Utopia Company’s main sources of revenue are entry tickets, merchandise sold at retail outlets in the parks and food sold at the park’s catering outlets. All rides and attractions are covered by the cost of the entry ticket. Tickets are sold both online and at each park’s main gate. Tickets sold online are offered at a 5% discount, to encourage advance purchase.
There are two categories of tickets. Standard tickets include access to all park areas, shows and attractions but exclude admission to the rides in the Thrill-U area of the park. Premium tickets
include access to all park areas, shows and attractions and also include admission to the rides in the Thrill-U area of the park. Premium tickets are 30% more expensive than standard tickets and are most popular among visitors aged 14 - 30.
The company aims to offer a consistent customer experience across all locations. Strategic direction
Utopia has deliberately expanded capacity gradually, with a new park opening approximately every 10 years. It is feasible to build parks at a faster rate, but the board feels this would risk saturating the market and diluting the appeal and publicity associated with the opening of a new park.
Moeen Hasan encourages the board to see Utopia’s core product as ‘an escape from the routine of daily life’. A trip to Utopia must be seen as something special, an experience that will live in the minds of visitors long after they have left the park gates.
Visitors to Utopia parks have shown they are prepared to travel considerable distances and the relative scarcity of parks seems to be part of the attraction.
Utopia monitor the popularity of individual rides, shows and other attractions by measuring capacity utilisation and customer queue waiting time, and from customer feedback. Attractions which experience a significant drop in popularity are upgraded, adapted or replaced.
The rides, shows and other attractions offered are consistent across all Utopia parks which enables the company to provide the same experience regardless of park location.
Utopia work closely with other stakeholders to make visiting each park as convenient as possible. For example, the company has successfully negotiated changes to railway timetables so that ‘express’ trains from major cities stop at Utopia park railway stations. Recent visitor numbers and key financial indicators
Over the past two years Utopia Company has experienced an average annual increase in visitor numbers of 6%, an average annual increase in revenue of 5.5% and an average increase in operating profit of 4%.
Utopia Company: Total visitor numbers (millions)
Age 9 and below Age 10-16 Age 17–21 Age 22–30 Age 31–45 Age 46–59
Age 60 and above Total
Most recent year
2.44 1.80 1.90 2.45 3.81 1.62 1.15 15.17
Previous Two
year years ago 2.50 2.53 1.80 1.76 1.81 1.57 2.31 2.10 3.65 3.38 1.44 1.29 0.94 0.87 14.45 13.50
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Revenue and operating profit
Revenue
Operating profit
Most recent year
� million 2,122 827
Previous year
� million 2,050 795
Two years ago
� million 1,925 765
Operating profit as a % of revenue Most recent year Previous year
39% 39% Average revenue per visitor
Most recent year Previous year
�139.88 �141.87
Two years ago
40%
Two years ago
�142.59
The steady growth in revenue and operating profit has been achieved against a backdrop of steady economic growth globally.
In percentage terms, Utopia’s revenue growth is slightly behind the growth in visitor numbers. Utopia’s board attribute this to a change in the sales mix between standard tickets and premium tickets.
In terms of visitor number growth, Utopia has either matched or outperformed each of the major players in the global theme park market over this period. Utopia’s popularity is attributed to their ability to regularly release new rides and features across the three areas of their parks. Although Utopia relies upon discretionary consumer spending, senior management feel the company is positioned to perform well regardless of economic conditions. During periods of economic growth the proportion of Utopia visitors comprising international and domestic tourists increases. During times when economic conditions are more difficult, parks attract a higher proportion of local visitors who are economising by holidaying closer to home.
The board see Utopia’s future as secure and prosperous as long as people wish to relax and enjoy themselves.
Other points of interest from the consultant’s report
The theme park market is competitive with customers always looking for new experiences. New rides often require significant capital expenditure but also generate significant media interest and provide a focus for advertising campaigns.
The weather significantly affects attendance at parks. Poor weather, particularly rain, has been found to reduce attendance on a given day by up to 40%. Utopia are exploring possibilities for covering parks so they are not affected by the weather.
Health and safety is a high priority. All safety harnesses are checked multiple times per day and the mechanical aspects of rides are checked weekly by Utopia engineers. However, there is always the risk that accidents can occur which could be serious. Utopia are fully insured.
Around 50% of Utopia workers are members of trade unions. The involvement of unions tends to ensure that all companies in the industry pay similar rates.
Parks are open 365 days a year, which means that essential maintenance has to happen during scheduled attraction closures which are published a few months in advance.
Demand fluctuates significantly at each park across the year. Week days during winter months, outside of school holidays, are particularly quiet. Pricing initiatives have been introduced in an attempt to smooth demand, with very limited success.
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Customer feedback indicates that Utopia staff are perceived by customers as being well trained and professional. However, customer approval ratings are significantly lower during the summer season at each park, when significant numbers of temporary staff are used.
The Utopia brand enjoys high brand awareness and Utopia parks are perceived as offering a high quality experience, reflecting effective public relations and marketing. The board are keen to
establish Utopia as a genuine global brand and holiday destination, which some feel requires the company to downplay its European origin and diversify outside of theme parks.
Feedback from employee surveys indicate that staff morale and satisfaction ratings are generally good. Employees (and shareholders) believe Moeen Ali leads the company well.
In the most recent year, 43% of Utopia visitors were over 30 years of age. The equivalent
percentage ten years ago was 35%. This statistic reflects the aging population in Europe and North America. The Middle East also has an aging population.
In interviews held with board members, two individuals expressed concern that the market research carried out before the new park in the Middle East was given the go-ahead was flawed, as it failed to take cultural differences into account. Both board members stated that they did not raise their concerns at board meetings as they feared being perceived as ‘negative’.
There is some support at board level for a strategy of growth through diversification into the development and management of hotels.
There is also support at board level to investigate the opening of a fifth park, in South America, to take advantage of a growing ‘middle-class’ in the region.
In Europe and North America, parks have experienced some negative publicity from groups opposed to dolphins being kept in captivity and trained to perform for an audience.
The emerging technology referred to as ‘Virtual Reality (VR)’ has the potential to be incorporated in new theme park rides.
The Utopia board uses a matrix management structure (the structure is shown below). The structure has led to confusion and conflict at times, for example when decisions are being made regarding marketing activity in a region it is unclear whether the regional director or the marketing director has the final say.
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Board structure
Utopia Company is organised in a matrix structure, as shown below.
Chair Anika Hingis Moeen Hasan Chief Executive Officer Tara Adenowo Finance Director Susan Tan Marketing Director Kate Azulay Human Resources Director Sun Wen Non-executive Director Joe Ball Non-executive Director Eric Blanc Non-executive Director Marco Silva Director of Operations Europe Greg Bradley Director of Operations North America Dipa Malik Director of Operations Asia and the Rest of the World Head of Internal Audit Sam Brown
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Exhibit 2
A transcript of a telephone conversation held between you and Moeen Hasan, Utopia Company’s CEO, and an associated email. Moeen You I was hoping to run this past Tara, but in her absence I would appreciate your input. No problem Moeen. As we speak I’m emailing through an outline of a proposed new ride we have been working on with Real Fantasy Company. The concept involves riders wearing Virtual Reality headsets while riding a rollercoaster. There are still a few technical issues to sort out and some health and safety issues to resolve, but we have drawn up tentative plans to launch the first new ride in approximately 18 months-time. Sounds exciting. Has the ride been named, and perhaps more importantly, has the project been costed and a financial business case prepared? You’ll see brief details of the ride, and the ride name, in the document I’ve emailed through. Regarding a business case, Tara put some numbers together, but the reality is the project justification depends ultimately on the number of additional visitors we decide the ride would attract to each park, which is a number that is practically impossible to estimate realistically. What we do know is that the cost of installing each ride is approximately 50% higher than a new ‘standard’ roller coaster would be. The board and I have decided we must be innovative and lead the market in this area. We have decided the strategic benefits outweigh the hefty cost. How would you like me to help? Please read the email I have sent through, and the attachments, and then get back to me regarding; whether proceeding with the introduction of the GW ride would be consistent with Utopia Company’s overall strategy; the likely impact of proceeding with the project on internal stakeholders and external stakeholders and factors to consider when deciding which park the first ride should be built in. No problem. I’ll be in touch. Moeen You Moeen You Moeen You
From: To: Sent: Subject: Moeen Hasan Senior Finance Analyst xx/xx/xxxx GW (confidential) Please find brief details of the ride concept attached and a summary of a recent board discussion below. Director of Operations, Europe The first Galactic Warrior ride should be installed in our European park as this was our first park and attracts the largest number of visitors. Director of Operations, North America The first Galactic Warrior ride should be installed in our North American park as we face the greatest level of competition and have more potential to increase visitor numbers. Director of Operations, Rest of the World Cleary, the logical place for the first Galactic Warrior ride is the park currently under construction in the Middle East. This will cause least disruption and cost less than elsewhere, as the park is not yet open to visitors. Regards Moeen Moeen Hasan (CEO) 10
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