Business - India;Fun Parks

Radhika Sachdev
Picture this: The rides and equipment at Fundoo World, AEZ Mall in Vaishali, Ghaziabad, on the outskirt of Delhi, is in place but there is not a flutter of activity in the vicinity. “We are still waiting for all the clearances,” says Rajesh Khursija, managing director of Prakash Amusement that manufactures rides and equipments.
Most park operators in India are ride manufacturers and while Khursija has two decades’ experience in the business in Delhi and Panipat, even he couldn’t foresee the trouble that Fundoo Park will run into with an unspecified amount stuck in the land leased out to them by realty developers AEZ Group, nearly three years ago.
“It’s a huge capital intensive business,” agrees Arijit Sengupta, president of the Indian Association of Amusement Parks & Industries (IAAPI), and promoter of Nicco Park (40 acres) in Kolkata. A bulk of the cost goes in land acquisition, plant and equipment. “Even the labour and maintenance costs are high, keeping in view the safety of the people,” he adds. In other words, park operators work on thin margins.
Add to this, the local entertainment tax—ranging from 10% to 25% in various states—and it’s easy to understand why all parks don’t do equally well. “They don’t have the same playing ground,” remarks Sengupta.
In short, the Rs 1,500-crore amusement and theme park industry in India is besieged by high taxation and multiple clearances.
Small wonder that all 150 amusement parks that currently exist in the country are concentrated in the top six-seven metros (Delhi and the NCR alone have five now) run by a dozen odd major players. Even these are mostly private-owned, while a few operate on government-leased land. Only a handful, three/four are joint sector companies with state governments as Nicco Park in West Bengal.
“Fun is a serious business,” VG Paneerdas, the doyen, who created VG P Golden Beach on the East Coast Road in Chennai once declared.
Located along the undulating shoreline against the shimmering white sand, the park entertains its visitors with nominally priced thalis and folk performances. His son VGP Ravidas has managed the property well set in carefully landscaped terrain, amidst exquisite green velvet grass, luxuriant gardens, paved walkways, elaborate food courts, sparkling fountains and the works.
The parks that continue to do good business are the ones that have managed the right location, product mix and pricing. A case in point in northern India is the upcoming Worlds of Wonder (WOW), part of the Noida Entertainment City. Located just a few miles away from Fundoo World, WOW houses a shopping mall called Great India Place that, although open to the public, is still being built on a sprawling 147 acres plot (Appu Ghar was only 14 acres).
A 50:50 joint venture between Unitech and International Recreation Parks (the Group that created Appu Ghar in Delhi), only 60%-65% of the park is built, yet it’s begun to draw significant footfalls—1,500-3,000 on weekdays and 5,000-7,000 on weekends. “Once the metro link at Sector 18 (close to which the WOW is located) falls in place, hopefully, by June 2009, we expect the traffic to double, if not triple,” declares Kurt Inderbitzin, CEO of the Unitech-IRPPL joint venture that also runs Adventure Island, another amusement park at Rohini, Delhi that’s reportedly doing brisk business.
“We have plans to start a monorail that will connect to various sections of the park,” informed Inderbitzin. The sections include a Teen Zone, where Woodstock style music festivals are being planned for a generation fed on MTV ware, live musical performances and other outdoor events against giant guitar scaffolding in the backdrop. A mini train will connect Teen Zone to the Family Zone and the shopping complex with landscaped parks in between.
The gate fee is steep—Rs 375 for an adult—although there are special weekday packages and discounts for students and corporate clients. “Price discrimination is a deliberate policy,” remarks Inderbitzin, “As once you are in, you are entitled to unlimited rides. There is no separate ride fee.”
This indeed is the policy of most amusement parks in India, including Subhash Chandra-promoted Essel Group’s amusement park Essel World in Mumbai (64 acres). According to Anand Lamdhade, assistant general manager of the park, “The per annum running costs alone eat up 50% of the gate collections with visitation varying with the seasonality of the business.”
Thus, to increase their revenue, nearly all water parks (since they have surplus land) also have a retail option. A case in point is the Great India Place that on an average Sunday, has begun to draw as many as 1.2 lakh visitors, significantly more than the park footfalls. “We had a retail option since inception. It was franchised earlier but now for the past couple of years, we are running it by ourselves,” says Sengupta. Although the conversion rate at these mall is anyone’s guess, the gate income vis-a-vis food, beverage and merchandising income falls in the ratio of 70:30 at Essel World, according to Lamdhade, which is why the gate fee is deliberately kept high at most parks. “The gate income vis-a-vis other income at Nicco Parks is 70:30,” adds Sengupta.
“However, even with these ratios and proper cost control, parks can survive satisfactorily wherever statutory tax burdens are not high,” explains Sengupta, why real estate majors like Unitech, DLF and, according to industry rumours, Disney and Time Warner are evincing interest in gaining a foothold in the Indian market.
“We don’t deal with a routine product. We provide escapism to our guests. Unless, we make it an exceptional experience, there is little scope for differentiation,” says Inderbitzin, who has started special training for even the casual staff and is planning to bring in Disney-style cartoon characters, magicians and palm readers to entertain families waiting in queues for their next ride.
“Eventually, you have to tailor your product to the needs of the target audience,” says Rajen Shah, managing director of Arihant Industrial Corporation, promoters of The Great Escape amusement park in Virar, Mumbai. Here, the Rs 400 gate fee also includes meals, which implies great value for money in a suburban locality.
Offbeat promotions work for the industry too. WOW has tried affiliate marketing with Airtel—SMSing Friendship Day messages tied to 50% discount offers.
“We are looking at opportunities for banding boarding passes on all Delhi-bound flights and are also in talks with Barista, American Express, HDFC and Adlabs for similar, low-cost, high impact actions. Nearly, 90% of our media budget will go into these promotions,” informs Inderbitzin.