Theme parks have increasingly come to rely on monthly and annual payments by loyal passholders and members. These help to pad the bottom line of company financial ledgers.
Prior to the COVID-19 pandemic, a pot of money filled with passholder payments was sitting at the front gate every morning before any visitors ever showed up. Parks relied on that steady stream of passholder revenue during lulls in the season brought on by bad weather, local competition and economic recession. That pot of passholder gold was crucial to keeping theme parks afloat during the first few weeks of the pandemic in the United States.
Theme parks in the US closed due to the coronavirus outbreak in mid-March. But they continued making money every day thanks to their passholders. At least for a few weeks until their most die-hard fans started complaining.
The impact of COVID-19 on theme park season passes
The coronavirus closure of theme parks has forced some operators to suspend monthly passholder payments. Disney, Universal, Cedar Fair and Legoland parks in the United States have halted monthly payments for passholders and members. Six Flags and SeaWorld parks have modified policies regarding monthly payments for passholders and members.
Parks have taken varying approaches to their most loyal customers. A lawsuit accuses Six Flags of continuing to charge season passholders monthly membership fees during the coronavirus closure of its parks. On the flip side, Cedar Fair has extended current 2020 season passes through 2021 at no additional cost.
Theme parks that have halted monthly payments still have cash in the bank. This is from passholders who paid upfront for the entire season or year.
Season passholders and members can account for 50% or more of daily attendance at theme parks. That revenue, whether collected annually or monthly, is typically realized on a daily basis by the parks.
An important revenue stream
Regional parks typically charge a few hundred dollars for a season pass. Bigger industry players like Disney can charge upwards of $1,000 for an annual pass. For passholders, that amounts to a few dollars a day for access to the park.
For parks, those daily micropayments add up quickly when you multiply the revenue by tens of thousands of passholders. That means a big chunk of a park’s daily revenue is already accounted for before a single ticket is sold — regardless of whether the passholder shows up or not.
When passholders and members do show up, they mean even more revenue for the parks. Passholders can be counted on to purchase season dining plans, pay for line-cutting passes and drive up in-park spending. All of which increases per capita revenue and fills theme park coffers.
In short, the parks’ most loyal customers have become increasingly important to the bottom line. And now that cash pipeline has been considerably restricted for many parks. It’s no coincidence that Disney announced the furloughing of its theme park staff in the US and the halt to annual pass monthly payments at the exact same moment.
Without monthly passholder payments, it became increasingly difficult for Disney to pay cast members.
How important are season passes to theme parks?
Cedar Fair season passes
Season pass visitation comprised 53% of Cedar Fair’s 2019 attendance, according to a March 2020 investor presentation. Season passholders represented more than 14 million of the 27.9 million visitors in 2019 at Cedar Fair parks, according to the presentation.
Sales of 2020 season passes and all-season products increased more than 40% through the end of 2019, according to the Cedar Fair presentation. The increase was equal to $40 million.
Cedar Fair sold 2.6 million season passes in 2019, nearly double the number sold in 2009, according to the presentation.
Expanding the season pass program is one of the core strategies in Cedar Fair’s long-range plan, according to the presentation. Turning season pass purchases from an annual transaction into a lifetime relationship is one of Cedar Fair’s key goals.
Six Flags memberships
About 40% of Six Flags visitors have a season pass or membership, according to a July 2019 investor presentation.
Six Flags members and season passholders generate more annual revenue than single-day visitors, according to the presentation. Members and passholders visit during off-peak periods and provide a “weather hedge” during cold and rainy seasons.
Members help drive higher in-park spending at Six Flags parks. And members generate three times the lifetime revenue of a season passholder, according to the Six Flags presentation.
The auto-renewal of Six Flags memberships provides a steady source of revenue, according to the presentation. Memberships make it easier to purchase dining and line-cutting add-ons and help drive in-park spending.
Six Flags lawsuit
A class-action lawsuit accuses Six Flags of continuing to charge season passholders monthly membership fees while the company’s theme parks are closed amid the COVID-19 pandemic.
“Unlike its competitors in the industry, defendants continued charging its thousands of customers monthly fees – at full price,” the suit alleges. “Defendants have made the deliberate decision to bilk its customers out of untold sums per month while its customers do not have access to defendants’ parks.”
The suit filed on behalf of a Six Flags Magic Mountain member seeks unspecified compensatory and punitive damages.
Merlin annual passes strengthen customer loyalty, increase revenue and drive secondary spending, according to a May 2019 company report. The company has begun to adopt a membership approach for its annual passes, similar to Six Flags and SeaWorld.
In 2019, Merlin launched a monthly membership plan to make it easier to become a passholder. By mid-2019, memberships accounted for 28% of all United Kingdom-based Merlin annual pass sales, according to the report.
“The great thing is that because it is easier to acquire customers and it is easier to pay for your membership, we are seeing more and more of our consumer base move towards a premium product, which in turn is having double-digit growth in our yield through membership versus a normal Merlin annual pass product,” according to the company report.
Theme parks in the United States have updated their policies regarding monthly payments for season passes and memberships since the COVID-19 crisis began.
Disney halted annual pass payments for passholders on the monthly payment plan. Disney passholders who have already paid in full for their annual passes can get a partial refund.
Universal parks are extending annual and season passes and pausing monthly payments on FlexPay passes.
Cedar Fair postponed season pass payments for pass holders on the monthly payment plan.
Legoland parks are also extending annual passes and suspending payments for passholders on the monthly payment plan.
SeaWorld and Busch Gardens parks are extending season passes and memberships. Passholders on the SeaWorld and Busch Gardens EZpay programs are advised to contact guest relations for more information.
Six Flags has extended season passes and upgraded monthly fee-paying members to the next higher membership level.
Background image courtesy of SeaWorld Orlando