Attendance and Hotel Stays Decline

U.S. theme parks and nearby hotels are experiencing a decline in attendance and bookings due to economic pressures and adverse weather conditions, with middle- and lower-income visitors being impacted the most.

The U.S. theme park industry, along with the surrounding hospitality sector, is experiencing a downturn in demand. This decline is attributed to economic uncertainties and weather-related disruptions, which have particularly affected middle- and lower-income visitors. While major destination parks, such as Disney and Universal, have shown resilience, regional parks and their associated hotels are feeling the financial pinch.

Decline in Theme Park Attendance

During a recent earnings call, Six Flags Entertainment CEO Richard Zimmerman reported a significant drop in attendance during the first half of the year. The decline was attributed to lower renewal rates and sales of season and single-day passes, which were influenced by extreme weather and economic uncertainty. This trend is mirrored in data from Consumer Edge, which noted a 5% decrease in overall spending at U.S. theme parks year-over-year. The economic pressures have made lower- and middle-income visitors more cautious with their spending, while wealthier guests continue to spend at high-end parks.

Impact on Regional Parks and Hotels

The downturn in theme park attendance is a concern for the hotel industry, particularly for properties near regional parks. David Sangree, president of Hotel & Leisure Advisors, highlighted that many visitors who might have stayed overnight are now opting for day trips. Anonymized cell phone data supports the observation of declining attendance across various parks. The rising costs of park visits are also a contributing factor.

In response, some parks, like Great Wolf Lodge, have eliminated resort fees to attract visitors, although this strategy has its challenges. The economic pressures faced by consumers may limit the effectiveness of such measures.

Case Study: Hersheypark

Hersheypark in Pennsylvania serves as an example of how regional parks are affected. Elias Thompson of the Shaner Hotel Group noted a dip in bookings this summer, attributing it to a decrease in travel to the market. While Hersheypark offers attractions beyond the park itself, the usual compression effect on the local hotel market was less pronounced this year. Shaner’s hotels near Hersheypark observed changes in visitor patterns, with guests opting for shorter stays or day visits instead of overnight trips.

Destination Parks Maintain Resilience

In contrast, major destination parks like Walt Disney World and Universal Studios in Orlando have shown resilience. These parks benefit from a lack of seasonality and continue to attract visitors year-round. The opening of Universal’s Epic Universe park in May has driven demand in the Orlando area, despite initial slow growth. The addition of new hotel rooms has not adversely affected occupancy rates, indicating sustained interest.

Chantal Wu from CoStar noted that Disney and Universal cater to different demographics, with Disney appealing more to families with younger children and Universal attracting older children and adults. The introduction of new attractions has not cannibalized demand but rather increased overall market interest.

Economic Pressures and Pricing Strategies

Despite the challenges, the upper-tier hotel market remains robust, with wealthy visitors continuing to spend on luxury experiences. The Orlando market, for instance, has seen growth in revenue per available room (RevPAR) due to increased average daily rates. Universal’s dynamic pricing strategy for admission tickets helps manage visitor numbers and maximize revenue.

The economic pressures are more pronounced among middle-class visitors, who are feeling the financial squeeze. However, the luxury segment appears less affected, with high-end hotels continuing to push rate ceilings.

Conclusion

The current economic climate and weather disruptions have significantly impacted U.S. theme parks and their associated hospitality sectors. While regional parks and hotels are experiencing a decline in demand, major destination parks, such as Disney and Universal, remain resilient. The industry faces challenges in balancing pricing strategies and maintaining visitor interest amid economic uncertainties. As the year progresses, theme parks and hotels will need to adapt to these changing dynamics to sustain their operations and attract a diverse range of visitors.

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