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Pandemic Forces Amusement Operators to Change Purchasing Plans, Firestone Survey Says
Operators optimistic about the future of the Attractions Industry

Industry Operators Show Optimism about the Future
According to Firestone's survey, 65% of operators plan to purchase equipment within the next 12 months.

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In one of the first industry surveys since COVID-19 essentially shutdown the amusement businesses, carnival companies seem to be cautiously optimistic and willing to adjust business outlooks to conform to the measures necessary to open during the Pandemic.   

Firestone Financial, a subsidiary of Berkshire Bank, one of the leading national finance companies serving midway providers, carnival companies, amusement parks, and entertainment centers, conducted a survey of its customers as an attempt to take a snapshot of the industry at this very critical juncture – a season has nearly entirely been lost and what will need to be done to ensure the 2021 season optimizes revenue as the industry and the economy continues to reopen.

In September 2020, Firestone distributed its survey to past and current amusement, location-based entertainment, and vending customers of Firestone Financial, as well as others in the attractions industry.  132 businesses responded to the survey.

The results may not contain startling findings, but the apparent trends seem to inspire some trepidation. The majority of customers continue to plan to purchase new equipment, but those purchases will be determined by a variety of factors due to the global pandemic. One of the most distinct trends is that the customers are planning to bypass industry conventions and tradeshows for the foreseeable future as part of the market research and purchasing process.

Survey highlights include:

  • 65 percent (of respondents) plan to purchase equipment for their business over the next 12 months.
  • 47 percent plan to finance up to $50k in the next 12 months.
  • Due to COVID-19, 45 percent of respondents indicated they are no longer making planned purchases.
  • 59 percent do not plan to attend any in-person trade show events in 2020 or 2021*
*Note: that this survey was conducted just after IAAPA Expo announced that it would cancel its 2020 convention and prior to the IISF's announcement that the Gibtown Trade Show will continue in 2021.  
The complete survey is available as a PDF file.

“Our customers and industry partners have faced their greatest challenges this year – from shut downs to shifts in consumer behavior to changes and limitations in facility operations,” said Michael Smith, Chief Operating Officer. Firestone Financial. “Firestone has always prided itself on supporting the amusement industry. In response to the uncertainty COVID-19 has caused in the industry, we want the survey results to be used as a resource to understand where our customers are, what their plans are over the next 12 months, and how we can best service those plans.”

To delve deeper into the Firestone Financial study. Carnival Warehouse asked Smith questions about the findings and what they might mean for carnival companies, amusement parks, fairs and other outdoor events as they begin to plan for next year.

Carnival Warehouse: Why did Firestone decide to do this survey now? What do you hope it accomplishes?

Michael Smith: The amusement industry was hard hit this year, facing challenges like never before. Given the extended closures and significant reopening regulations, the industry needs are changing faster than ever before. We want to get a pulse of where the owners and operators stand and what their plans are going forward. Armed with this information, Firestone Financial and our channel partners will look for opportunities to flex our offerings to meet the current needs.

CW: What were the biggest surprises in the findings?

MS: There are indications of owners and operators willingness to change their approach to meet shifts in consumer behavior with 24 percent of respondents saying they now plan to purchase different equipment to accommodate business changes. As lenders with extensive experience servicing the amusement and attractions industry, we see opportunities in mobile and kiosk ticketing and payment option, hygiene and sanitizing equipment, and air filtration systems to meet these concerns of consumers. But respondents are optimistic and proactive, as one amusement company commented: “We are taking this opportunity to grow the business back stronger than it ever has been before. We see a void that needs to be filled with the right concepts. We want to be the company that fills that void.”

CW: What are the most optimistic findings of the survey?

MS: In looking at the results, we were struck by the optimism among respondents. As noted in the results, 16 percent are looking ahead to opening a new facility or adding a route to their current operations. But more notably were the write-in comments. Overall there was a sense that the attractions industry will not only get through the pandemic, but that it will come back stronger. Many comments include plans for expansion, new facilities, and purchasing new route.

CW: What is the most problematic finding of the survey and how long lasting will this negative impact be?

MS: The most problematic thing is the thing we all have the least control over. No one can say how long the pandemic will last, if there will be more closures and shut downs. We also can't say when there will be another government relief package, or what that would look like. We're ready to assist our customers in any way we can!

CW: How is Firestone Financial coping with the COVID-19 Lockdown?

MS: While the current situation is unprecedented in many ways, it's not entirely new to us. We could say our approach is business as usual. And that's because over the last 55 years, we've seen our customers through record expansions and economic lows, through extraordinary events that impact their businesses and lives. And we'll see them through this one.

CW: How far down is Firestone Financial business? Have you had to cutback financing, furlough employees, or curtail some operations?

MS: We're extremely busy right now and have been fortunate to not furlough any employees. Our account management and sales team have on-going conversations with their customers advising on current loans, business structure, and 2021 planning. The credit, operations, and portfolio management teams are implementing all of the loan deferrals and working to get customers back on their payment schedules. There is also demand from our existing customer base – those who are using the pause in business as an opportunity to refresh and expand their businesses. Our focus over the first six months of the shutdown was helping customers with loan deferrals, advisory services, and government assistance in the form of PPP loans as part of the CARES Act. As we near the end of the year and move into 2021, our focus is on assisting customers in any way we can to get them back into repayment.

CW: What are your customers most worried about?

MS: Most commonly we hear concerns about how long customers can operate at reduced capacity or remain closed for continued periods. We're working with customers to help them position themselves to be ready to return to operations and accommodate the ever-changing regulations related to reopening. We want to help make this pause in business more manageable for our customers.

CW: Most of your clients have had little to no income since March, what sort of deferred payment plans has Firestone implemented?

MS: As shut down orders were just coming in March, we proactively reached out to all of our customers and offered a three-month deferral. Firestone's goal was to allow customers to focus on the health and safety of their employees and loved ones, not on their next payment. During this initial deferral period over 1,200 customers were able to defer over 2,600 loans. As the shutdowns continued longer than initially anticipated, we were able to offer over 400 customers additional deferrals on 1,000 loans. We had close to 9 percent of our loans on some form of deferrals. We were also able to assist on Paycheck Protection Program (PPP) loans to over 150 customers, allowing owners and operators to keep employees on payroll.

CW: From all the categories of purchases, New or Used equipment outpaces all the other options. What does this says about the market, and the attitude of amusement companies? What is the benefit buying equipment versus other investments after a long period of business inactivity and economic recession?

MS: I think there a few things worth noting here. One is that owners are interested in growing and coming back stronger than ever. As communities begin to open up, there is going to be pent up demand with people looking to get back out there and enjoy themselves. However they will likely be focused on things they haven't been in the past – social distancing, sanitizing. Facilities will need to change their operations to accommodate that.

We also commonly see – even before the pandemic – that equipment purchases are opportunistic. Owners aren't always planning a specific piece they want to buy while budgeting. But they may wait for either a good deal on used equipment that comes onto the market or reserve funds for new attraction they think will be particularly popular at a specific point in time.

CW: What about the equipment supply chain? Most companies are still closed down or operating at limited capacity. Is there a surplus of equipment now on the market, or is there a shortage due to manufacturing being shut down? Do you expect equipment costs to rise or fall once things return to a normal?

MS: Based on conversations with our channel partners, the equipment is available – and some are continuing to plan new releases.

CW: One of the white paper conclusions is: “Even with these obstacles, the respondents were overall optimistic, not only with reopening, but also in growth and expansion plans.” What prompts you to draw this conclusion, and how do you see this optimism playing out in 2021?

MS: Throughout the survey respondents indicate (in comments) that they are planning expansion, new routes, and facility upgrades. A smaller number of responses note the need for financing to meet general operating costs of their business and while we don't want to see any businesses close, only 2 percent of respondents have had to permanently close their doors.

CW: Perhaps the most “concrete” conclusion from the survey is little interest in attending trade shows, what will be the long term impact on the amusement industry?

MS:  This is a tricky one for us. We've always used trade shows to make personal connections with our customers, channel partners, and prospects. As much as the attractions industry has advanced in recent years, it's still very traditional in many ways – and the desire to conduct face-to-face business transactions is one of them. Customers want to see the equipment and meet their business partners. We're looking into ways to do that on a smaller scale that will both meet COVID-19 guidelines and alleviate customers' safety concerns. While virtual events have not been widely embraced at this time, I do think there is room to improve the execution of these and better engage with the audience. More interactive product demos, smaller groups to allow better interaction, and private rooms for 1:1 conversations are some things many of the partners I've spoken with continue to work on into 2021.

CW: The country – actually the entire global economy – is in one of the worst recessions in modern history. How will this impact purchasing and financing of those equipment purchases in 2021?

MS: Business will be tight for awhile. We're all thrilled to see owners fighting through the challenges they've been dealt this year and everyone is looking for ways to thrive in spite of the many unknowns.We monitor healthcare reports on a daily basis in order to our adjust lending policy. While some lenders are shut down for the foreseeable future, we've advanced new funds in limited circumstances – and plan to continue doing that. Our focus is on returning our portfolio to repayment status and assisting our current borrowers to achieve same. Like most businesses that we deal with, Firestone has also been negatively impacted by COVID. We continue to work with customers and as we see improvement in our portfolio, we'll be better positioned to move forward with more funding.
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