Indian Amusement Park Industry
- 1. Indian Amusement ParkIndustry What does the future look like? Sky wheel at Twilight Wonderla Bangalore 12th February 2017
- 2. 120+ Number of amusement& theme parks in India 40 billion Estimated industry revenue till 2020, Projected CAGR 17.5%. Current revenue = ~ 22 billion Source: Indian Association of Amusement Parks and Industries (IAAPI) ~60 million Total number of footfalls in FY 2013 Expected to grow by 15% y-o-y Shift from ‘Standalone park’ model to an ‘Entertainment hub’ model- with resort, golf course, banquet halls, shopping malls etc. 01/12Presentation by: Piyush Parekh Primary source of revenue generation is ticket sale. Indian companies are unable to create another steady source of revenue. State governments are proactively engaging into public-private partnership (PPP) models to promote amusement parks in their states.
- 3. 02/12Presentation by: PiyushParekh Organic Growth 12 3 4 Innovation Brand Creation Word-of-Mouth Publicity Invest in creating a brand Differentiate yourself from competitors Innovation at core of business Trade-off in radical, rational & robust growth strategies Maintain healthy profit margins Build a strong relationship with stakeholders Provide “value for money” experience Optimize marketing efforts Identifying strengths is the first step to strategize sustainable growth.
- 4. 03/12Presentation by: PiyushParekh HighLow Low High Riskinvolved Return gained Incurred Cost Associated Benefit Overall Score Intangible Risks/Deterrent Rationale: Land Acquisition Cost of Employee Development Operating Cost Revenue Growth Brand Expansion Number of footfalls Customer Awareness Delay in government approvals Collaborating with unfamiliar local vendor Susceptible to local taxation Acquisition of desired land & location Diversity adaptation 1.1 1 Investing in new territory ensures rapid expansion of customer base. Venturing into new geography imposes high risk. Major Minor Major Minor
- 5. 04/12Presentation by: PiyushParekh HighLow Low High Riskinvolved Return gained Incurred Cost Associated Benefit Overall Score Rationale: Intangible Risks/Deterrent Legal dispute over land Inexperience in hospitality Brand is associated closely with “park” in consumer’s mind. Low occupancy rate at resort Innovation Cost Land Acquisition Development Customer Acquisition Economy of scale Revenue Growth Number of footfalls 0.2 1 2 In long run, expanding product portfolio minimizes risk and create a differentiation. New brand associations are required to be carefully designed. Major Minor Major Minor
- 6. 05/12Presentation by: PiyushParekh HighLow Low High Riskinvolved Return gained Incurred Cost Associated Benefit Overall Score Rationale: Intangible Risks/Deterrent Brand positioning conflict Additional safety norms for kids Customer attrition Customer Acquisition Customer Retention Innovation Cost Economy of scale Revenue Growth -1.3 1 2 3 Expanding customer base, here, essentially is moving away from target customer segment. The brand positioning conflict may result into driving primary target segment away. Major Minor Major Minor
- 7. 06/12Presentation by: PiyushParekh Wonderla Adlabs Essel World ARPU Avg. revenue per unit (Footfall) Rs.820 Ticket prices should be increased Rs.1822 Less dependency on admission charges Rs.772 High discounts on admission charges Number of Rides per unit area ~1 Need to optimize rides, less space for F&B stalls ~0.32 More space for stalls, merchandise sale ~0.83 As number of rides increases, cost goes up, margin falls down Avg. Revenue (million) per unit area 16.41 Indicates the floor space utilization 15.98 At par with competitor 9.44 Low gross margin return on footage Statistics for FY 2015
- 8. 07/12Presentation by: PiyushParekh Word Cloud Wonderla Adlabs Imagica Source: Facebook official page Vintage: 2 months (Dec’16 & Jan’17) Tool used: R (Text mining) Avg. likes per post Avg. comments per post Avg. shares per post Avg. posts per month~50 Wonderla Imagica Imagica Imagica Wonderla Wonderla
- 9. 08/12Presentation by: PiyushParekh Revenue = Number of footfall X Average spend per customer Priority 1 : Increase number of footfall Priority 2 : Increase avg. spend per customer Parks in new location Open resorts in other two parks Option 1 Option 2 Expand customer base Option 1 Option 2 Increase non-product based revenue
- 10. 09/12Presentation by: PiyushParekh 1 2 3 Evaluation Criteria Chennai Ahmedabad Vishakhapatnam Format of the park Customer profile Ease of setting up the park Amusement/Resort/ Entertainment Area of land required for such format Location Land acquisition Demographics study Catchment analysis Estimated footfalls Stakeholders analysis Competition analysis ROI/Breakeven analysis Delhi Chennai Vishakhapatnam Coimbatore Mumbai Ahmedabad Park type: Theme based park Area: 30-50 acre Footfall(e): 4 lac per year
- 11. 10/12Presentation by: PiyushParekh Timeline Costofimplementation Phase 1 Phase 2 Phase 3 Increase in ticket price Product portfolio optimization Market basket analysis Mergers & Acquisition/ Franchise Raising capital for investment Floor space optimization Direct impact on profit Indirect impact on profit* Bubble size indicates possible increase in profit (monetary value) ** Not to scale Wonderla has significantly low avg. revenue per customer Make use of leverage. Capital investment should be funded by debt & not retained earnings. Reorganize the floor plan. Optimize number of rides so as to maximize revenue. Introduce gaming arena, virtual reality games & shows Identify the most profitable rides. The industry is in growth phase. As it matures, 3-4 major players will dominate the entertainment park industry. It is advisable to plan & expand customer base and geographic footprints.
- 12. 11/12Presentation by: PiyushParekh Proposed floor plan layout 1) Instead of having all the kiosks & food stalls clustered together at one place, have them spread intermittently all over the park. 2) Place differentiated products near entry. 3) Quality control. Maximize GMROF 4) Availability of multiple cuisine Destination rides- differentiated offerings which justify the premium charges. Routine rides- typical rides characterizes value for money for customers.
- 13. Presentation by: PiyushParekh Thank You !!!