South-Western College Publishing - Economics  
You Need a Calculator - and a Second Mortgage, Sometimes - to go to Amusement Parks These Days.
Subject Amusement Parks Alter Pricing Strategies to Increase Revenues
Topic Elasticity
Key Words

Discounts, Pricing

News Story

While some amusement parks have raised gate prices this year, they have also aggressively discounted tickets by offering a variety of package and online discounts to increase park attendance.

In 2004, Universal Studios increased gate admission prices at both its parks--to $54.75 per adult in Orlando, Florida, and $49.75 in Hollywood--but visitors can save $15 by carrying a Coke can through the gate with them!

Part of the price increases owes directly to new attractions being added nationwide. Universal Studios is introducing "Revenge of the Mummy - the Ride" and "Van Helsing: Fortress Dracula" this year, based on recent high-profile, technology-laden movies.

Knott's Berry Farms in California charges $43 at the gate, but only $35 if you book online, and only $29.95 if you book for one of the park's all-you-can-eat barbecue weekends this summer. At King's Dominion in Virginia, gate admission is $43.99, but only $34.99 if you book online and print out the tickets at home. For even more savings, booking four days in advance will reduce your price to $29.99. At Sea World in San Diego, California, a two-day pass to Sea World and Universal Studios Hollywood costs $89, an 11% discount off the regular one-day admissions for both. Or you can buy a Fun Card for Sea World for only a few dollars more than the regular one-day pass, allowing you to visit Sea World unlimited times for the remainder of the year.

Such aggressive discounting comes on the heels of slumping attendance over the last few years. In 2003, gate attendance was down 2%, to 168 million visitors, at the top 50 theme parks nationwide. Similarly, attendance during the end of 2001 and 2002 were down, owing much to the September 11 attacks.


(Updated August, 2004)

Questions
1.

Does the introduction of new rides have an impact on amusement parks' pricing? Why or why not? Use a graph of supply and demand to illustrate your answer.

2. Is the demand of those individuals who purchase tickets at the gate more likely to be price inelastic or elastic than their counterparts who purchase their tickets in advance online? Draw a graph and explain.
3. Why would Universal Studios and Sea World, two rivals in the marketplace, cooperate and issue a discount for admissions to both parks?
Source Eleena de Lisser. "Cheap Thrills: A New Twist in Theme-Park Pricing." The Wall Street Journal. 24 June 2004.

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