The recession depressed revenue and profit, but both have rebounded as the economy recovers
Los Angeles, CA (PRWEB) April 09, 2013
The Go-Kart Racing Tracks industry has slowly expanded over the past five years, matching overall trends in consumer spending. Unemployment shot up during the recession, causing a sharp decrease in per capita disposable income. As a result, consumer cut back on discretionary expenditures on entertainment and leisure activities, such as go-kart racing. In 2009, industry revenue contracted 3.6%. However, Disposable income and consumer confidence in the economy has trended upward since 2010, bolstering overall consumer spending. “Go-kart racing also provided a relatively low-cost leisure activity for individuals and families, which helped attract customers even though disposable income lingered below prerecession levels,” says IBISWorld industry analyst David Yang. As a result, downstream demand quickly rebounded as the economy recovered. In the five years to 2013, IBISWorld expects industry revenue to increase at an average annual rate of 0.3% to $51.1 million. In 2013, this industry is expected to be in full recovery. Per capita disposable income is estimated to reach 2008 levels. Consumer confidence in the economy, measured by the consumer sentiment index, is expected to strongly increase. Both of these factors are expected to fuel downstream demand for leisure activities. As a result, revenue is estimated to increase 1.4% over 2013.
However, while this industry grew over the past five years, profit margins have taken a slight hit. To attract customers during the recession, industry operators implemented multi-race deals, memberships and group packages, all of which have lower profit margins than single-race tickets. Furthermore, competitors in the leisure and entertainment activities sector, such as miniature golf courses, laser tag arenas and bowling alleys, also implemented price cuts and deals. External competition put downward pressure on profitability. On average, profit is expected to slightly decline to 12.0% of revenue in the five years to 2013. The industry will continue to grow over the next five years. According to Yang, disposable income is forecast to surpass prerecession levels due to the recovering labor market, which will stimulate consumer spending on entertainment and leisure. Although leisure time available to consumers is anticipated to slightly decline as more individuals return to work, strong disposable income growth is projected to overshadow any decline in leisure time.
The Go-Kart Racing Tracks industry has a low level of market share concentration. In 2013, the top four companies account for less than 30.0% of total industry revenue. Most operators in the industry are small-size businesses and many are independently owned and operate just one facility. Additionally, the low level of barriers to entry allows companies to enter the industry with ease, creating a greater number of operators. In the past five years, industry enterprises have grown at an average annual rate of 1.1% to total 37 in 2013. Industry concentration is not expected to change significantly over the next five years. For more information, visit IBISWorld’s Go-Kart Racing Tracks in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
This industry provides recreational and amusement services through go-kart racetracks and other related services. Go-kart tracks may be indoor or outdoor.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.