A Tale of Two Shows
I am getting ready for two trade shows in the next two months, both of which represent powerful strands of opportunity both for my business and for the industry as a whole. They are the International Association of Trampoline Parks Conference and Trade Show in Scottsdale, Ariz., and the International Association of Amusement Parks and Attractions Expo in Orlando. In this month’s column, I will explore what I hope to achieve at each event.
The trampoline park show offers a great example of an industry that is poised for rapid growth, if it can embrace a little diversification. So far, the group has hit a penetration rate of about 200 facilities throughout the U.S. That’s a good number. Currently they are mostly a single attraction industry, at least so far, and they are doing quite well with their model. But there is a much greater opportunity for trampoline parks if they embrace games (particularly redemption), food service, as well as adding other family entertainment attractions.
The market appears to be dominated by four bigger firms building out these locations on a corporate or franchise basis. The locations I have visited measure approximately 20,000 to 30,000 square feet. Some are paying extremely high rents, but others are realizing that they can locate in less trafficked areas and pay rents more in line of 15% (or less) of revenues.
The trampoline parks are aiming at the $1.5 million to $2 million gross revenue level, and they are nailing it right now. Participating patron per capita spending is in range of $15 if the parents and other adult spectators are not included in the attendance figures. However, my concern is that once the shine wears off, each facility will have to expand their market to increase attendance, tap spectator revenue, and increase repeat business.
Laser tag started out as a stand-alone single attraction business, but the number has dwindled down to under 100 single attraction laser tag facilities remaining in the U.S. Today laser tag is thriving as an add-on attraction to many bowling centers and a major staple attraction of a broader entertainment facility. Trampoline parks could follow the same downward path as the single attraction laser tags have or gain traction with trampoline activities being the anchor with other revenue streams coming from food, games, parties, and other family attractions.
Trampoline park operators understand their current business model. They want to turn customers quickly so they can do more trampoline business, but they could maximize revenue from those visits if they offer more entertainment.
History shows that the single attraction facility has a short-term shelf life, maybe five years, if they don’t add more to the mix. With better food and games, they could pick up another $10 from parents and other spectators, who are otherwise just standing around looking at their smart phones.
But this message can be tough to hear. I got at best a skeptical reaction from the roller skating industry twenty years ago. I had 400 rink owners in a seminar that I presented, and told them that in five years 2/3rds of them would be out of business if they did not run their skating rinks as a family entertainment center. They didn’t like hearing that, but it turned out to be true. I had a similar experience with the bowling industry early on, but they understood and more are transitioning to bowling-anchored FECs and increasing revenue significantly.
Change is difficult, and you see this resistance to evolution over and over again. At 200 locations nationwide, trampoline parks are going to grab traction and expand fast or suffer slower growth. The suppliers may be happy with five good years’ worth of sales. They can do quite well in that time frame. But what about the operators? Four-five years of revenue may not represent a sufficient return on investment. But it is good to know that there is a Plan B for at least another 5 years of profits after the initial period.
I will be presenting two seminars at IATP and hopefully I will learn as much from the attendees as they learn from me. I will let you know what the reaction is.
I go to the IAAPA show to look for diamonds in the rough. Joe Camarota and the Alpha/AEM team go to look at games as well as merchandise, and I do some of that too. But I’m really looking for new game and attraction ideas, small companies that we can work with to help develop their product and bring it to market.
Sometimes I discover a new concept or technology in a game but that game is not right for the market or costs too much. It is important that this not be lost to our industry, which it often is because the game is not an instant hit. Over the years we have worked with dozens of games and assisted in improving them into long term earners.
I also look to see if there are any games we may have missed. We are constantly testing a dozen new games and prototypes so we are always ahead of the curve, but things show up at IAAPA that we have never seen before. Those tasks keep me busy for a whole week. The show is so large that I still don't see the entire show.
Before heading to IAAPA, know what the Top 30 games are and go play the ones you do not have. This is just as important as playing the newly introduced games that none of us yet knows will be great earners or money not well spent.
Currently my Top 10 earning games are (as listed in The Redemption & FEC Report):
Wizard of Oz 6 Player
Monster Drop Xtreme
Big Bass Wheel #1
Big Bass Wheel #2
Whack N Win
Ticket Candy Crane
Down the Clown #1
Down the Clown #2
The Top 10 have remained pretty steady over the past several months. The Top 4 have been a lock for close to two years, but 11 through 50 really change up a good bit, as several test games and new games are added to the mix. When a new game does well for 90 days (even with more new coming in during the period, it is fairly easy to see that it has legs and which games drop down. What I have learned about closely following the Top 50 is that these days a game room can stay fairly current and maximize revenues by changing out only 10 percent of games per year based on which new games rank high in the Top 50. In the past, we were moving more games in and out of a location, which required more investment. But we are doing less of that today because there are fewer new workhorse additions each year.
The big rotation cycle is not as effective as it used to be because the games just don’t have the appeal they had in the past. By upgrading at least 10 percent you keep your revenue up with a modest reinvestment.
Our biggest achievement of late, something I have mentioned here before, involves offering ticket bundles as prizes in cranes and rotaries. We have been doing this for twenty years but not at $1 play. The key is to have a high hit frequency (1 out of 3) and still keep the Win % around 25%. With $1/play our actual cost for a 150 ticket bundle is $1.13 (based on a ticket value of 3/4 cent), but the perceived value is four times the cost or $4.50. Simplicity works as well as technology when it comes to redemption and I think the manufacturers are moving away from that and getting lost in complexity.
Maybe we can find another simple but fun attraction or another great operational idea at IAAPA. And maybe we can help open up an expanded market for games and attractions at the trampoline park show. I’ll let you know in my next column.
Frank Seninsky is president of Alpha-Omega Group of companies, which includes a consulting agency, Amusement Entertainment Management (AEM), and a nationwide revenue sharing equipment provider, Alpha-BET Entertainment; all are headquartered in East Brunswick, New Jersey. Along with industry consultant Randy White, Seninsky also heads up Foundations Entertainment University. During his 41 years in coin-op, Seninsky has presented nearly 250 seminars and penned more than 1,000 articles. He has served as president of the Amusement and Music Operators Association from 1999-2000 and is a past chairman of the International Association for the Leisure & Entertainment Industry. Seninsky can be reached at 732/254-3773 or by email at email@example.com and www.AEMLLC.com.
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