Niles: Annual passes have become a bad deal for theme parks

Have theme parks become subscription services?

It’s been years since all the people visiting Disneyland, or any other park, just bought their tickets at the front gate when they arrived. Parks have been pushing their fans to buy annual passes, with almost everyone now offering monthly payment plans.

The move to passes from daily tickets has created profound financial and operational effects on the industry. That’s led me to wonder if maybe we all would be better off if parks did away with their annual passes and just went back to daily tickets.

That is unimaginable for many fans, given how much parks are charging these days for daily admission. Disneyland charges almost $200 for a one-day ticket on peak days. But I suspect that the dramatic increase in prices for daily tickets and prices, as well as the development of paid line-skipping services such as Six Flags’ Flash Pass and Disney Genie+, are direct consequences of parks’ success in selling annual passes.

Annual passes started as an attempt to increase revenue per visitor by upselling them to a higher-priced pass. But the result has been a decrease in revenue per visit, as passholders chase value by visiting more often, often crowding out day-ticket guests. That leads parks to try to boost their per capita revenue numbers with higher daily ticket prices and more in-park upcharges.

The irony? Those higher prices drive more dedicated visitors to buy annual passes, perpetuating the cycle. Meanwhile, casual fans just stop going to Disneyland and other theme parks because they can’t afford them anymore, leaving parks to serve a limited population of increasingly restless and dissatisfied passholders.

Imagine a “Dry 2025” — the industry equivalent of a “Dry January” — where instead of abstaining from alcohol, parks did without annual or seasonal passes for a year to see just how much demand actually exists for their parks at regular admission prices. I suspect that parks quickly would have to lower their daily ticket prices to keep their parks filled. But their average revenue per visit would increase with annual passholders out of the mix.

More affordable parks that make more money for their owners? Sign me up.

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Unfortunately, I suspect that many parks might not survive that transition. Without a base of locked-in annual passholders to maintain their attendance, too many parks lack the fresh attractions, efficient operations and well-supported customer service that daily ticket buyers would demand. Disney and Universal would be fine, with their hotels and unique IP that allow them to appeal to global audiences. But everyone else?

My best recent experience at parks outside of Disney and Universal have been at Silver Dollar City and Holiday World — parks located far from big cities that provide a ready supply of annual passholders. They have had to survive on daily ticket sales, which has led to a better park experience.

Just like cheap streaming services helped kill demand for box-office movies and linear TV, annual passes have trapped theme parks and their customers into what has become a bad deal.

 

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