Common Mistakes and Competition Situations in Waterpark Industry
Translated by AAA Committee
As a water park investor in China, how to excel in intense market competitions and grab business opportunities? Here are the 5 most commonly made mistakes in water park investment.
The 5 most common mistakes
No.1 The lack of market research in advance leads to excessive investment and even regional cut-throat competitions.
With such a notion in mind that bigger is better, some investors believe that the amount of investment is proportional to their profits, neglecting the relationship between investments and the market. The larger your investment scale is, the more customers you need to keep your water park running. Especially in some third and forth tire cities, the population and their buying power are not big enough to support an over-sized water park. For example, somewhere in Hunan Province the world’s biggest water park is planned to be built with an area of over 650,000㎡and its wave pool alone will be about 130,000㎡ in area.
Seeing that China’s domestic demand for amusement parks is strong in general, some investor ignore the development rules of local market and blindly begin a water park project, which results in regional cut-throat compositions and a waste of money. Statistics show that by 2017 there will be 5 water parks in operation or to be put in operation in Chengde City, Hebei Province. How can a third tire city like Changde support the operation of 5 water parks at the same time?
NO.2 The lack of rational planning leads to a poor visiting route for visitors.
Partial developers spend too much budget on water park equipment and not enough on planing, management and marketing. Some water parks fail to provide their visitors with a reasonable, comfortable and convenient visiting route, which leads to poor customer experience and a high complaint rate. For instance, in a forth tire city in Zhejiang Province there is a water park equipped with a whole set of equipment imported from Canada. Its construction has cost as much as 400 million - 5 million RMB, however, the recovery of investment is nowhere in sight. Another water park in Guizhou Province failed to take into consideration shades from the summer sun for their visitors, which later became the main root of complaints.
No.3 Overly high ticket prices lead to a low revisit rate.
according to the Consumption Research Report of Water Parks released in 2015 by Jiangsu Province, 85% water parks charge over 100 RMB for admission. Partial developers attempt to recover their investment in a short period through high priced tickets, however, the overly high ticket prices usually damp the enthusiasm of visitors.
No.4 The lack of a distinct theme leads to the lack of attractiveness.
On the surface, in the last few years China’s water park industry has been booming. In 2015 alone 26 water parks have opened for business. Nevertheless, most of them do not have a distinct theme or cultural innovation, but are purely made up of equipment. That is because most of the developers have planed, built and operated their water parks the way a real estate developer usually does. Therefore, homogenization and limited market attractiveness have become serious problems for some Chinese water parks.
No.5 Products of little variety leads to susceptibility to seasonal changes.
One of the most distinctive features of water parks is that water parks are greatly influenced by seasonal changes and they usually only open for a comparatively short period. Every summer holiday, water parks are crowded by visitors, while in spring and winter, they have to close temporarily due to the lack of customers. Basically in every province of China, water parks open for 3-6 months annually. Since the products and services they provide lake variety, water parks are susceptible to seasonal changes.
5 Present Competition Situations
It is important to avoid common mistake, but it is also important to understand the
present situations of market competitions.
No.1 Water parks will become a daily product for citizens.
With China’s rapid economic growth and the increasing average income of individuals, Chinese citizens’ need for aquatic recreation is strongly stimulated. A research suggests that every year in China there are at least 1 billion person-times of residents engaged in aquatic activities. Water parks now have turned from a luxury good into a daily product for citizens.
No.2 Water parks with a small choice of products will be targeted at visitors within 1 hour’s driving distance.
Water parks with a small choice of products usually have strong regional features. Local residents, especially families within 1 hour’s driving distance, are their main source of visitors. When it is a holiday, their customer base will expand a little bit further, however, people from other regions usually account for less than 20% of total visitors. Therefore, it become imperative for water parks to raise the revisit rate of local family visitors.
No.3 The market of 1st and 2nd cities will tend to be saturated while 3rd and 4th tire cities will become the main battlefield of market competitions.
From Chimelong Water Park, Maya Water Park, to Haichang Polar Ocean World, leading enterprises such as Chimelong, Oversea Chinese Town, Fantawild and Haichang, etc, have occupied major market share in 1st and 2nd tire cities. The present competition situation can be concluded that the market in 1st and 2nd tire cities is reaching saturation and the competition there has turned white-hot, while there are still tons of business opportunities in 3rd and 4th tire cities. It is predicted that 3rd and 4th tire cities will become the main battlefield of market competitions.
No.4 Conventional water parks will gradually fall into recession while themed water parks thrive.
With the improving living standards and broadening horizons, residents’ requirement for recreational consumption is going through an upgrade. The return and innovation of local culture will generate new market needs, therefore, culturally themed water parks will become one of the hottest investment projects in the future.
No.5 Water parks with few choice of products will strive to change into comprehensive tourist areas with multiple functions.
Convectional water parks with simple products will eventually lose its competitiveness and attractiveness, and are therefore, forced to upgrade. They will strive for variety of product functions and customer experience, and forge themselves into comprehensive tourism areas.
Source: Asia Amusement Magazine, Jan 2017.
Original author: Mr. Hong Yu and Mr. Hu Zhenqiang, experts with over 10 years’ experience of tourism planning in China.
By avoiding common mistakes and grasping the competition situations, you have a high chance to succeed in China’s water park market. If you think you are ready for it, please don’t hesitate to attend AAA 2017 (2017 Asia Amusement & Attraction Expo) and grab your business opportunities!
For more information about AAA 2017, please feel free to contact us! You are also welcome to attend other amusement related exhibitions held by our Company!
2017 Asia Amusement & Attraction Expo (AAA 2017)
Date: March 8th-11th, 2017
Venue: China Import & Export Fair Complex, Guangzhou City, China
China (Zhongshan) International Games & Amusement Fair 2017
The 4th Wuhan International Game & Amusement Fair (GAF 2017)
Date: May 12th-14th, 2017
Venue: Wuhan International Expo Center, Wuhan City, China