The Wild Ride Begins.
THE KILLER WHALE RELEASED FOLLOWING the success of the movie "Free Willy", which detailed his sad existence, won a new lease on life. So, happily, has the struggling Mexican theme park he once called home.
Keiko, the killer whale, spent almost 11 years in a cramped pool at Mexico City's Reino Aventura amusement park before being returned to the waters off Iceland. Now, his theme park home has been given its own second chance, thanks to a US$40 million investment by U.S-based Premier Parks, parent company to the Six Flags amusement park chain.
The company marks its first foray into Latin America with its Six Flags Mexico park--and the investment is paying off.
In a strategic alliance with Warner Brothers, the park has been overhauled to add nine new stage shows, headed by a "Batman" presentation that costs $1 million a year to produce, and 20 gut-grabbing rides designed to please even "the most hardcore adrenaline thrill-seeking teenager," says Manuel Gonzalez, general director of Six Flags Mexico.
The park added attractions like the 3G tower ride that drops riders into a 27-meter freefall, roller coasters that hit speeds of 128 kilometers per hour, and roaming Warner Brother and DC comics characters such as Bugs Bunny and Taz. Still, the park retains a distinctly Mexican flavor. The grounds resemble an old Spanish-colonial hacienda and the restaurants offer quesadillas of squash flowers and Mexican beer. The bumper car arena advertises gasoline from state oil monopoly Pemex.
The park also boasts Latin America's tallest, steepest, fastest and longest wooden roller coaster, the Medusa. Coaster fanatics who jump aboard can immortalize the moment: as they exit the ride, they discover their own screaming faces displayed on television monitors. The images are available for sale.
Rallying around Six Flags. Six Flag's incursion into Latin America is a smash success so far, driven by the legions of Mexicans hungry for U.S.-style amusement parks. Locals associate the Six Flags brand with higher quality and safety standards, says Gonzalez. Three months after the park's April 14 grand opening, Six Flags is "very, very happy with the results," he says. "We have surpassed attendance and in-park sales projections, and overall, we have been met with an incredible brand acceptance in the market--better than we expected."
Gross receipts are expected to hit $50 million this year, meaning profits of about $18 million to $20 million, says Gonzalez. He predicts those figures will grow 20% to 25% annually for at least the next 10 years.
The 116-acre park has seen 1.3 million people walk through the gate since it opened its doors; that's 167,000 more than management expected. This year, Six Flags Mexico is preparing to receive 2.75 million visitors. (The complex can accommodate up to 4 million a year and there is room to grow since only about half the acreage is developed.) Attendance is up 36% from when the park was Reino Aventura.
Mexico City is one of the biggest urban zones in the world, so only a fraction of the overall population need visit to push the numbers high. Also, Mexico boasts a disproportionately young population. Those children, teenagers and young adults form the amusement park's base of potential customers. "Although we, by conservative estimates, have only about one-half the market penetration that our U.S. parks have, and ticket prices are only about half of what they cost in the U.S., we believe the Mexico City park can be just as profitable, simply because of demographics," Gonzalez says.
Hal Davis, an analyst who tracks Premier Parks for investment banking company Thomas Weisel Partners, agrees that Latin America's demographics will make all the difference. "Although per capita spending may be lower, as long as Six Flags can drive actual attendance higher it will make up for it," says Davis. "The park business is very fixed-cost, and each new visitor makes an incremental difference."
Big city roller coasters. This bodes well for amusement park fans all over the region. "Over the next 10 years, we will probably have five Six Flags in Latin America and another five to seven non-Six Flags-branded smaller theme parks," says Gonzalez. The Six Flags brand name is only assigned to the largest amusement parks; the company operates smaller theme parks under different names. "And in 20 years," he adds, "we will probably double those figures."
As in Mexico, a Six Flags presence in other countries will be limited to large cities, such as Sao Paulo, Buenos Aires or Santiago. Gonzalez says the right opportunity for expansion would probably start with the purchase and upgrading of an existing park. "There has already been some talk of buying up the pre-existing local theme park in Copihari, Brazil or De La Costa, Argentina, possibly in a joint venture with Mexico's (theme park operator) Grupo Magico," he says.
Six Flags is simultaneously eyeing smaller parks. Gonzalez says the company is contemplating the purchase of an existing theme park in Monterrey, Mexico, as early as next year.
"While our strategy in the U.S. is marked by buying up smaller struggling regional parks and building them up, in Latin America expansion will probably be marked by a different strategy," Gonzalez says. "Because Latin America does not have many homegrown theme parks, the company will have to do a larger amount of building from the ground up."
Partly for that reason, Gonzalez notes that free-trade pacts come heavily into play when new park sites are under consideration. "Most of our equipment comes from the so the international tax and tariff structures are very important," he says, citing a dearth of such agreements between the United States and South American nations as a big reason the company is focusing on Mexico first.
So, as South American free-trade pacts move forward, they may bring roller coasters as well as new jobs. Six Flags, out to lock up the Latin American amusement park scene, is poising itself to be front and center for the coming wild ride.