Eight Reasons to be Concerned about the Future of the Haunt Industry

Eight Reasons to be Concerned about the Future of the Haunt Industry

Jonathan and Crystal Discuss Red Flags That Every Haunter Should Be Aware Of.

This blog is based on Episode 174 of the Haunt Weekly podcast, which is targeted at the haunted attraction and haunted entertainment community. Whether you’re an actor, owner, or just plain aficionado, we aim to be a podcast for you. Crystal was with me for that podcast.

We’ve talked about the future of the haunt industry—consolidations, things that are good, things that are bad—and we wanted to cover those discussions in one podcast. The original idea I had was to do this in one episode—with eight positive things and eight negative things relating to the future of the haunt industry—but we figured we’d be talking for 3 1/2 hours or some shit, so we decided to do it in two.

To be clear, although we’re starting with reasons the industry is ailing, we’re not active pessimists about the future of the haunt industry. In fact, one of the things I realized in organizing all the stuff to do this episode was that the positive signs outweighed the negative. That doesn’t mean everything is rosy, however. I don’t want to come off as an optimist, either. We’re an industry that has opportunities and struggles.”

Eight Reasons to be Concerned about the Future of the Haunt Industry
Image Credit Halloween Horror Nights

Consolidation is Hurting the Industry

So, let’s just rip off the Bandaid and start with the first concern I have about the haunt industry, and that’s consolidation. Organizations like the 13th Floor Entertainment Group have been purchasing many haunted attractions—specifically, many of the biggest haunted attractions. They currently own 15 different haunts, two major escape rooms, two other venues, and four different touring events. The latter aren’t necessarily all touring events. They have two things I consider actual touring events and two things their haunts do that they brand as a tour. That sounds more accurate to me, based on my understanding.

Here’s the thing—consolidation is rarely good in an industry that wants to grow and thrive. Consolidation is usually a sign that an industry is entering a maturation phase and it’s heading for the downslope. For example, think about ride sharing. We’re seeing new ride-sharing companies—smaller ones—and they’re all getting bought out by Uber, Lyft, etc. This kind of consolidation is hindering the abilities of new companies to enter the market.

“This made me think about wrestling,” said Crystal. “They consolidated everything. Remember, in the early 2000s, when ECW and WCW went out of business within a week of each other? That was ridiculous. That’s when it became difficult for a smaller competitor to get started. It made it very difficult for a small entity to grow into a larger one and for the industry at large to grow. They simply can’t compete with the marketing and the scale. They simply couldn’t afford to survive.”

To be clear, I don’t think 13th Floor or any of these larger companies is evil. They’re doing a lot of things right, such as when they bought the old House of Shock and it became New Orleans Nightmare. They did a lot of smart things with that—they made it a more general-audience haunt, and they started paying their actors. These are good things. I loved these guys for a lot of the things they did, but I want to acknowledge that consolidation brings a lot of problems. If you think of the lower-tier haunts, the new startup haunts, as the soil from which the industry grows, the soil has some problems right now. Those problems seem to be growing, and I don’t really have a good answer for that.

Eight Reasons to be Concerned about the Future of the Haunt Industry
Image Credit Haunted Plantation

We’re a Top-heavy Industry

Playing into the previous concern is that we’re a very top-heavy industry. According to America Haunts, only 1% of haunts get more than 40,000 guests per year, and only 10% get more than 12,000. According to this source, the mean is right around 8,000 guests with most getting 7,500 to 10,000. It’s easy to see there’s a sharp curve that favors the far side—the 1%. The visitor disparity in the industry definitely seems to favor large, mega-haunts, which are getting an extremely big share of the customer base.

“That’s going to be true in a lot of industries, not just the haunt industry, where the bigger brands are going to get the most customers just because they can market to a bigger audience,” observed Crystal.

I totally agree. A correlate of this is the beer market. You have, obviously, Bud Light, Miller Light, Budweiser, all those beers which, of course, do way more business than the local brewer. We’ve got tons of local breweries. Another way to understand this is to take an example from the natural world. Biologists talk about trees forming a canopy in a forest—that’s like the mega haunts—and they capture all the yummy sunlight they can in their leaves. Now, some of that sunlight filters through, and that light allows the underbrush to grow, but not to the same degree. As an industry, we have a lot of trees, and the undergrowth is struggling. That’s a continuing problem.

Eight Reasons to be Concerned about the Future of the Haunt Industry
Image Credit Bennet’s Curse

The Higher Cost of Operation

This brings us to concern number three—the higher cost of operation. What I wanted to highlight with the first two concerns is that it’s not necessarily abnormal for an industry to be top heavy. In fact, most industries are—to a degree. The soda industry is extremely top heavy. It’s got only two major players. The trend is going more that way, and it seems like it’s getting to the point where the undergrowth—the smaller haunts—are struggling, and the higher cost of operation is one of the reasons.

Crystal added: “We’ve heard about more and more small haunts closing in the last couple of years than we had previously.”

This is certainly true, and we aren’t always able to find out why haunts close. Sometimes, they put up a post and explain it and, when they do, what we usually learn is it has something to do with the cost of business. That just makes dead obvious sense. Operating costs are continuing to rise pretty much across the nation. According to REIS and status stuff, the value of commercial property is rising, and vacancy is either decreasing or staying flat. This is true for warehouses, office space, shopping centers, and pretty much everything across the board. This means higher rents and fewer people willing to sell, especially considering they can get more for their rent money. If your solution is not to worry about rents and simply raise capital for purchase—

“That won’t work,” Crystal interjected.

Right. That may not work so well. There are fewer willing sellers because rents are rising—currently, rent spaces increase in value 2% per year, which, while not super high, is higher than what was happening in 2010, when rents were just shooting down, because commercial space—in particular, warehouse and office space—was hitting the cellar due to the economy. Such spaces became cheaper to both rent and buy. Since about 2011 or so, rents have gone straight up, and the curve has a kind of exponential look to it. It started rather slow on the increases and then became faster. Currently, the rate is accelerating. You can expect your rent to go up the next time your lease is up.

“And, a lot of times, because we’re a seasonal business, it’s hard to rent for just a few months—it’s hard to find that kind of lease,” said Crystal. “If there are fewer people willing to outright sell, you’re going to find it that much harder to find someone willing to lease the space for just a few months.”

Much like Spirit Stores, some haunts—especially smaller haunts—have thrived on very short-term leases.

“Short-term and storage leases. A storage lease is one that’s been used often for haunts,” said Crystal.

Eight Reasons to be Concerned about the Future of the Haunt Industry
Image Credit Erebus Haunted Attraction

That’s where the space is rented as a business for three months and as storage for the other nine. We’ve seen that done at least a couple of times. It’s kind of a weird arrangement, but, from the perspective of the owner, it’s a good option if they don’t have a prospective tenant to rent the place, maintain it, run the goddamn air-conditioning, etc. If you’re in New Orleans, AC is a very big deal. This might seem like a minor thing, but, if you don’t run the AC in a lot of these units, mold, mildew etc. will soon be your problems, and AC costs are high. These units weren’t designed to be exposed to the elements.

To summarize this point about the high costs of operation, we have a situation where the commercial property values are increasing, and vacancy is flatlining or decreasing. Owners are seeing dollar signs. They think they’re seeing this property becoming more valuable. They think they see higher-quality tenants, and they’re seeing they can get more money from them. They’re not super worried about vacant buildings anymore. In some cases, they should be. Just because vacancy is going down doesn’t mean it’s nothing. Believe me, there’s still vacant property to be found. I think vacancy in commercial property is in the 14% to 16% range. One out of every eight properties is vacant, but that’s way better than it was eight or 10 years ago.

This has been coupled with the increased cost of fire-code compliance. It’s not that new fire-code regulations have been coming online, it’s that the enforcement of existing regulations has become much more demanding. We’ve been hearing about haunts that have been ordered by their local fire marshal to put in a sprinkler system. Technically, that’s been a requirement for quite some time, but a lot of haunts skirted around it one way or another—either their fire marshals didn’t care, or they’d compromise on it in some way.

“Or they were grandparented in,” said Crystal, “because it was a historical building.”

That’s becoming less and less a thing. Sprinklers are one of those things that’s not too expensive to build into a new property, but to retrofit an old one with them is damned expensive. Newer commercial property is more expensive and looking for inexpensive commercial property you can rent and use for a haunt ends up in a devil’s choice.

There’s also the increased focus on paying actors—which, I repeat, is a good thing. In a commercial business, there are lots of laws that say you must pay your actors. Paying actors is a positive thing—for the haunt and for the actors. It’s a win-win. It does, however, mean labor costs go up and, even if labor isn’t a significant part of your cost, it’s another thing to factor in.

Added to that is customer demand for high-tech scares and customers wanting more and more thrills from their haunts—longer walkthroughs, better effects, cooler things.

Crystal added: “The tech industry is expanding into this area. We have new toys to play with, but they’re going to be expensive toys.”

A single pneumatic prop, for example, goes for thousands and thousands of dollars, and they’re not getting cheaper.

“No, and now you’ve got all sorts of digitally implemented things, too.”

Eight Reasons to be Concerned about the Future of the Haunt Industry
Image Credit Netherworld

One of the props I’ve watched is Shake and Bake, the guy in the electric chair. We love him, and he was actually at a haunt where we worked at the Chamber of Horrors. He was really good for letting us know where customers were in the haunt. That son of a bitch is loud. You hear him clear across the goddamn property. He was tremendously handy for that, but that prop hasn’t dropped in price. If anything, it’s gone up slightly in price. Same prop, same everything, and it’s getting more expensive. That’s the result of inflation, obviously, but now there are newer, better, more exciting props. He hasn’t gone down in price, and those newer props are more expensive.

I see this going the way of computer-controlled puppets. It’s absolutely bananas. Here’s one of the things to think about—even if you’re paying actors, remember that most haunts are only open for about 25 nights a year over a month-and-a-half season. If you’re paying an actor a minimum wage, $7.25 an hour, you might have the idea of replacing that actor with a prop. How many trouble-free, maintenance-free years do you have to get out of that prop before it’s cost-efficient to replace an actor? It’s a lot of goddamn years.

Crystal jumped in. “Not only that, but a prop is harder to change. You can put an actor in a different costume and a different role, and you can’t do that with props.”

If you’re thinking a solution to labor costs is more props, good luck, because the math says something different.

Haunting is a Very Small Industry

Okay, on to reason number four to be concerned about the haunt industry. Haunting is still a very small industry. Haunting is our little baby. It’s our wonderful world of fantasy and horror, but it’s not a big industry. According to America Haunts, haunted attractions generate between $300 million and $500 million in ticket sales per year. I’m going with the high end, because I think it’s probably closer to half a billion, and that sounds freaking huge, doesn’t it?

“It does,” Crystal agreed.

Meanwhile, according to Box Office Mojo, the first Captain Marvel movie made $353 million, and Infinity War, which came out a couple of years ago, made $689 million in ticket sales. That’s significantly bigger than our entire industry—just one film.

“That’s pretty insane.

That’s really insane. And there are films released every week. The movie industry and video games comprise the biggest category in the entertainment industry. You’ve got video games now that make billions upon release. In a way, we’re a small industry, but we’re ripe for rapid growth. However, we’re also an older and established industry, too. Modern haunted attractions have been around since the 1960s and 1970s, and commercial ones have been around since at least the 1980s, so we’re not this brand-new, upstart industry.

We’re an established player, so the size of the industry—dollar wise—is discouraging. It’s a bit of a kick in the teeth. Once again, this is according to America Haunt, a trade organization for haunted attractions. There’s been growth from year to year, and a lot of that growth has been driven by rising ticket prices but not necessarily by rapidly rising ticket sales. I looked in multiple sources, but I couldn’t find information on the average ticket price year to year.

Eight Reasons to be Concerned about the Future of the Haunt Industry
Image Credit Frightland

Expenses Have Increased

Which brings us to the fifth reason for concern in the haunted attraction industry—expenses have increased. I have our records, and I have the numbers for how much we list as expenses for tax purposes.

“We’ve also looked at the spreadsheets of some of our listeners,” said Crystal.

We have, but the plural of anecdote isn’t data. I’m not saying this is hard data, but we’ve found that expenditures for haunted attractions we know about have gone up about 15% year to year, mostly for the same haunted attraction.

“Yeah, and that might be because of the decreased intake in ticket sales. They’re trying to make up that cost.”

Maybe. The owners seem happy with their attendance levels—those that we’ve talked to—but, at the same time, even if attendance is flat or going up some, if expenses are increasing, they’re raising ticket prices to stay ahead of that goddamned expense curve we were talking about. That’s significantly faster than inflation. It’s multiple times faster than inflation. Here’s an interesting fact. I tried to find things that were increasing at the same pace, according to inflation. You know what I found? College textbooks.

“Yeah, that makes sense.”

Once again, this isn’t data, and we acknowledge it’s not data, but, in our case, the amount we spent has increased year to year at a pace very similar to college textbooks, and also college tuition. Fuck that.

“Yeah, especially comparing tuition and textbook costs to when we went to school.”

I anticipated it would be more, but jumping Jack Daniels, I didn’t expect that much. Here’s the thing. Haunting is an entertainment, whereas textbooks and tuition are considered an investment. We’re talking about forms of entertainment, which are the first things to go when the market heads south. These are the fluffy expenditures, the happy things that people buy, and there’s only so much the market can bear.

Think about it this way. The last time I checked, the average size of a group attending a haunt was 3-point something. Let’s just say 3.0, because I’m lazy. Many haunts charge a group or family of three more than $100, and it’s going up. How long is it going to be until people just go to a movie or an escape room or something else instead?

Crystal added, “Or something where the experience is going to last longer.”

Or costs significantly less.

“Yeah.”

Image Credit Headless Horseman

Haunted Attractions Are Usually Seasonal

Reason number six for why the picture isn’t so rosy for our industry is that haunted attractions are still almost entirely seasonal. Multiple haunts have been making efforts to try to extend their season or add dates, and there’s been some success there, which I’m very happy about. However, most of the business in the haunted attraction industry is done over about a six-week period, and it’s goddamn hard to run a business with year-round expenses and only six weeks of revenue. One bad season—or even a bad week, in some cases—can kill a haunt. The reason House of Shock closed the first time was largely because they had to close for Halloween one year due to rain, and that crushed their financials. They were one of those 1% haunts that were putting up those kinds of numbers, but they were still on the fringes in terms of profit margin. That one bad Halloween basically put them in the toilet. That’s rough.

Increasing Competition from Outside Sources

Haunts are trying to expand into non-haunt areas, but it’s not necessarily going as smoothly as anticipated. The reason for that is increasing competition from outside sources. Non-haunted escape games are very real, as is ax throwing and any number of other activities. What makes a haunted attraction unique in a very, very digital world is that we provide a very real, very physical, very visceral experience that a lot of people struggle to find in their lives. We provide that for the price of a ticket. That’s awesome, but more and more places are getting into that. They’re occupying the market. We picture ax throwing as part of the hipster culture, but it provides that real-world, unique, physical experience just like we do.

America Haunts estimates there are 1,200 haunted attractions in the country. That seems about right. In 2006, there were just 22 escape rooms in the country. Ten years later, there were more than 900. It’s very likely that between now and the end of 2019, escape rooms will exceed haunted attractions in number of locations. I know that’s true here locally. I can name six or seven escape rooms in southeast Louisiana—one less now, unfortunately, because Rise got rid of theirs—and I can only name five commercial haunts. Think about it. Escape games have grown, have more locations open year-round, and, from a customer standpoint, many of them provide better deals. Their ticket prices are comparable to haunted attractions, but they give you a guaranteed, one-hour playtime whereas, in a haunted attraction, it’s typically less than that.

“Right, and the other thing I’ve seen start to get a foothold here are the murder mystery dinners. The entire city is becoming a Clue game this summer,” added Crystal.

One of the advantages that haunts have over escape rooms is their seasonality. I can go to an escape room any week, but I can only go to a haunt when it’s open for those six weekends a year—or six weekends plus hell week.

“Yeah, I think it would be cool for haunts to partner up with some of these murder mystery events to put on some of their own whodunit dinners.”

I can definitely see a place like The Mortuary doing that. While I don’t think we’re in direct competition with non-haunt escape rooms and so forth, we definitely provide similar experiences, and we need to be thinking about them as being in the orbit. I could tell Crystal had a lot to add here.

“Here’s the problem with non-haunt escape games: A lot of them just aren’t good. They just plain aren’t. They don’t compare with haunted-house escape games, because the level of detail isn’t there, among other differences. If you’re a first-time customer and you walk into a shopping center escape game, you may or may not go to another one after that,” she said.

That’s just it, we have to be aware of and understand—especially since haunts are trying to push into this area—the non-haunt competition.

“How we market escape rooms is going to make all the difference,” said Crystal. “If they’re marketed as a completely immersive experiences and demonstrate how we do escape games differently as an industry compared to escape-game-in-a-box places, we can succeed at it, but it’s an issue.”

Crystal is correct. It’s definitely an issue, and that’s a reason to be a bit wary about the future.

Image Credit Kersey Valley

Demographics

The final reason we’re going to discuss is demographics. The population in the US is getting older. Picture your average haunt-goer—yours will probably be different than ours, because we’re home haunters. I can pretty readily describe the customers at pro haunts we’ve worked at and gone to as middle-class, predominantly white (although we’re getting better about diversity in our haunt customer base), and teens to young 20s. Crystal and I are usually the oldest people around. We’re the old fogies when we go to haunts.

“Yes, we get stuck in with kids, and they think we work there,” observed Crystal.

But we’re too old to work there. They don’t seem to understand that if we’re too old to be customers, we’re too old to work there. Anyway, back to demographics. By 2035, the population of people over 65 will nearly double, and that’s only 15 years from now. This group will represent a much larger percentage of the overall US population and, to make matters worse, the number of adults in the middle class has already dropped by several percentage points and is expected to continue to drop. That’s not good for an industry that needs young, middle-class people to remain viable.

“Start planning your retirement-home haunted houses now, folks. That’s where it’s’ going to be at,” said Crystal.

That’s rough news for our demographic. Here’s the thing. The group that’s under 65 will still grow, but it won’t grow as rapidly—either in raw numbers or in percent—as the over-65 group. This means, at the very best, growth is going to be slower than industries that have a broader appeal to a larger demographic. We either need to appeal to the larger demographic or accept that growth will be slower—which, as I said, will be difficult in this industry where expenses are going up pretty damn fast. It’s depressing.

“Yeah, well, we knew it would be.”

Image Credit The Dent Schoolhouse

After reading the statistics, the demographics situation has me as worried as any of the other reasons. We’re getting much, much older as a nation, and there seems to be a trend of fewer and fewer children per couple. We’re not getting as many young people to replace the old people as they age out of haunted attractions. You may ask, “Do you really age out of haunted attractions?” Normal people do, yes. It’s really going to be a problem, because we’ll have to find a way to appeal to older and older customers. We need to find ways to reach out to people in their 30s and 40s or even older. We need a broader base now, because we can’t depend solely on young people.

“Those young people need to start reaching out to their grandparents,” offered Crystal. “We need to get grandchildren to take their grandparents to haunts, and make it even more family friendly than we already are.”

This comment brought out my snark: “Murder, murder, murder, death, death, death, mean horrible stuff, violence, FAMILIES!” We always talk about making haunted attractions family friendly and, for some reason in American society, family-friendly has become lexicon for “kiddie.” There was a “family-friendly event” at the Point today called Pirate Day. It was all kids dressed up like pirates, and that’s exactly what it was—for kids. To me, family-friendly means trying to appeal to everyone in the family.

“This is why the haunted park idea—like Scream Park—isn’t a bad thing,” said Crystal.

Scream Park and also Spoofers have a couple of haunts—one trail and one haunted attraction—that are listed as 18 and up, but everything else is for kids, too—which means, you can bring the little ones and the big ones.

Crystal added, “At the Scream Park here, you’ve got the carnival rides, you’ve got those scare zones, and you can choose what to go to.”

Attractions are going to have to figure out how to truly appeal to a wider variety of customers, age-wise, because of these demographics. If you consider the entire US population, you’d expect it to be like a pyramid with a bunch of people at the bottom that have just gotten born, and then it angles up and narrows into the people over 100, almost like a triangle. It might be a little fatter around the teenage years, but you’d mostly expect it to be a pyramid, right? In fact, the future estimate is pretty much a straight, goddamn line up until like 75, and then it starts to taper, so it’s more like an obelisk. It’s a little wider at the bottom, but it’s not the wide base you’d expect, and it’s certainly not the wide base that followed the baby boom. That’s done.

We’re entering a top-heavy period. People are living longer—God bless medicine—they’re remaining ambulatory and fully functional into progressively older age, and I’ve heard that the first person who will reach age 125 has probably already been born. So, the people already born are living longer and, as I mentioned, people are having fewer babies. So, help the haunt industry. Have babies!

Crystal chimed in: “That’s terrible advice.”

That’s terrible advice—terrible advice we haven’t followed.

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