Evolving Landscape of Indian Amusement Park Industry
Published by Sharekhan Education | February 24, 2023
Amit Pathak| Sharekhan Education
An amusement park features entertainment attractions such as roller coaster rides, giant wheels, and recreational events. These parks provide a one-stop-shop for outdoor leisure and entertainment for the entire family. They have a fixed location, unlike carnivals and funfairs. Technological advancements in Hydraulics and Animatronics have improved safety in rides while making them more exciting and entertaining. This industry includes amusement parks, water parks, and theme parks. The industry in India is around two decades old, and still in its infancy.
About the Indian Amusement Park Industry:
According to IBEF, the market size of the Indian amusement park sector is around USD 500 million and is estimated to grow at a 10% CAGR between FY22 and FY27. The size of this industry in India is ~1% of the global industry of ~USD 49 billion. India has 125+ districts with a population of over 3 million. We have only 15-20 major amusement parks in India with a footfall of greater than 0.5 million/year, thus presenting a huge opportunity for the sector in the coming years.
Key Growth Drivers:
The key growth drivers for the sector include an increase in per capita income, favorable demographics, limited options for other outdoor entertainment avenues, and changing lifestyles. Millennials prefer spending money on experiences more than buying assets. Social media platforms like Instagram and Facebook are nudging people to seek out more such outdoor experiences. Infrastructure developments like Metro Rail and Ring roads have enhanced connectivity to popular amusement parks.
Indian companies in the sector are unlikely to be challenged by foreign behemoths like Disney World and Universal Studios. Foreign players like Disney have high upfront capital expenditures and long payback periods. If Disney World decides to set up an amusement park in India, it would take around 30 years of payback period which would not be a viable investment. The economics of the foreign parks is different. They make only 35% of their revenues from entry fees, the remaining from resorts, food, and merchandising. Indian companies make around 75% from entry fees and the remaining from food and merchandising. The difference is mainly due to the lower discretionary spending power of the consumer in India.
Wonderla Holidays:
Let us discuss Wonderla Holidays in this space. The company has three amusement parks in India. It plans to expand to 10 parks by FY30. As per Google Trends data, Wonderla brand scores double in terms of interest from potential customers vis-à-vis Imagicaa, EsselWorld, Worlds of Wonder, and Ramoji Film City. The company requires lower maintenance capex due to its in-house ride manufacturing plant. The company is estimated to deliver 24%/18%/16% CAGR growth in Revenue/EBITDA/PAT, respectively, over FY23-26E.
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