Louis.sayer3

How do Theme parks make profit from yearly passes?

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I want to know how theme parks make a profit form a single $130 yearly pass, wouldn't they be making a loss really? Can someone please explain how they would be making profit. 

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I learnt about this a little while ago back in High School.

 

VRTP makes money from the passes thanks to "Supplementary Purchases". When an average guests goes to the park, they tend to buy food and beverages, as well as merchandise. The psychology behind the passes is that the guest thinks "Gee, I saved $80 on my entry today. That means I can splurge!". This could be on something as simple as a locker, or as far as an Animal Adventure or a Helicopter flight.  

I may not have covered everything in the best way possible, but that's all I can remember from a class a couple of years back

Edited by Zanstabar
Dang it Reanimated. Beating me to it.

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Why whinge at all?

if the parks increase their prices, people whinge. 

If they keep passes cheap but a high markup on food and bev, people whinge.

park doesn't put in $10m attraction each year due to people whinging about pass, food or bev prices, people whinge

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I'll always pick something up in park when I visit. I see it as my way of contributing something towards what will hopefully be re-invested revenue. 

Even if its an ice-cream or character photo for my son 

I always see that getting a locker when I go contributes. $10 for the day is surely 80% profit or more

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It also has the effect that a Victorian family like mine will buy a pass and then make the effort to have a trip or two extra during the year when we would usually have gone elsewhere. 

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By and large, the marginal cost of one more person in the park is zero1.  So in that sense the season pass is free money for the park - they still have to open, still have to have staff, still pay rent and insurance - so having people in the park is good.  There's no way they're making a loss, unless you consider a "loss" to be the difference between what they would have earned if full price had been paid for every visit - which is unrealistic because people with season passes may not go as frequently at full price. 

Plus, as others have mentioned, people spend money within the park, bring their friends who pay full price, etc.

Obviously this is simplified a bit - more people in the park means more staff required, greater park upkeep costs.  If the park is at capacity and you have to turn down full price customers then that's a small loss too.

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I do think there is a psychological element to choosing a season pass.  Usually a season pass equates to two single entries or thereabouts.  I'm guessing that theme parks are thinking that some people might only visit once a season and only get $50 off them for the whole year.  Now if you think you can come in all year for $100-$130 and you enjoy coming back time & time again, then it's a no brainer and the theme park is getting an extra $80 (+food, etc) X thousands of members then the park has an extra X hundred thousand dollars in the bank that will partially cover wages, electricity, fixed costs, etc.  

Also when you have a family season pass, you're more likely to invite your kids friends for birthdays, summer holidays and so on.  I could go on......

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I think the issue of long queues is a bit of a different discussion. 

The issues at MW are because it doesn't have enough attractions and doesn't add enough new ones (as opposed to one out one in additions), especially "2nd tier" type stuff. 

Dreamworld is much more accessible on a busy day because it has 3 times more to do. I don't think that's a pass cost issue. 

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When people post on MWs page one thing that I've noticed that people say about is as BigKev said, the lack of additional attractions to the rides. People can complain about rides being closed, but they have to be at some point and it was predicted that the GL would be closed. I think the issue is that there is less characters that walk around, and less extra shows. If I remember correctly, there used to be a scheduled show nearly every hour on Main Street. Even small shows such as the cowboy show down in the Wild West area was  a good extra something.

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^ Not forgetting that they used to have a bunch of really good stage shows.

completely disagree.

 

Could you be a little more specific?  Why wouldn't they put on less staff if they were trying to save money?  They let you into the park.  They might limit the hours some things are operating, but they're still living up to their side of the bargain.

Or are you saying, like Big Kev, that it's only at places like Movie World where they haven't kept their classic attractions and now there's not enough to do

Or is it the fact that the management don't know what they're doing and don't care about service and has nothing to do with money? 

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hahah well it doesn't work on me i always take my own food in and never buy any of their crap over priced merchandise in the shops.  :P

You obviously don't have kids lol. Believe me, when you do, you'll be forever caving to "can I PLEASE have a churros, mum?" and "can we go look in the candy shop?" and "I'm hungry/thirsty.... can we get popcorn/frozen coke?" etc. Oh, and don't forget the green cape for the junior Green Lantern fan, and the MW jewelry accessory for the tween daughter.

Kids don't run on schedules, nor do they happily accept a homemade sandwich or a packet of chips when there is better things on offer around them :lol: Even after attempting to eat lunch outside of the parks prior to visiting, we always tend to end up buying something during nearly every visit.

Another prime example of where the parks make their money. And you wonder why they encourage families so much to buy annual asses (buy 3, get 1 free) lol... seems fairly obvious to me ;)

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x 2.

 

And is it Seinfeld who does the bit about airports just being cover to make money from sandwiches?

Be very interesting to see the breakdown of where a park makes its money. 

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I tend to treat Movie World as a half day, and accordingly try and fill them up before arriving, or we pickup takeaway on the way home.  We will typically buy drinks, or an ice-cream. etc.  Very occasionally we might pick up an item of merch.  We'd probably visit on average once a month.  The kids get bored there a bit quickly, due to a limited amount of stuff for them to do.  We went last weekend, arrived at opening, and had been on all the kids area rides, some twice, after about 2 hours.

We can get a whole day out of Sea World, even going on no rides.  Being further from home, we tend to eat a proper lunch there.  More likely to buy merch there, as the sea animals have more of an appeal to my kids than the MW characters.  We only visit a few times a year though.  

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Parks have worked out something like over $100 is spent per day for a 4 person family on additional in park purchases. 

They track in park sales of food and beverage, plus merch and upsells very closely and know exactly what they need to turn over daily, and based off averages; how many people they need in the park each day to turn a profit. 

If you have no people in the park, you stand no chance of reaching those targets. Pretty simple (if well executed) economics.

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It stands to reason that a cold, rainy day with 50 people in the park will make less money than an average Saturday with several thousand pass holders. Fixed costs are basically the same -- it's only when service is ramped up for peak season that costs would increase. 

There's no doubt at all that the passes and overall pricing strategy have contributed to reductions in overall quality and service standards, so they've had an impact absolutely, but cost-cutting ("operational efficiencies") has kept profits in check. The parks are doing fine.

As for buying food or merch to support the next big attraction, I suspect that if every guest chipped in and bought a Frozen Coke, about the only new thing we'd see is more Frozen Coke machines. If you want to play your part and help get new rides sooner, then your best bet is to not renew your pass. As counterintuitive as that is...

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I want to know how theme parks make a profit form a single $130 yearly pass, wouldn't they be making a loss really? Can someone plesease explain how they would be making profit. 

1) Sell passes

2) ???????

 
3) Profit
 
 

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