for entertainment services come from rides and attractions. Major rides such as roller coasters and water slides can cost up to million, while smaller attractions can cost as little as ,000 USD. Additional costs to this include power, safety inspections, maintenance, and replacement parts.

Food and drink: Next is the cost of providing food and drink to customers. These range from snack stands to full-scale restaurants, each of which contains its own overhead. Amusement parks must also consider the cost of raw materials and other supplies, as well as labor costs. The total range for this is usually between and million per year.

Marketing and Advertising: Perhaps one of the most overlooked aspects of theme park operating costs is marketing and advertising. This includes the cost of creating and maintaining a website, creating and distributing marketing materials, developing advertising campaigns, and even outsourcing to marketing companies. The marketing and advertising budget typically ranges from million to million per year.

Labor Costs: Another major expense of running a theme park comes in the form of labor costs. Not only do theme parks need to hire and retain qualified employees, but they also need to cover salaries and other benefits. Additionally, they must cover costs such as insurance and training. The typical annual labor cost for a theme park is estimated to be between 8 and 10 million USD.

Conclusion

One of the most important parts of running a successful theme park is managing operating costs. By understanding and budgeting for a variety of expenses associated with running a theme park, including facility utilities, park staff salaries, advertising and marketing costs, driving and maintenance from attractions, parking and transportation, food and beverage services, insurance, security personnel, and entertainment services, park owners can control a successful business. Ultimately, by monitoring these expenses and understanding their costs, theme park owners can make more profitable decisions that ensure a successful and profitable park.