Alton Towers

Business Overview

            The Alton Towers is a renowned theme & water park, resort and hotel complex in the UK. As an amusement park that is part of the British company, Merlin Entertainments Group, Alton Towers has succeeded in establishing its business since it opened in 1980 (Gary, 2015). Over the years, Alton Towers has gained popularity to millions of visitors and thrill-seekers by creating new types of rides which include roller coasters and other exciting rides which brought something new to the British theme park industry (Savvas, 2015; O’Caroll, 2015). Among the major attractions in the Alton Towers include the Oblivion, the Runaway Mine Train, the Nemesis, the Hex- Legend of the Towers, Thirteen, Congo River Rapids, the Rita, Air and the infamous Smiler (Scare Attractions UK, 2007; Wardley, 2015). In 2014, the two hundred-hectare amusement park, Alton Towers, registered a total £87 million worth of profits for its theme park division (Martin & Williams, 2015). However, the recent rollercoaster crash in Alton Towers’ “Smiler” ride which seriously injured at least five of its visitors caused a significant hit on the company’s bottom line. As a result, Alton Towers may lose at least £47 million worth of profits for the present year 2015 (Sky News UK, 2015). The rollercoaster crash incident caused a huge slump on the number of visitors that come to Alton Towers causing the company to lose millions worth of profit (Martin & Williams, 2015).

Market Overview

            The theme park industry in the UK is one of the key business industries that immediately recovered from the most recent recessionary phase that hit Europe. Beginning the year 2013 up to 2014, records showed a consistent rise in the number of visitor attendance to theme parks and new leisure attractions across UK (Reuters UK, 2014). Among the key reasons for the continued growth and rise of the theme park industry in Britain include the companies’ adoption of various promotional and advertising strategies catered to both the domestic and international visitors (Bainbridge, 2010). In addition, the use of social media proved to be one of the most effective ways to encourage people to visit theme parks and attractions (D&J Consulting & Morisetti Associates, 2014). Other key factors for the growth of the theme park market in the UK include the availability of multi-day visits and the increased convenience and proximity of hotels and parks to the British market. Moreover, the continuous investment efforts of theme park companies in new attractions, rides and additional facilities also kept the consumers engaged in the market. Instead of staying at home during holidays and short breaks, more and more British consumers choose to visit theme parks to spend time on leisurely activities (Mintel UK, 2010).

Market Structure

            Alton Towers is classified as part of an oligopoly type of market structure. By definition, an oligopoly is a market structure wherein only a few firms dominate. In most cases, an oligopoly market is concentrated and is shared between few successful firms (Hirschey, 2000). In addition, companies that are part of an oligopoly type of market structure tend to maintain their market dominance as the barrier to entry in the market is quite high and costly (Economics Online, 2015). This is the reason why for many years, the Alton Towers has steadily maintained its market dominance prior to the rollercoaster crash incident in 2014. In fact, since the 1980s, Alton Towers was consistently hailed as the number one theme park in Britain with over 2 million visitors per year (Wallace & Wallace, 2001). Moreover, Alton Towers was only competing with a few number of successful theme parks in the UK, among which include the Legoland, the Thorpe Park, the Chessington World of Adventures, the Drayton Manor, and the Blackpool Pleasure Beach, to name a few (Telegraph Media Group Limited, 2015).

Market Developments​

            The introduction of a ‘new generation’ of theme parks in Europe served as a huge compelling force for the UK theme park industry to experience growth and development over the years. These ‘new generation’ of parks encouraged top theme park companies in the UK to focus on reinvestment campaigns, develop new services and attractions, and reposition their brands in the market (Clave, 2007). The first stage of market development in the British theme park industry transpired in the 1990s with the development initiatives of Alton Towers, the Legoland, Parc Asterix and other theme park and hotel complexes in the UK. The second wave of market development happened in the early 2000s through the development of more accomodations such as the Splash Landing Hotel of Alton Towers, Efteling’s Dreamland Hotel, Blackpool Pleasure Beach’s Big Blue, and others (Clave, 2007; Mintel UK, 2010). All of these notable developments in the theme park industry in the UK have contributed to the expansion and development of the British consumer market as even during the period of economic recession, the new attractions, facilities and new rides kept the consumers engaged in the theme park industry (Mintel UK, 2010).

Market Attractiveness

            The theme park market in the UK wherein Alton Towers serves as one of key players has a lot of potential for further growth and development. With Alton Towers alone being able to maintain over 2 million visitors each year, there is a clear proof that the market is continuously expanding and that the theme park market is a profitable one (Mintel UK, 2010; Wallace & Wallace, 2001). Also, aside from the fact that the theme park market in the UK remained strong throughout the entire period of economic recession in the Europe, there is also an increasing trend towards spending holidays at home with at least 3% or more of the adults visiting theme parks. Moreover, it is estimated that there will be over 1 million new visitors each year, who will be spending their money on theme parks and this adds to the market attractiveness of the British theme park industry (Mintel UK, 2010). Given that the theme park market continues to boom as driven by the increasing consumer appetite for entertainment and leisure, there is a significant business opportunity awaiting Alton Towers and the other key players in the market.

References

Bainbridge, J. (2010). Sector insight: UK theme parks. Retrieved from http://www.marketingmagazine.co.uk/article/998079/sector-insight-uk-theme-parks

Clave, M. (2007). The Global Theme Park Industry. Oxfordshire, UK: CABI.

D&J Consulting & Morisetti Associates. (2014). European amusement and theme park industry. http://www.iaapa.org/docs/default-source/iaapa-europe/iaapa-europe-economic-impact-study-2014.pdf

Economics Online. (2015). Oligopoly. http://www.economicsonline.co.uk/Business_economics/Oligopoly.html

Gary, K. (2015). The birth of the modern park. http://www.altontowers.com/info-help/

Hirschey, M. (2000). Managerial economics (Rev. Ed.). Ontario, Canada: Dryden .

Martin, B., & Williams, C. (2015). Alton Towers crash hits Merlin profits and sends shares tumbling. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/leisure/11764662/Alton-Towers-crash-hits-Merlin-profits-and-sends-shares-tumbling.html

Mintel UK. (2010). Consumers queuing up for UK theme parks. http://www.mintel.com/press-centre/leisure/consumers-queuing-up-for-uk-theme-parks

O’Caroll, L. (2015). Alton Towers rollercoaster crash: Villagers wait for trade to return . http://www.theguardian.com/uk-news/2015/aug/28/alton-towers-rollercoaster-crash-villagers-wait-for-trade-to-return

Reuters UK. (2014). Research and markets: Global theme park market report 2014-2019 – trends & opportunities featuring Disney, Merlin Entertainment, Six Flag & Universal Studios. http://uk.reuters.com/article/2014/06/04/research-and-markets-idUKnBw046254a+100+BSW20140604

Savvas, L. (2015). Alton Towers: Theme park a ghost town as public appear to shun attractions following horrific Smiler crash. http://www.mirror.co.uk/news/uk-news/alton-towers-theme-park-ghost-6175760

Scare Attractions UK. (2007). Terror of the towers: Bloodfest banquet, Alton Towers. http://www.scareattractions.co.uk/terror-of-the-towers-bloodfest-banquet-alton-towers/

Sky News UK. (2015). Alton Towers crash prompts £47m profit warning. http://news.sky.com/story/1525794/alton-towers-crash-prompts-47m-profit-warning

Telegraph Media Group Limited. (2015). Britain’s theme parks: A summer guide. http://www.telegraph.co.uk/travel/destinations/europe/uk/5322959/Britains-theme-parks-a-summer-guide.html

Wallace, D., & Wallace, S. (2001). GCSE business studies. Oxford, UK: Heinemann.

Wardley, J. (2015). The creation of nemesis. http://www.towersalmanac.com/features/multimedia.php?id=19