Attraction Finance 101 

Potential developers often overstate the potential revenues and understate operating costs. Here are some basic figures on the sector. 

Introduction 
This paper is aimed at providing readers with an appreciation of the broad economic performance parameters of visitor attractions around the world. 
 
The values incorporated in this overview represent general guidelines and do not refer to any specific location. They should not be used to reflect a particular project, rather they are aimed at providing a broad overview of the general economic principles across the sector. 
 
They do not replace the need for an assessment of the local and regional market factors or wider economic context which should be undertaken as part of the development planning process. 
 
Admission Price 
The economics of gated visitor attractions are broadly similar around the world with the majority of revenue being derived from admissions. 
 
We have based this assessment on an attraction charging a full adult admission fee of US$60 including tax. 
 
Per Capita Revenues 
All attractions offer some form of discounts for children, families, group tours and other parties as well as special promotional activities. Allowing for these discounts and tax (which varies by country) generally results in per capita admission revenues between $34 and $44. 
 
Adding on spending on food, beverage, merchandise, games, parking and upcharge activities would typically bring the total per capita revenue back to a value equivalent the full adult admission charge of $60. 
 
Profit Margins 
Operating costs at attractions vary by the type of attraction with theme parks, water parks and entertainment attractions achieving the highest profit margins. Commercially run wildlife and aquatic attractions can be profitable although the largest ones often need subsidies. Most museums can only operate with significant amounts of grants and subsidies. 
 
At well-run theme parks and entertainment attractions, an operating profit margin of around 33% would represent a strong performance. On this basis the attraction would generate an operating profit equivalent to $20 per visitor. 
 
Reinvestment 
It is critical for attractions to reinvest in the product. This is especially true of theme parks that target a local and regional resident market where generating repeat visits from this source is vital to success. 
A general guideline is that a reinvestment equivalent to 10% of revenue is an appropriate allocation to ensure ongoing stable attendance levels. This would require an amount equivalent to $6 per visitor to be set aside each year for reinvestment. 
 
Profits 
Allowing for the reinvestment funding the attraction would provide a profit margin of $14 per visitor to cover debt and interest repayment along with any taxes. 
 
Capital Costs 
The level of investment to create attractions can vary enormously depending on the availability of funds and the client vision. However, a useful guide for attractions targeted at a local and regional market is to allow for a budget equivalent to $150 - $200 per visitor. 
 
This would indicate a development budget of $150 - $200 million for a theme park targeting 1 million annual visitors. However, many projects in the Middle East and China have development budgets significantly above these levels. 
 
Summary 
The economic challenge comes when assessing the funding for this level of investment. With a likely profit of $14 per visitor each year and a capital cost of between $150 - $200 per visitor, the profit equates to less than 10% of the required investment level. 
 
Unless a developer can secure funds at low interest rates or can self-fund with a low target financial return, it is not possible to create a park within these economic parameters without some form of external support. This support could include free land, support with infrastructure investment, grant funding and sponsorship. 
 
If external support is not available then the development costs will need to be revisited. In many locations where there is limited competition it is possible to develop parks and attractions in stages with a relatively modest initial investment that can be supported by operating revenues. Profits can then be used to enhance the attraction over time to build up attendance and revenues to reach the full market potential. 
 
Implications 
These figures illustrate the challenges in developing, funding and operating visitor attractions. However, they are merely indicative guidelines and it is critical at an early stage of the development process to secure independent market and economic planning assistance to complement the design process. 
 
Our site uses cookies. For more information, see our cookie policy. Accept cookies and close
Reject cookies Manage settings