In June 2024, Solomon Partners released a report overviewing the state of the experiential entertainment market—including cruises, theme parks, live entertainment, and family entertainment. Without further ado, let’s explore the key findings of the report…

Live Entertainment Sector Shows Resilience Amid Growing Demand for In-Person Experiences

Solomon Partners found that the live entertainment industry continues to perform well, propelled by a consumer demand for in-person experiences. Despite varying economic conditions, operators in this sector maintain a strong belief in the resilience of consumer discretionary spending, predicting sustained growth in the future. 

“We had record attendance and gates across our live events portfolio… raising our full year guidance for revenue and adjusted EBITDA… experience economy is alive and well,” said Ariel Emanuel, CEO of TKO, a sports and entertainment company that comprises UFC and WWE.

This optimism is based on the ongoing appetite for live events, concerts, and performances, highlighting the sector’s ability to attract audiences and generate revenue even amidst broader economic challenges.

Family Entertainment Faces Challenges Amid Economic Strain

The family entertainment sector has faced notable challenges due to adverse weather conditions and a tougher consumer market, according to Solomon Partners. Macroeconomic factors have made individuals more restrained with their spending, leading to a cautious approach toward discretionary expenses. Consumers are feeling the strain of a high-rate economy, which has impacted their willingness to spend on non-essential activities.

“Q1 same venue sales of down 7%… Q1 was impacted by a post-COVID surge in our corporate events business in early 2023 as well as extreme cold weather during January… slightly behind our full year targets… given the choppy market conditions we have seen and could continue to see,” said Oliver Brewer, president and CEO of Top Golf on the company’s Q1 2024 Earnings Call.

Solomon Partners added that credit card interest rates have reached peak levels, with the average APR hitting 22.8% by the end of 2023. Additionally, delinquent credit card debt (90+ days) continues to grow, reaching its highest levels in over a decade. These factors contribute to a challenging environment for family entertainment operators who must navigate a more cautious and financially strained consumer base.

Cruise Operators Optimistic After Record-Breaking Q1 Results

Cruise operators have reported record results for the first quarter, fueling high optimism for the remainder of 2024 and into 2025 based on strong future bookings. Solomon Partners says operators in this sector believe that the current growth level is sustainable and not merely a product of market dynamics.

“We are even better positioned now for 2025 than we were last year at this time, heading into what is shaping up to be a phenomenal 2024… Consumers… are looking for value and they’re looking for experiences that are worth paying for,” said Josh Weinstein, president and CEO of Carnival Cruises on the company’s Q1 2024 Earnings Call.

This outlook is driven by consistent consumer interest and the perceived value of cruise vacations, which continue to attract a broad audience. The optimism within the industry suggests a stable future, with cruise lines poised to capitalize on their recent success.

Theme Parks See Strong Demand Despite Weather Challenges

Theme parks have experienced strong demand, with increased attendance figures even as operating days were reduced due to weather-related issues. In-park spending remains high, indicating that visitors are willing to spend on experiences and merchandise, despite the shorter season.

“We are pleased to report record financial results this quarter, including record revenue and adjusted EBITDA. While attendance in the quarter benefited from a positive calendar shift… this benefit was almost entirely offset by unusually wet and cold weather during the quarter, particularly on certain peak attendance days,” said Marc Swanson, CEO of United Parks and Resorts, on the company’s Q1 2024 Earnings Call.

Solomon Partners says this trend underscores the enduring appeal of theme parks as destinations for entertainment. The ability to draw crowds and encourage spending highlights the sector’s resilience and its capacity to thrive even when external conditions aren’t ideal.

The Future of Experiential Entertainment

The experiential entertainment industry presents a mixed, but generally optimistic picture. While family entertainment faces hurdles due to economic pressures and adverse weather, live entertainment, cruise operators, and theme parks demonstrate resilience and growth.

The sectors’ ability to adapt and attract consumers despite economic challenges underscores the enduring appeal of entertainment experiences and the industry’s potential for sustained success in the future.

Click here to view the full report from Solomon Partners.