Arts, entertainment and recreation sectors will take the longest to recover

COVID-19 restrictions created a difficult environment for businesses over the last year, and according to Statistics Canada, the arts, entertainment and recreation sectors are the furthest away from seeing a full recovery anytime soon as their success relies on the gathering of large groups.

Altus Group has taken a look at the impact the pandemic has on Canadian casinos, theme parks, movie theatres, golf courses, live theatres/concert venues and gyms and provided forecasts of what recovery could look in its latest blog, Wheel of Fortunes: Recovery timelines for Sports, Recreation and Entertainment Properties.

Key Takeaways:

Casinos – Projected time to recovery is 2-3 years;

  • In most Canadian markets, gaming casinos were heavily impacted by the first wave of complete shutdowns (Apr – Dec 2020). Where restricted openings were allowed, the number of patrons was limited to only 50 patrons per casino floor at one time and on a reservation basis only.
  • Looking at the financial results of publicly traded gaming companies, the impact of COVID-19 on this industry has been dramatic.
  • There is a potential issue with the full recovery of these operations, given the average age of casino patrons is in the mid-60’s, and the stigma within this cohort around re-engaging with crowds.

Theme Parks – Projected time to recovery is 1-2 years;

  • In most Canadian markets, major theme parks like Canada’s Wonderland and West Galaxyland were either completely closed for the season in 2020, or open with extreme customer limitations which resulted in huge revenue losses.
  • Cedar Fair reported net revenues in Q3 2020 were $87,000,000 versus $715,000,000 in Q3 2019, while Six Flags reported Q2 2020 net loss per share of $3.98 versus net earnings per share in 2019 of $2.24.

Golf Courses – Projected time to recovery is less than 1 year;

  • One industry that has seen a boom from the pandemic is golf courses as restrictions have been minimal as the sport provides a natural social distancing venue for many.
  • Restrictions on cart ridership, varying food and beverage limits, and cancellations of events like tournaments and weddings have created several challenges and disruptions to other revenue streams and this loss in revenue for hospitality and event rentals are likely to experience a longer road to recovery.

Live Theatre/Concert Venues – Projected time to recovery is unknown at this time;

  • The 2020/2021 season of major concert tours and festivals were cancelled/postponed indefinitely as these shows were impossible while adhering to public health restrictions. Spring and summer 2021 events planned have already been cancelled in most major cities following guidelines from provincial authorities.
  • Concert promoters are becoming more creative, producing drive-in events or virtual concerts while adhering to smaller gatherings and outdoor events but the financial impact on the industry has been very dramatic.

Movie Theatres – Projected time to recovery is unknown at this time;

  • Provincial governments across Canada mandated complete shutdowns of movie theatres at various times throughout the pandemic, with devastating consequences for the industry. While there had been initial optimism early in the year that they may be able to reopen at least in time for the critical holiday movie season late in 2020, this did not happen for the most part.
  • Many consumers flocked to a variety of video streaming services like Netflix, which added 15.8 million subscribers globally very early in the pandemic.
  • It remains to be seen whether consumers will feel comfortable returning to the traditional movie theatre venue in the post-pandemic world.

Fitness Clubs/Gyms – Projected time to recovery is unknown at this time;

  • This industry has been negatively affected by COVID-19 as facilities were forced to closed at a time that it was being “disrupted” by platforms such as Peloton, Mirror Home Fitness and others. Online platform memberships and subscriptions have increased from 20 per cent to 60 per cent in recent years.
  • Landlords do not have much of an option now to find alternative tenancies for this type of space that usually commands large and very specialized space
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