Return on Roller Coasters: A Model to Guide Investments in Theme Park Attractions

Rutger D. van Oest (), Harald J. van Heerde () and Marnik G. Dekimpe ()
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Rutger D. van Oest: Tilburg University, 5000 LE Tilburg, The Netherlands
Harald J. van Heerde: Waikato Management School, University of Waikato, Hamilton 3240, New Zealand, and CentER, Tilburg University, 5000 LE Tilburg, The Netherlands
Marnik G. Dekimpe: Tilburg University, 5000 LE Tilburg, The Netherlands; and Catholic University Leuven, 3000 Leuven, Belgium

Marketing Science, 2010, vol. 29, issue 4, 721-737

Abstract: Despite the economic significance of the theme park industry and the huge investments needed to set up new attractions, no marketing models exist to guide these investment decisions. This study addresses this gap in the literature by estimating a response model for theme park attendance. The model not only determines the contribution of each attraction to attendance, but also how this contribution is distributed within and across years. The model accommodates saturation effects, which imply that the impact of a new attraction is smaller if similar attractions are already present. It also captures reinforcement effects, meaning that a new attraction may reinforce the drawing power of similar extant attractions, especially when these were introduced recently. The model is calibrated on 25 years of weekly attendance data from the Efteling, a leading European theme park. Our return on investment calculations show that it is more profitable to invest in multiple smaller attractions than in one big one. This finding is in remarkable contrast with the current "arms race" in the industry. Furthermore, even though thrill rides tend to be more effective than theme rides, there are conditions under which one should consider to switch to the latter.

Keywords: entertainment industry; theme parks; return on investment; bundling (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:29:y:2010:i:4:p:721-737

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