Thorpe Park: General Discussion

[Matt N]

I don’t think it will be “a few years” worldwide necessarily. Most industry experts seem to predict a recovery by 2022 at the latest, and even then, I’d imagine that parks will still invest in rides, as investment may well lure people back before the recovery happens.

Most people I speak to don’t seem to think that this will affect parks much beyond the initial closures, with the effect very much behind them by 2021 or so. I don’t see this being a major, multi-year, long-term impact.

 

[ChristmasPud]

I don’t think it will be “a few years” worldwide necessarily. Most industry experts seem to predict a recovery by 2022 at the latest, and even then, I’d imagine that parks will still invest in rides, as investment may well lure people back before the recovery happens.

Most people I speak to don’t seem to think that this will affect parks much beyond the initial closures, with the effect very much behind them by 2021 or so. I don’t see this being a major, multi-year, long-term impact.

Who is saying these things? How are they making these predictions?

Even to non professionals, it seems obvious that an industry relying on mass gatherings outside every day is going to suffer some consequence during a global pandemic that isn't going to go away completely for a few years. This isn't a fleeting problem or just a 'bad summer season' for parks

 

[Matt N]

Who is saying these things? How are they making these predictions?

Even to non professionals, it seems obvious that an industry relying on mass gatherings outside every day is going to suffer the consequences during a global pandemic that isn't going to go away completely for a few years.

Dennis Spiegel, an industry expert from a theme park analytics company, predicts that demand will return to former levels in 2022. A Wells Fargo analysis of Walt Disney World predicts that demand will return in 2022 under a worst case scenario.

And even then, I’d assume that there’s a sense that parks will still press ahead with things. Once social distancing is relaxed, I’d assume that parks may well try to lure guests back with a big new investment. Many theme park companies have counter-invested in the event of economic downturn in the past; Universal, for example, built lavish things like Mummy after 9/11, and built Potter directly after the financial crisis. I know that parks weren’t shut during those, but I think it should take no more than a year or two for parks to recoup their cash flow. Shanghai Disneyland selling out on its reopening day and for quite a number of days after suggests that there is perhaps more pent-up demand than some are suggesting.

So my basic point is; worldwide investment will not stall completely, even if it slows down. The world isn’t ending. Somewhere in the world, there will be parks wanting to build new rides.

Besides, most predictions where a vaccine is created or treatment is found (I know this isn’t guaranteed, but current news looks very promising) seem to suggest the pandemic ending in 2021, so I’d suggest that the pandemic will not last past 2021. As such, parks can effectively return to normal in 2021, and then it will be no different to past downturns in the tourism industry, such as the one following 9/11, once profit is flowing in at a regular rate again.

 

[Mr Pearse]

Worldwide parks will more then likely pick up in a few years. Some more quickly then others but the uk parks will not recover and start planning new rides in 2 years time. It takes time and more importantly money to plan and build a ride. Most parks will still be recovering from this hit for a few years that a big new shiny coaster is last on the mind. They will want cheap and easy gimmicks to get people back into the parks. As I said I’m not up to date with overseas parks only uk parks. But that’s just the way I see it.

 

[Pleasure Beach Valhalla]

Thorpe really need to up their game in terms of new rides. We've got so many sites available:
. Loggers Leap (not station)
. Slammer
. Swarm Island empty land
. Canada Creek Railway
. Fungle Safari
Yet they seem to like Bouncezilla but it would be cool to see it return for Fright Nights or even on the lake

 

[MiserableMonkey]

Your optimism is relentless @Matt N. I only wish I could share in it. A recovery for this industry is based on so many ifs, whats and buts, that predictions seem all too whimsical.

I can get behind the likes of Universal and Disney etc still pursuing dead cert investments, but a selection of smaller family parks across the world definitely have a tightrope ahead of them, and they’ll be cautious.

 

[ChristmasPud]

Dennis Spiegel, an industry expert from a theme park analytics company, predicts that demand will return to former levels in 2022. A Wells Fargo analysis of Walt Disney World predicts that demand will return in 2022 under a worst case scenario.

But of course a development consultant whose job relies on parks continuing to build things is going to say parks shouldnt delay investing because of the virus (where did he say this by the way?). And a case study on the most popular theme park resort in the world predicts they will be ok by 2022. These two sources can't speak for the whole theme park industry or suggest that "the effect will be very much behind them" by as soon as next year! I'm sorry it's just not that easy to predict

Many theme park companies have counter-invested in the event of economic downturn in the past; Universal, for example, built lavish things like Mummy after 9/11, and built Potter directly after the financial crisis.

Again these are two of the cash-richest parks in the world so you can't take them to represent most parks, and 9/11 is really not comparable to the effects of this global pandemic which has many direct costs to theme parks everywhere

So my basic point is; worldwide investment will not stall completely, even if it slows down. The world isn’t ending. Somewhere in the world, there will be parks wanting to build new rides.

Can't argue with that, but that's totally different to saying there will be no problems for theme parks come 2021/2022.

Especially Thorpe Park, which was having troubles even before this crisis

 

[Funcone]

The way things are going it wouldn't surprise me if the major manufacturers ran out of capital before considerable numbers of orders started coming in again.

I totally agree with your points WillPs

It’s a worrying time for those in manufacturing. There could potentially be a lot of knock on effects. From the manufacturers end there seem to be two main risks. The first is that they do work and don’t get paid for it. Each project will have its own contract, but often they won’t get all the payment upfront. There’ll be a chunk they get at the beginning of the project. A kind of deposit. But they will also get a chunk at the end, and for large projects at key points in between. So far not many parks have gone bankrupt (just M&Ds in the UK), but there is a risk that if more parks go under, manufacturers will find themselves out of pocket.

The second risk is that work just dries up. It is true that most manufacturers don’t just build rides. Some do maintenance on rides. Garmendale seem to have started with refurb work and moved across into building rides. The Attraction Pros Podcast recently did an interview with someone from Premier Rides. They do a lot of refurb projects as well. Refurb work’s likely to get hit though. Some stuff will be essential, while other work can get delayed. If a refurb is going to cost a lot, a park might choose to mothball the ride. Some manufacturers run parks, like Mack and Europa Park, Zamperla and Lunar Park, or Funtime and some of the rides at the Prater Park. Some of these parks are likely to be hit hard themselves.

Some manufacturers do use quite a few freelancers and contractors, which reduces their liabilities, but if they stop using them, they might not be there when things pick up. The industry could be feeling aftershocks for a while.

From the park’s point of view, if a manufacturer goes bankrupt midway through building a ride, then that can be tricky. Potentially the park has to take over the project themselves. Whenever a manufacturer goes bankrupt, it can mean that parks with their rides find it harder to get parts.

I don’t want to scaremonger, but there could be a domino effect, where one business going under causes ripples elsewhere.

 

[jon81uk]

9/11 caused some American theme parks to close for one day. Gate levels were significantly down, but they kept trading.

COVID19 has caused the majority of theme parks across the globe to close entirely for months.

The situation isn't comparable.

9/11 still caused major issues with tourism (mainly in the USA) as people were put off flying. Lots of US places cancelled or postponed investments even if they kept trading, the effect on the industry lasted for years in the US.

I think although the immediate financial impact is different this year due to the closure, we may not see the longer-term downturn as people will travel again once it is safe to do so (although this could be several years anyway). So yes this may have a greater impact, but some of the things parks did back then to minimise their risk and hold back on spending is likely once again.

So we will see similar in the USA where investments didn't pick up again for a number of years, but of course Covid will have a greater worldwide effect and we will see changes across the world.

The only silver lining perhaps for UK parks is that its likely overseas travel will be affected for longer than domestic tourism so we may see some increases again in "staycations" again.

 

[Matt N]

If the current predicted timeline of a vaccine being available and mass produced at some point in 2021 comes true (which I think it probably will; some are even predicting end of 2020), then that would suggest that travel is safe again once enough of the population has been vaccinated, which shouldn’t take too long as I think many countries may be considering some sort of mass vaccination program. The difference between COVID and 9/11 is that the threat of terrorism never truly reduced or disappeared after 9/11, while the threat of COVID will greatly reduce once a vaccine is widely available.

Many parks are still pressing ahead with 2021 and 2022 investments, so assuming a significant percentage of the developed world has been vaccinated by 2022, then that would in theory allow life to resume as it did before, so if parks receive pre-COVID levels of business again by 2022 (which I think they will), then that would negate the need for them to cut investment from then on as they would have sufficient cash flow coming in again. Judging by the amount of people posting online about wanting to travel ASAP and go to tourist attractions once they can, I’d suggest that it is only really the restrictions that are causing problems here, and most MPs and experts seem to refer to the wide presence of a vaccine as being when the restrictions can go. So I’d suggest that the impact shouldn’t really be felt too much beyond 2022/2023; even if it isn’t that soon, I certainly predict that things will have returned to very much how they were in 2019 by the latter half of this decade (so by 2025).

From an investments standpoint, I don’t think it will ever completely dry up even if it reduces, so that should keep the manufacturers in business to a degree, along with things like the parts & maintenance trade. Also, it’s worth noting that there have been cases of manufacturers surviving with very little trade. Maurer, for example, have only built 3 new roller coaster installations since 2016, and they haven’t gone bankrupt.

Looking at RCDB, the only years in the last 100 years where no new roller coasters were built whatsoever were 1944 & 1943, and that was before the theme park business really took off, so I’d suggest that investment will never completely dry up, even if they reduce. The world is a big place. Somewhere in it, there will be parks wanting to put in flash new coasters. New parks will still be built.

 

[Mr Pearse]

I stick to my comment you won’t see any major investment in a uk park till about 2025 at the earliest. Most uk parks don’t really invest in anything new or grand. But if you thinking that merlin will put in a big grand coaster before 2025 then it’s very unlikely to happen. You don’t regain and you don’t make the money company’s like merlin have lost over night. To lose possibly (just a guess) about 600-700million right up to now. Plus what ever that lose after the parks have closed for winter it don’t just magically appear overnight it will take years to balance the books correctly. Any new coaster is at the back of the minds now next year will be full of cheap and easy gimmicks to tempt people back. And that’s when the rebuilding starts so then maybe about 2023-24 they will start again planning for new coasters unless they sold off the theme park division.

 

[Adam H]

And the knock on effect won't be just parks and investments, most companies across the board will feel the effects sooner or later, if not already. There will be more jobs lost even when a vaccine is in place due to companies needing to scale down. The world economy is shrinking, that means less people in parks and less money being spent within them. I'd love Thorpe to get an RMC or hyper but even if plans were ready to submit, I can't see it happening for at least 4 years. I hope I'm wrong.

 

[Matt N]

If most predictions are anything to go by, though, it will only be shrinking until next year at the latest and will have recovered by 2023 at the latest. That’s the Treasury’s prediction, anyway.

 

[WillPS]

If most predictions are anything to go by, though, it will only be shrinking until next year at the latest and will have recovered by 2023 at the latest. That’s the Treasury’s prediction, anyway.

I missed the treasury's briefing on how theme parks are going to do in the aftermath of COVID19. Could you hit me up with a link please?

 

[Matt N]

I missed the treasury's briefing on how theme parks are going to do in the aftermath of COVID19. Could you hit me up with a link please?

It wasn’t theme parks specifically, it was the general economy, which should surely be linked with theme parks. Here’s a link to what they said: https://www.cityam.com/bank-of-england-keeps-interest-rates-and-bond-buying-at-current-levels/

They’re predicting a sharp fall in 2020, but a rebound in 2021. Even some of the more pessimistic estimates think that the economy could return to its former size by late 2022.

However, other industry experts have predicted a recovery for the theme park industry by 2022-2023.

 

[kydog1299]

To be honest, if Merlin were reluctant to invest big in Thorpe after the failings of The Swarm & DGBT before COVID, I wouldn’t be surprised if Thorpe doesn’t get any major investment for a while again yet. If they’re going to take risks with investing in big attractions or experiences, it’ll be at the parks with a proven track record of getting at least some success out of it, e.g. Towers, Gardaland, etc.

Could be wrong though. I mean at this point, it’s anyone’s guess regarding future investment. But at least for the next few years, it’ll have to be relatively low risk or risk-free, and almost certain to get some kind of short-term return.

 

[Ian]

The general economy may begin to pick up in 2021, but that has no guarantees that every single sector and industry will at the same time. There will be knock on effects that take time to resolve. The economy is a big thing made up of lots of elements. The economy may begin to grow, but that doesn’t mean it will be across the board. We may have manufacturing back on its feet, but hospitality, leisure and tourism is going to take time to recover.

Remember that the hospitality and leisure sector relies on the spending of its customers. Those customers need to get their money from somewhere, but also have a desire to visit an actual attraction to part with it.

A lot of businesses are struggling and some have gone under as a result of the virus. That’s people who are potentially now out of a job with little or no income. Yes, there is financial support available for businesses and individuals who are struggling (such as the furlough scheme and unemployment benefits), but this is not going to necessarily cover the entire loss for those people (such as furlough being 80% of your salary rather than the full amount). The knock on there will be people having to tighten their belts to make their money go further, and in some cases potentially dipping into savings and the like to see themselves through.

Businesses may be restarted and new job opportunities becoming available later this year, but that’s not going to be an overnight fix for the financial challenges that individual people face. It’s going to take time for people to regain that lost income, and until then frivolous spending on “nice to haves” such as days out and leisure time will be a low priority for many. If your customers don’t have money in their pockets how can you profit from them?

Beyond that, there’s a shift in mindset. People are now more aware than ever of the risks of contact and group gatherings (though others still choose to ignore this). Are the public going to feel comfortable straight away with placing themselves in an environment like a theme park, renowned for crowds and close proximity. Even once social distancing measures begin to relax, this mentality is going to be deeply engrained in a lot of would-be visitors. It’s going to take time for everyone to readjust and begin visiting attractions again (there will be some who will visit regardless, but it certainly will not be everyone).

When we’re talking about a business that can be as risk-averse as Merlin, I think it would be unrealistic to assume that they will be dropping a lot of money on their attractions until there is significant evidence that they will recoup their expenditure. That is going to take time (probably a lot longer than the end of 2020).

 

[WillPS]

It wasn’t theme parks specifically, it was the general economy, which should surely be linked with theme parks. Here’s a link to what they said: https://www.cityam.com/bank-of-england-keeps-interest-rates-and-bond-buying-at-current-levels/

They’re predicting a sharp fall in 2020, but a rebound in 2021. Even some of the more pessimistic estimates think that the economy could return to its former size by late 2022.

However, other industry experts have predicted a recovery for the theme park industry by 2022-2023.

OK, that makes more sense to me.

Elasticity between demand for domestic theme parks and the state of the economy overall is rather loose - I hope you can see I'd be rather hesitant to draw any conclusions from such a statement.

That said (and at the risk of giving you yet another optimism attack vector @Matt N ), it'd be remiss to neglect acknowledging that there is likely to be a significant lag between the pandemic 'going away' (if it does) and the demand for holidays overseas picking up. That does represent a big opportunity for traditional seaside resorts and other tourism primarily aimed at the domestic market. Whether or not there will be capital available for that opportunity to be exploited to its full potential is another thing altogether.

 

[Matt N]

As I think I may have said before somewhere else, there will of course be an impact in the short to medium term, but I don’t think it should be too bad in the long term. In the short term, I think that UK parks may perhaps fare worse than other theme parks in other countries (e.g. Germany) as our parks are spending a longer period of their season shut, therefore losing more money, however in the long term, I think crowds to the parks will restore to a sort of normalcy once the restrictions are removed, which should be at some point next year. I certainly think it’s realistic to expect a near-restoration or crowds by 2022 or so.

As a result of this short-term loss, there will almost definitely be lower investment, however I don’t think it will ever completely dry up. There will still be parks in the world that want to invest big, there will still be new parks getting built. That should tide the manufacturers over for the time being along with other trade like parts. Many companies are still pressing ahead with projects for 2021 and 2022, and the tactic many companies are going for is delaying projects by a year or two as opposed to cancelling them completely.

Bringing this back to Merlin/Thorpe, Merlin have announced a 40% CAPEX reduction for an undefined time period. If I had to guess, I’d say that this will only probably impact investments for 2021 and potentially 2022 at the moment. Because of this, I’d say that rumoured projects like SW9 for 2022 will probably now be more likely to arrive in 2023/2024; I’ll be very surprised if it doesn’t arrive before 2025. In terms of Thorpe, I’d say they’re less likely to build in the short to medium term, as Merlin will likely allocate cash to less “risky” parks like Alton Towers. Once the parks reopen, money will flow in again, and this should offset some of the losses made earlier on. From talking to people online who work for large companies, most of their projects seem to still be going ahead, some with slightly delayed timescales.

Before I ramble on for too long, my point is; I don’t see this having too much of a crippling long term impact, and worldwide investment will likely continue to a degree. Even if it reduces, I don’t think it will stop completely.

 

[Mr Pearse]

As I think I may have said before somewhere else, there will of course be an impact in the short to medium term, but I don’t think it should be too bad in the long term. In the short term, I think that UK parks may perhaps fare worse than other theme parks in other countries (e.g. Germany) as our parks are spending a longer period of their season shut, therefore losing more money, however in the long term, I think crowds to the parks will restore to a sort of normalcy once the restrictions are removed, which should be at some point next year. I certainly think it’s realistic to expect a near-restoration or crowds by 2022 or so.

As a result of this short-term loss, there will almost definitely be lower investment, however I don’t think it will ever completely dry up. There will still be parks in the world that want to invest big, there will still be new parks getting built. That should tide the manufacturers over for the time being along with other trade like parts. Many companies are still pressing ahead with projects for 2021 and 2022, and the tactic many companies are going for is delaying projects by a year or two as opposed to cancelling them completely.

Bringing this back to Merlin/Thorpe, Merlin have announced a 40% CAPEX reduction for an undefined time period. If I had to guess, I’d say that this will only probably impact investments for 2021 and potentially 2022 at the moment. Because of this, I’d say that rumoured projects like SW9 for 2022 will probably now be more likely to arrive in 2023/2024; I’ll be very surprised if it doesn’t arrive before 2025. In terms of Thorpe, I’d say they’re less likely to build in the short to medium term, as Merlin will likely allocate cash to less “risky” parks like Alton Towers. Once the parks reopen, money will flow in again, and this should offset some of the losses made earlier on. From talking to people online who work for large companies, most of their projects seem to still be going ahead, some with slightly delayed timescales.

Before I ramble on for too long, my point is; I don’t see this having too much of a crippling long term impact, and worldwide investment will likely continue to a degree. Even if it reduces, I don’t think it will stop completely.

I stick to my comment earlier you need to look at the bigger picture of this situation then just figures the government produces. This situation will cripple merlin in the long term there’s no two ways about it. You don’t have a company potentially on the verge of losing over 700-800 million in one year then magically being better 2 years later. This will affect merlin more then any figures will say. They already come out and said they are spending £50mil a month while everything is closed. So how do you recoup that sort of funds in 2 years?. Merlin has to come up with the best plan possible to return to normal. Just think about when the parks close they will have to survive while social distancing is place on only around 10 attractions being open. This is the only downside to the merlin portfolio it’s vast and it can cause a lot of financial problems in situations like this. Obviously no one saw this coming but it’s happened and it will be interesting to see how merlin get out of this one. I still think at some point they will get rid of the theme park division. But only time will tell.