With a projected revenue loss of Rs 1,100 crore, amusement parks will be further impacted since families will avoid going to crowded places and travel will be restricted.

Water ride at an amusement park in Bengaluru
news Coronavirus Friday, May 22, 2020 - 13:01

If you walk into a theme park after the lockdown, you may not be able to buy tickets at the counter. You may have to reserve time for your ride in advance. The noisy eateries and merchandise stores will be less crowded and you will have to wait for your turn until the seats are sanitised.

Just like other establishments, amusement parks would have to make necessary changes to be able to follow the rule of physical distancing. People will have to wear masks and there would be hand sanitisers at every station and at the entry point to every ride.

“There will be several changes for sure. We’d have to ensure that physical distancing is maintained at all times. There could be a complete transition to online ticketing, or no cash option at the ticket counter,” says Arun Chittilappilly, Managing Director of Wonderla, a popular amusement park chain with parks located in Bengaluru, Kochi and Hyderabad. 

Expected changes

At Wonderla, the seating arrangements in rides will be different when the parks are allowed to open. The number of people who can go on a ride will be reduced by half. At 50% strength, Arun says, where people would have to sit on every alternate seat.

“In roller coaster rides, where two people usually sit in one row, only one person will be allowed to sit. If there are rides where a whole family can go, they can ride together,” he says.

For water rides people will now have to wait longer, says Colonel Ashutosh Kale, Operations Chief at Adlabs Imagicaa, a theme park located in Maharashtra’s Lonavala. “There are many technologies available for constantly disinfecting water. Water rides will be limited to a single person at a time,” he adds.

One or two groups of people will be allowed into the pools at any given point in time. “One or two families or one or two groups of friends will be allowed inside the pool. We will have to cut down footfall by 50% in order to ensure that those who come in are able to avail the rides they want,” Col Ashutosh says.

In common amusement areas like rain dance, spots will be marked to ensure people maintain distance. In the restaurants and cafeterias inside the park, every alternate table will be empty, people will not be allowed to crowd around counters and will have to wait for their turn.

Arun says that even after theme parks reopen after the lockdown, it will still take a long time for them to recover financially. “Wonderla will recover, we have no doubt about it, but it might take a while,” he says.

The lockdown and impact on business

The summer months of April and May are crucial for any theme park. These are the months when children have their summer break and families throng amusement parks. In this period, theme parks generate 35-40% of their annual income. The lockdown, which began in late March, has resulted in huge losses to theme park owners.

“These are the peak months for any theme park. At Imagicaa, we have been suffering huge losses because there are many maintenance costs that we have to bear even when the park is not operational. Like power consumption, maintenance of the landscaping and gardens, the rides have to be turned on and off, parts must be oiled, salaries have to be paid,” Col Ashutosh explains. 

Wonderla has suffered a loss of Rs 4 crore per month. Arun expects the government to allow parks to open only by November or December. “Amusement parks will be the last to be given permission to open, because a lot of people gather here. We have three parks and we incur a loss of Rs 15 lakh per day. We have lost 40% of our revenue this year and we hope to recover after next summer,” he adds.

Col Ashutosh says that employees at Imagicaa have been given a pay cut, which would be compensated once the lockdown ends. “The highest paid have taken a 50-70% cut, the others have been given a 30% cut. The employees earning the lowest salaries have not been given a pay cut. But once operations start and there is cash flow, we will compensate for the money that was cut,” he adds.

While Imagicaa and Wonderla were two of the country’s highest profit-making businesses before the lockdown, several regional theme parks are in limbo.

“There’s no plan yet as to how the rides will work once the amusement parts resume their operation. We will wait for the government guidelines in this regard before forming a plan,” says Rhomy, manager at Silver Storm Theme Park in Kerala’s Chalakudy. Rhomy says there have been no layoffs and employees have been getting their salaries.

In Mysuru, GRS Fantasy Park, one of the oldest in Karnataka, has allowed the district administration to use its premises to screen international passengers travelling back to Mysuru. Shut due to the lockdown, the park has rented out the space to the state government in order to cope with the losses.

The Indian Association of Amusement Parks and Industries (IAAPI) pegs the losses incurred by the sector due to the lockdown at Rs 1,100 crore.

Speaking to TNM, IAAPI Chairman Ajay Sarin says, “The industry has lost its biggest peak season (summer) which generates approximately 45% to 55% EBITDA and is usually followed by a long off season. After the lockdown, the amusement industry will be further impacted since families will avoid going to crowded places and travel will be restricted because our industry attracts kids, youth and families in large numbers. The Indian amusement industry thrives on 75% visitors from the middle and lower middle-classes, which will be under tremendous stress post-lockdown. The projected revenue losses due to COVID-19 and post pandemic is approximately Rs 1,100 crore.”

“Major operating expenses like taxes and maintenance costs constitute approximately 42% of the average operating cost in any amusement park in India compared to the 13% average internationally. GST in India is at 18%, which is very high when compared to Europe and other developing Asian countries. The GST rate is in the single digits where amusement parks are well-established,” Ajay adds.

Sector seeks relief from govt

Col Ashutosh says that Imagicaa has written to the Maharashtra government seeking relief as theme parks will not be able to recover without support. “April and May is when we get 40% of our income. This year, we did not open the parks during these months. Next there are monsoons and exams. That period and winter are when income is lower. We’re hoping to recover next summer. But restricting the number of people entering the parks will have an impact on the income,” he says.

At Wonderla, Arun says that they are mulling reducing the price of tickets. However, it would be difficult as there would be a certain minimum operational cost to be covered. Unlike countries like the US, Indian theme parks rely heavily on income from ticket sales.

Imagicaa has requested the Maharashtra government to allow indirect taxation or reduce the GST for tickets. “We’re hoping the government reduces the tax as it stands at 18% currently. If the Centre allows this, it can help us recover sooner,” Col Ashutosh says.

IAAPI has requested the Centre to waive GST for a period of 12 months after they begin operations and a moratorium of 12 months on payment of principal and interest instalments on loans, among other requests. “We have also requested working capital from financial institutions besides a doubling of working capital limits on interest free and collateral free terms. Wavier of minimum fixed cost charges levied by the electricity department, which are currently exempted for industries by the states of Maharashtra, Gujarat, Uttar Pradesh and Punjab,” Ajay Sarin says. 

The sector has also requested waiver of property tax, non agriculture tax and gram panchayat tax for the theme parks for 12 months as they are located across huge land parcels. The association has also requested that the existing licences for the upcoming year be renewed without any charges.

“In order to take care of the financial burden, we request the ministry to kindly direct the Employee State Insurance Corporation to reimburse wages or salaries from the date of lockdown for a period of at least three months for the employees of those units that are covered under ESI. As COVID-19 has caused a medical disaster, ESI is well-justified in meeting this commitment for employees,” the IAAPI said in a statement.

*With inputs from Cris