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20 Jan 2018 Attractions Management Handbook
 

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Attractions Management Handbook - Economic Impact

Analysis and Trends

Economic Impact


Karen Staley, vice president of IAAPA Europe, summarises two recent reports carried out for the association to identify and analyse economic factors impacting the industry

The latest IAAPA study extended its coverage to a wider range of attractions Photo: © Shutterstock/Jovana Milanko
The latest IAAPA study extended its coverage to a wider range of attractions Photo: © Shutterstock/Christian Bertrand
Lower VAT rates stimulate investment, growth and jobs in the attractions sector Photo: © Shutterstock/Julija Sapic
Lower VAT rates stimulate investment, growth and jobs in the attractions sector Photo: © Shutterstock/Peter Dean

The International Association of Amusement Parks and Attractions (IAAPA) is the premier trade association for the attractions industry worldwide. Founded in 1918, IAAPA is the largest international trade association for permanently situated amusement facilities and attractions and is dedicated to the preservation and prosperity of the amusement industry. The association represents more than 4,700 attractions, suppliers and individual members from over 90 countries.

Since its incorporation in 2008, the European office ? IAAPA Europe ? has seen membership grow to more than 1,000 active members in Europe. Its location in Brussels, Belgium, has enabled staff to actively work to continue the development, improvement and provision of member services on a more regional level. In doing so, IAAPA Europe has seen an increase in services for members, including more EU lobbying and industry exposure, and reports that better represent the industry and provide members with information on the issues impacting on their businesses.

European Studies
IAAPA Europe has collected data on the financial strength of the industry through its Economic Impact of Attractions in Europe study. Furthermore, to better understand and prepare for changes in the value added tax (VAT) policy, an extensive Europe-wide VAT study was commissioned to provide detailed information to members, national associations and politicians on the negative and/or positive impact that changes in VAT can have on the industry and long-term on tourism.

Looking ahead, IAAPA Europe hopes to continue to develop more economic studies on the industry, in addition to producing regional benchmark studies on various important industry subjects to help members better evaluate, manage and grow their businesses.

Economic Impact of Attractions in Europe Study (2012)
IAAPA Europe has just completed an assessment of the Economic Impact of Attractions in Europe. The report builds on the 2009 study (European Amusement and Theme Park Industry: An Assessment of Economic Impact of Onsite Visitor Spending), which identified that in 2008 theme and amusement parks in Europe had a combined total economic impact of e8.6bn (£7.1bn, US$12bn).

Both studies covered EU countries plus Norway and Switzerland, whereas the latest study extended its coverage to visitor attractions like waterparks, family entertainment centres (FECs), wildlife faciities and science centres, in addition to the more mainstream theme and amusement park sector.

A summary of the report’s findings is set out in Figure 1. The economic impact of theme and amusement parks has grown by just under 17 per cent since the 2009 study, to reach more than e10bn (£8.2bn, US$13.9bn). This growth has been primarily driven by existing parks, with the addition of on-site accommodation and second gate attractions ? an increasingly popular route to growing revenues. The inclusion of the other attraction sectors brings the total economic impact to an estimated e19.2bn (£15.8bn, US$26.7bn), indicating the importance of these researched attraction sectors to the European economy. The study aimed to identify and quantify the attendance and on-site visitor expenditure for the attractions sectors covered and then applied gross type II multipliers in order to assess the level of indirect and induced economic impact generated by the direct on-site expenditure impact.

For the theme and amusement parks, this included a survey among a sample of small, medium and large parks. Their willingness to support the study by providing operating performance data demonstrates their commitment to supporting IAAPA Europe’s lobbying activities.

In addition to the economic impact of spending by visitors while at the attractions, additional economic benefit will also be generated for the European economy through expenditure by visitors travelling to and from the attractions.

More detailed results, including country-specific data, can be found in the full report: IAAPA Europe – An Assessment of Economic Impact of Onsite Visitor Spending at European Attractions.

IAAPA Europe VAT Study
The European attractions industry has campaigned for many years for reductions in VAT to support investment and growth in the industry, and IAAPA Europe is active in supporting its members in such campaigns. The need for this support has grown in recent years, with many governments seeking to offset the impact of the recession through increases in VAT.

IAAPA Europe has just completed a VAT study to assess the current situation and to support future lobbying. The report identified the scale of variation in the VAT regime for visitor attractions across Europe. Figure 2 sets out the current VAT rates applied to admission prices at theme and amusement parks for each EU member state, showing that VAT rates vary from a high of 27 per cent in Hungary to a low of three per cent in Luxembourg.

Of particular relevance to the industry is the extent to which the VAT rate has increased since the recession. The average standard rate for the EU was 19.5 per cent in 2007 and has increased by 10.3 per cent to reach 21.5 per cent in 2014. However, for theme and amusement parks the change has been more significant, ranging from an average rate of 12.7 per cent in 2007 to an average rate of 15.7 per cent in 2014 ? showing a 23.6 per cent increase.

The IAAPA Europe VAT study presents numerous European case studies, showing both the adverse impact of VAT increases (eg the shift from a reduced rate of eight per cent to a standard rate of 21 per cent for Spanish theme and amusement parks in September 2012) and, conversely, the positive impact on investment and jobs of a reduced VAT rate (eg the application of a reduced VAT rate for tourist accommodation in Germany in 2010).

The IAAPA Europe VAT Study concludes that lower VAT rates have the beneficial effect of stimulating investment, growth and jobs in the attractions sector and that these indirect gains could more than offset any immediate loss in VAT revenues for EU member states. Additionally, eliminating the current distortions that exist between commercial theme parks and other visitor attractions in many EU member states would help the EC to achieve its objective of an undistorted competitive market with a level playing field between different enterprises.

2014 and Beyond
IAAPA Europe will build on these studies with further benchmarking research to enable members to compare their site’s operating performance with industry averages. The forthcoming research programme includes attendance benchmarking pre and post the main summer season to provide members with a check on how their current season performance compares with their peers, and an end-of-year financial benchmarking study to help compare key performance indicators like visitor spends and staff productivity.


ABOUT THE AUTHOR
Karen Staley is vice president of IAAPA Europe. The complete Economic Impact of Attractions in Europe study and the IAAPA Europe VAT study are available to IAAPA members.
Email: europe@iaapa.org
www.iaapa.org


Originally published in Attractions Handbook 2014 issue 1

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