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Industry considers economics of post-Coronavirus reopening with limited numbers

Industry considers economics of post-Coronavirus reopening with limited numbers
May 15, 2020

The easing of Coronavirus lockdown restrictions by Federal and state governments means that a large range of activities and facilities can now restart operations, subject to numerical limitations, the enforcement of social distancing and appropriate hygiene measures.

While these moves are largely welcomed by the public - keen to return to normality and resume activity, entertainment and social lives - along with business eager to again generate income, for some there is uncertainty as to whether their operations will be financially viable.

With guidelines for the resumption of community sport widely welcomed and the recommencement of elite competitions, led by the NRL, suggested a return to normality, in other sectors the picture is less clear.

In some cases, operational costs may well outweigh the potential income from a restricted number of users/members.

For example, the costs involved operating an aquatic centre or ‘big box’ fitness club are likely to exceed income from a maximum of 10 or 20 patrons, and the same applies for a theme park with 100 patrons.

Aquatic and fitness facilities
Among aquatic and fitness facilities, small gyms and studios are likely to welcome the reopening but among bigger fitness clubs, some of whom have in excess of 1000 members, issues are likely to arise.

Similarly, aquatic centres that do open are unlikely to look to casual entry and are more booked hourly sessions.

Among aquatic facilities, the Cockburn Arc has published the video below on its opening protocols.

Theme Parks
With the Queensland Government’s three-stage plan for reopening the state’s economy set to allow a maximum of 20 people at a time in a location as of June, and potentially 100 people in July, the Gold Coast’s theme park operators have indicated they are likely to remain shut even once restrictions start easing.

Village Roadshow Theme Parks Chief Operating Officer, Bikash Randhawa told MyGC that such numbers are not financially viable, advising “we need to have, at a minimum, 5000 people here before it makes any commercial sense or financial sense.”

Randhawa also warned it would take up to four weeks before the parks would be in a position to reopen.

Live Entertainment
A just released study by Zach Finkelstein, in Middleclass Artist, has revealed large concert halls would need to charge four times the usual ticket price in order to break even if opened under social distancing rules.

The study looked at the 2,625-capacity Boston Symphony Hall in the USA, which found that it would need to operate at a quarter of its capacity and sell just under 500 tickets to be in line with social distancing rules.

The Boston Symphony, according to its 2017/18 financial report, sells out about 81% of the 96 concerts in their BSO Winter Season, or around 2,100 seats a concert. A mid-tier BSO Symphony Hall subscription ticket costs about US$57 a concert.

If the Boston Symphony were to switch from a 2,625-seat model to the social distancing model, they would lose the capacity to seat 77% of their current audience.

For the 96 concerts in the BSO’s Winter Season, about 16% of their yearly programming, the social distancing ticket model could result in a drop of nearly US$9 million in a few months.

In order to maintain the same revenue as last season, the venue would need to charge $265 a ticket, over four time its current average price.

Australasian Leisure Management will also publish resources on restarting activities and facilities across all sectors of the industry.

Click here to view this page.

Image: Warner Bros. Movie World.Village Roadshow Theme Parks Chief Operating Officer, Bikash Randhawa say the attractions need 5000 people per day to be viable.

About the author

Nigel Benton

Co-owner / Publisher, Australasian Leisure Management

Nigel Benton is the co-owner and publisher of Australasian Leisure Management, Australia and New Zealand’s only magazine for professionals in all areas of the leisure industry. Having established the magazine in 1997, shortly after his relocation to Australia, he has managed its readership rising to over 11,500 and its acceptance as the industry journal for professionals in aquatics, attractions, entertainment, events, fitness, parks, recreation, sport, tourism and venues.

As of 2020, he has launched the new Asian Leisure Business website.

Among a range of published works and features, his comments on a Blog (blogspot) from 2007 to 2011, when this website went live in its current form, may be interesting to reflect back on.

Click here to connect with him via LinkedIn.

Read more from this author

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