Spending

Half-Year Report 2022: Carnival Companies Assess New Spending Trends and Mid-Term Cut

With 2022 halfway through – and the peak of the fair season kicking off – Carnival Warehouse has conducted an informal survey of carnival businesses to take the pulse of the season so far and look for any augury signs of the second half of 2022.

After a year of closures, the fair industry rebounded with a strength that exceeded expectations in 2021. While some events, such as the Ohio State Fair and many California fairs, were canceled or significantly reduced, there Seems most fairs have seen some softness in attendance, but spending has surged, with many carnival businesses reporting years of record or near-record revenues.

But they earned every penny. The comeback year was the most stressful in recent memory, with everyone working harder than ever to fill constant workforce gaps. Labor shortages have plagued the industry, and doing more with fewer people has become the status quo and reducing the number of mid-trips an industry-wide reality.

What new normal?

What will this year look like? The good news is that some H-2B workers are starting to arrive at companies that were previously capped. The most disturbing news is that everything costs more, including labor, which both increases business expenses and decreases disposable income.

“2021 was an anomaly,” said Bob DeStefano of Dreamland Amusements. “Nobody had anywhere to go. Food and fuel prices are catching up. Most of our spring dates are free, but as we move into the great season, I’m not sure how well that expense will hold up when we get to the end of June or July.

Winter extended into spring in many parts of the United States, so the weather was more often an adversary than a supporter. Footfall was steady, and while no drastic drop in spending was apparent, a shift in transaction methods portends a change in consumer confidence. “We’ve had cold, wet weekends, but when the weather is nice, people come out,” DeStefano said. “I’ve seen a huge increase in credit card sales. This implies that people want to come and visit our product, but the fact that they use credit cards [as opposed to debit cards] tells me that the reins are tightening.

Fair goers seemed much less reluctant to loosen their strings than attendees of fixed dates and other outdoor events, but at this point in the year it’s hard to discern how much this trend is region specific and how far it will be. “My Florida shows, all these regular events, they were all really good, on par with previous years,” said Rick Reithoffer of Reithoffer Shows. “The spring dates have fallen well.”

Scenario changes

For the rest of the fairs industry, the scenarios are now quite different from 2021. Pent-up demand was not just pent up for the return of annual fairs, but for anything resembling pre-pandemic normality. Fairs were often one of the only games in town, benefiting from both exclusivity and customers hungry for stimulus payments. This year, not so much.

Public events of all stripes are resuming operations, including festivals and other outdoor events such as concerts, theaters and family entertainment centers. By nearly all accounts, competition for the family entertainment dollar will return to pre-COVID levels, at the same time inflation erodes the value of that dollar. “Fuel price increases affect all of our customers,” Reithoffer said. “There are certainly indications that this is directly affecting the economy and that people have less disposable income. But the fairs will still do good, but will they stay at the fair as long as last year?

“We were close to where we were at this time last year,” said Russ Kissel of Kissel Entertainment. “There has been a drop in spending. Where we used to sell four funnel cakes to a family, we only sell two, as was the case before COVID.

The fair industry and carnival businesses tend to be optimistic people who believe in their strong followings for what has been, in most cases, a multi-generational branding business. They just have what seems like a reasonable expectation in terms of attendance and spending that some of the record or near-record revenue in 2021 was due to the comeback rebound.

One stressful condition in 2021 that carnival businesses seem confident of falling back on in 2022 is lack of staff. While there were questions – as there are every year! — whether the H-2B guest visa system would be ready to handle the 2022 season or if the same chaos of last year with worker shortages and systemic processing disruptions would be repeated.

Labor costs are about 30% higher than a year ago, including foreign and American workers, according to the carnival companies surveyed. “We got our workers on time and we’re 100% complete,” DeStefano said. “We have excellent workers, but labor costs have increased, which affects our bottom line. Fuel prices have doubled, so between running the generators and moving the show, it affects the bottom line. »

Measure participation rate

If last year had provided a big yes! to the question of people’s participation, the question for 2022 is how will profitability compare to 2021? The answer to this question has become a critical issue currently under discussion between carnival companies and fairground boards.

A major factor determining the profitability of any middleman is the number of rides, their capacity and their popularity. The total number of trips and the number per category are often specified in the contracts. In 2021, labor shortages, coupled with the need for more extensive layout to accommodate social distancing, has seen many fairs waive contractual obligations for a specific minimum ride. Additionally, understaffed carnival businesses have optimized worker time by experimenting with limited hours, having the center open mostly during peak fair hours.

No one can argue with record revenues, but earning as much, if not more, with fewer rides and limited hours was also key to improving 2021 profitability. It’s too early to make an industry-wide projection. industry, but it seems that most carnival companies have launched discussions with their fair partners about optimal size, content and mid-term timings with unprecedented seriousness.

“What people realized in 2021 was that it was hard to find workers, so they put less equipment in or didn’t start getting people on at noon on Tuesday, but they had record revenues,” said Michael Wood, Wood Entertainment Company. “What they discovered was that they could do more with less.”

“How much is enough for a fair is not a clear answer,” Reithoffer said. “With too many hours, the unique things you have are unproductive. But the way to limit and condense the mid-way is different for each fair.

The reduction in journeys halfway could reach up to 15% less journeys, according to the fair. Inevitably, discussions can get tense when a ride that isn’t as profitable as larger capacity equipment but happens to be a favorite of a fair board member’s grandchildren, but a greater desire for collaboration seems obvious. “Fairs are very changeable, they understand the problem,” Wood said. “We have granular discussions on a piece-by-piece basis of what’s best for the midway. It’s actually very positive.

Other mid-gear news isn’t quite as positive. The manufacturing and shipping of new rides has become more rumor than operating infrastructure – backorders are the rule, not the exception, and delays are not going away, but increasing. “I was expecting parts by February, then they said by Memorial Day and that was last week,” Reithoffer said. “They stopped telling me when I can expect them.”