Credit: Special Arrangement
India’s nascent theme park industry is now feeding on revenge consumption, more disposable incomes and increased migration to urban areas are contributing to increased footfalls, with governments also realising the investment and tourism potential they pose. The sector, which is pegged at $500 million or about 1% of the global industry, is expected to grow at a compound annual growth rate of 15%, says Wonderla’s chief executive and managing director Arun K. Chittilappilly. In an interview with DH’s Anjali Jain he discussed his company’s plans to leverage this traction, marking presence in more tier I/II cities.
Edited excerpts.
How is your Chennai theme park coming along?
We're starting work there already. We need quick approvals as we need two-years to complete the project. With a 10-year tax break offered by the Tamil Nadu government, we need to get operational by June 2025. Our pre-Covid estimation for the project was roughly Rs 400-450 crore, which may now go up by 10-20%.
What are your expansion plans?
We are talking to a few state governments. We have two models. One - we buy the property and build everything in the traditional brick and mortar model. The other model we’re pursuing, especially in tier-2 cities, is where we partner with the government. They give us land and some incentives to set up the park, with an eye on adding tourist attractions to the cities.
On these lines work has started in Bhubaneswar. We have signed a memorandum of understanding (MoU) with the Madhya Pradesh government for Indore. Both of these are large tier-II cities. We are also in talks for Mohali and Chandigarh, having signed an MoU with the Punjab government. In Gujarat because there might be a bigger project.
We have an MoU with Uttar Pradesh for a park in Greater Noida, which will be a big park at par with the one in Bangalore. We also want to do something in Goa, but that maybe more of a resort.
Why this interest in tier-II cities?
Tier-II cities mean more reasonable land cost. Projects here are less time consuming. When the government is proactive towards these investments, it opens doors.
Of course, we will continue going to tier-I cities, such as Kolkata, Mumbai and Ahmedabad. But they will be larger projects that will take more time.
What kind of investments are you looking at in the coming few years?
Between Chennai and Bhubaneswar we will be spending close to about Rs 550 crores in the next two years. By that time we hope at least 2-3 more projects will be approved and we will start designing them. So overall we are looking at an investment of Rs 1,100-1,200 crore in the next 6-7 years. Also, every year we typically spend 10% of our top line on adding attractions to existing parks.
We might have to take on some debt for expansion, right now we are debt free. Aswe are a listed company, we can also look at equity dilution to raise funds.
What has been the footfall and revenue trajectory since Covid and what are your future targets?
Pre-Covid in FY20 we roughly did 2.5 million yearly footfalls for the three parks. Last year, we did 3.3 million. We had almost 35-40% increase in footfalls this year. After such a huge growth, we are only expecting 5% growth this year. Last year, we had this whole exuberance post-Covid but everybody's gone back to their regular life.
As our pricing is much higher now compared to pre-Covid, we should be able to do 15-20% growth in our revenues this year. For the next 5-6 years, we want to grow at a pace of 25% once the new parks are opened.
Non ticket spending makes up for 20% of our revenues right now and we want to bring it up to 25%. In terms of average revenue per user (ARPU), last quarter it was roughly around Rs 1,500-1,600, which is about 20% higher than it was a year before that. The ARPU will keep growing as we introduce more value added offerings. We are refurbishing and reopening some of our restaurants. Earlier we used to offer food that was very basic, but with Instagram now, we have to make it more visually appealing.
Can you talk about the regulatory hurdles the sector faces?
We need to obtain some 45 different types of licences before we can start operations ranging from fire to electrical, all kinds of safety, pollution control, and even local approvals. Some governments, like in Chennai, have offered single window clearance, which makes the whole process a little faster. I hope that it becomes countrywide.