China is now the second largest market for theme parks globally, and even during the challenges of the COVID-19 pandemic the country’s attraction industry continued to evolve, expand, and hold its global position.1 A new report, China’s theme parks face a new era, highlights several trends that are shaping the industry, and identifies opportunities for both greenfield developments and existing destinations to provide new product offerings that enhance the visitor experience.
Driven by strong consumer enthusiasm, China’s theme park industry has transformed considerably over the past few decades, with hundreds of local players tapping into a rapidly growing market. International brands with strong intellectual property (IP) have upped the game to compete for visitors, and by the end of 2021, three new international theme parks had opened in China including Disneyland Shanghai and Hong Kong, and Universal Studios Beijing.
The market has enormous potential—McKinsey analysis suggests that only 27 percent of China’s population has ever visited a theme park, less than half the average for developed markets, at 68 percent.2 And the market size could more than double from RMB40 billion in 2019, to over RMB90 billion by the end of 2025.3
However, despite these strong foundations, the industry faces several challenges. Even before COVID-19-related restrictions, only half of the country’s parks turned a profit.4 And theme parks are experiencing increased competition, from local and international brands, requiring operators to provide a state-of-the-art visitor experience to differentiate themselves in a crowded field.
Visitor expectations are evolving
The disruptions of COVID-19 notwithstanding, a growing and increasingly urban middle class means that theme parks in China will likely have a bright future. Operators can consider the following three trends that are shaping visitor expectations:
First, new experiences can draw repeat customers. This is especially relevant as during COVID-19, trips around hometown cities became the first choice for leisure travel. And a McKinsey survey of Chinese tourist attitudes revealed that nearly half of consumers said their first choice for travel would be a short trip to a new destination.5 Operators can update their offerings regularly, and integrate entertainment and events, to provide repeat visitors with new experiences. For instance, the Disney characters dressed in traditional Chinese Hanfu attire to celebrate the Spring Festival in Shanghai soon captured visitors’ attention and became a trending topic on social media, gaining over 20 million views on TikTok.
Second, consumers are increasingly looking for interactive and immersive storytelling experiences, not just rides—and digitization can enhance the theme park experience. Operators are now introducing wearable devices and augmented reality (AR) or virtual reality (VR) technology to elevate the in-park experience.
Third, social media promotes engagement. There is rising interest in experiences that are tailored to social media, making it easy for visitors to post their experiences online, and customers are increasingly taking travel advice from influencers. COVID-19 pushed people to spend more time online—now short-form videos and livestreaming have become the top online entertainment options in China. In the first half of 2022, short videos accounted for 30 percent of mobile internet use time in China.6 As a result, theme park operators are doubling down on social content.
Developing greenfield theme parks
While new theme park developments, or greenfield projects, provide an opportunity to introduce something original to the market, they are capital intensive and require at least five years from initial planning to launch, but often longer.7 To help ensure their success, greenfield developments should have a strong brand identity or IP, a unique product concept based on consumer insight, and use innovative technology so that the park retains its “wow factor.”
Strong brands with associated IP are critical to theme park success, helping to attract visitors and keep consumers engaged even when they are not on site. Global operators have invested heavily in strong IP ecosystems, often over many years—and such success may be difficult to emulate. Operators looking to build IP could take a partnership approach, as Haichang Ocean Park in Shanghai did when it added an Ultraman-themed pavilion to its offering—the first of its kind—including a theatre, restaurant, and entertainment center with interactive facilities. For operators without their own IP, the brand itself can become a key element in building a strong identity. For example, Chimelong built nation-wide brand awareness with its Guangdong theme park complex that includes unique product offerings such as a wild animal park, amusement park, water park, ocean park, and circuses.
New theme park concepts should incorporate consumers’ perspectives early on in the design process to ensure that the end product provides a unique experience that consumers want. Operators may also need to take a visionary approach to technology so that their rides and experiences continue to impress for years into the future. Keeping abreast of the latest technological developments, such as VR and AR, is key to ensuring that the visitor experience will be exciting, easy to navigate, and on trend.
Elevating brownfield theme parks
For operators looking to elevate established parks, it is critical to understand the value-creation process across the customer journey: visitor acquisition, value conversion (including ticket sales, and non-ticket sales), and customer retention (exhibit).
In terms of visitor acquisition, local operators often invest in one-size-fits-all mass marketing campaigns through traditional and offline media such as TV, newspapers, and outdoor advertising. Considering the increase in consumers’ time spent online, operators could instead invest in online presence—and use customer insights to tailor messages to different segments and personas. Operators could also consider stimulating demand by promoting holidays or events that fall outside peak periods and by creating themed events that cater to local interest. They could also look for ways to collaborate with partners, across industries, to reach new customers. For example, Universal Studios Beijing leveraged Tencent's Honor of Kings mobile game to attract gamers by holding themed events at the park.8
To grow revenue from ticket sales, operators could consider taking a tailored approach to travel-agency management. Travel agencies accounted for around 45 percent of Chinese tourism bookings in 2019.9 Theme parks may be able to manage these sales in a more efficient manner. Instead of relying on the traditional commission model, operators could categorize agencies into various levels—for instance according to sales volumes and growth, strategic fit, target segments, and geographic coverage—and apply a tailored incentive policy for each category. Operators could also collaborate with online travels agencies, as these made up around 30 percent of Chinese tourism bookings in 2019.10 Local online shopping channels and apps such as Meituan are gaining traction too. Theme parks can partner to better leverage online platforms’ capabilities in planning and executing marketing campaigns. Although use of direct-to-consumer channels is on the rise, they have generally been under-utilized by park operators, when compared to other industries such as retail. These channels could be more effective than operators’ official brand websites and mobile apps.11
Operators could look to increase non-ticket revenue, which accounts for between 30 and 40 percent of total income for industry leaders, but usually makes up less than 20 percent of revenue for local operators.12 To do this, operators could develop premium experiences including VIP tours, backstage passes, fast passes, and exclusive services. Such services are popular in mature markets such as the United States and usually have a high margin. Operators could also provide edutainment in the form of tailored offerings for families designed around educating and entertaining children. These offerings are relatively new in the market. Seasonal festivals, holidays, and special occasions also offer opportunities to boost non-ticket revenue such as specially designed dining experiences, costumes, and limited-edition holiday merchandise.
To boost customer retention, operators can increase efforts to build long-term relationships with their customers and keep them engaged, both inside and outside of the park. Brand touch points outside the park help to keep the brand top of mind. For instance, Universal Studios partnered with Nintendo to provide a wearable power-up band to park visitors. This is more than an in-park accessory, it is a Nintendo amiibo with game characters that can be connected to Nintendo consoles for at-home use. This extends the park experience.13
Customer retention could also be improved by a tiered annual pass that meets different needs. For instance, a weekday pass can cater for visitors with more flexible schedules who prefer to avoid crowds. Passholder benefits such as value-added services, and hotel and dining discounts can also enhance the perceived value of such passes.
Over and above visitor acquisition, value conversion, and retention, park operators need to continue to provide a seamless and enjoyable visitor journey. This requires multiple forms of operational support including optimized staffing, utilities and sustainability management, and use of predictive maintenance to keep the park running smoothly.
As China’s theme parks enter a new era, with increased competition, operators might consider examining their fundamental product offerings and look beyond the traditional on-site experience to engage new visitors and build lasting relationships with existing customers. Those preparing or considering new parks may need to plan ahead to ensure their tech-enabled products will continue to impress for years into the future. Operators with existing parks could continue to elevate the experience and build value across all areas of the customer journey.