Cultural executives are grappling with public concerns about the economy. How much do admission fees contribute to cost-related barriers to visiting right now?
Here’s the answer.
As a professional nerd, I get to delve deep into research concerning visitation trends for cultural organizations. It’s a fantastic privilege to work with amazing data scientists, researchers, analysts, and client organizations, but the best part of my job is when the advantages of real-time data collection strike, and certain findings make my jaw drop in interest. This is one of those times.
At IMPACTS Experience, we manage the National Awareness, Attitudes, and Usage Study. It is believed to be the largest in-market survey of perceptions and behaviors concerning cultural organizations in the United States. The key there? “In market.” We don’t often have defined collection periods. Instead, we’re always collecting data.
As regular readers may remember, the real-time nature of the data was particularly helpful during the pandemic when things were shifting quickly – and we’re currently facing more quick shifts as the public becomes increasingly concerned about the economy. Given specific challenges including inflation and gas prices, more Americans are worrying about their household finances. Consumer sentiment plunged to record lows in June amid surging inflation. And in fact, Americans view inflation as the top problem facing the country today.
Right now, cultural executives are grappling with public concern about the economy. We’re receiving questions about how this concern is impacting visitation behaviors, travel plans, and overall perceptions related to museums and performing arts organizations.
However, we’re seeing a dichotomy in the research that’s causing some executive brain pain. Despite viewing inflation as the top problem currently facing the United States, the public remains generally rational about perceived market efficiencies affecting admission pricing. Organizations that were perceived to be “value advantaged” (i.e., underpriced in terms of perceived value for the cost of admission, or, less politely, showing signs of leaving money on the table) remain similarly perceived. In other words, the value proposition has not been upset by the economy. Thinking in broader economic terms, this makes sense: A variance of a few dollars in admission price is unlikely to dramatically affect the household budget for many of our current and potential visitors.
The market does not show evidence of broad concerns about admission pricing. Indeed, many organizations report favorable attendance trends as consumer behaviors gradually return to pre-pandemic patterns. But we’re also concurrently observing several organizations express concern about the role that their respective admission prices play as a potential barrier to engagement amidst the current economic malaise.
The simple answer – as is often the case in these type of broad economic analyses – is that there is no simple answer. Economies are complex systems and rarely does one factor singlehandedly drive perceptions or actualities. However, the research does lend insight into what aspects of our high-propensity visitors’ behaviors are most likely to be affected by negative economic sentiments. And, perhaps surprisingly, admission pricing is among the cost factors least likely to be affected by current economic perceptions.
People plan to spend less money on their trips to attend cultural organizations.
The research below illustrates a metric that we monitor at IMPACTS Experience referred to as “share of wallet” for cultural experiences. “Share of wallet” helps us understand how much money likely visitors intend to spend in support of their visits to an exhibit-based organization (e.g., museums, zoos, aquariums, gardens, historic sites, etc.) and/or performance-based organizations (e.g., theaters, symphonies, ballets, etc.).
The research contemplates high-propensity visitors to cultural entities (both those who have recently visited and those who have not) and their spending expectations (i.e., the collective sum their cultural experience accounts for as a component of their overall household budget). Factors that comprise the total cost of a cultural daytrip could include gas, tickets, onsite food and beverage purchases, gift shop purchases, parking, offsite food and beverage purchases (e.g., pre-theater dinner), Uber rides, and childcare, among others. The chart below indicates the variance in spending expectations for a cultural daytrip – organized by both exhibit-based and performance-based experiences – for the end of 2019 (the “before times”), the end 2021, and the end of the second quarter of 2022.
As of the end of Q2 2022, the amount that people expect to spend on their trip to a visitor-serving organization has decreased by 12.5% for exhibit-based organizations and 28.6% for performance-based organizations when compared to EOY 2019. These are significant declines in spending expectations, the majority of which were realized in the first half of this year.
For those of you who may have noticed a decline in spending at your gift shops and food service locations, this is likely not a figment of your imaginations. This research suggests that people expect to spend less overall in support of their cultural experiences. Of course, this doesn’t mean that they are abandoning or deferring cultural experiences; instead, they are contemplating economic tradeoffs to align their actual spending to expectations. Think carpooling instead of driving separately. Parking in the garage instead of using the valet. Eating at a fast casual restaurant instead of the Michelin-starred culinary temple.
You will note that there is no mention of “downgrading” their admission spending – and this is intentional. The research doesn’t suggest that this is happening. Instead, admission pricing is seen as a core component of the cultural experience. The factors perceived as being more flexible are the other elements that support the core experience such as those listed above. These elements can be more readily substituted – or even eliminated.
Admission cost is not a top cost-related barrier.
Your brain may still jump to adjusting your admission prices. We get it: This may feel like a cost within your control – unlike factors such as fuel and offsite food experiences. Plus, admission fees are often something leaders are generally concerned about, especially if issues relating to perceived affordability are already on the table. But before you start calculating the costs and benefits of lowering your admission fee based upon the best guesses of your (our) human and proved-fallible brain(s), take a pause. There’s an important follow-up question here about what factors are actually driving this decrease in expected spending.
The research below gets to the bottom of this question. As usual when you see a list like this from IMPACTS Experience, it’s been populated by a process called lexical analysis in which we ask open-ended questions to both identify the factors affecting cost-related concerns and understand the relative contribution of these individual factors to one’s overall perception of the economy. We did not present people with a “list” for folks to choose from. Instead, the list is the top cost-related factors informing potential barriers to admission that folks stated themselves.
The findings are indicated as index values. Index values are a way of assigning proportionality around a mean of 100. Items over 100 in index value are more contributory as cost-related barriers and the top reasons why spending expectations have decreased. As you can see, inflation is a nearly four times greater factor as a potential cost-related barrier than admission cost!
Because these items were informed and grouped by lexical analysis, it may be helpful to see some clarifications about how people responded for those items that require some additional explanation:
- Inflation – including rising interest rates
- Travel costs – including fuel, airline tickets, and other travel-related factors
- Concern about financial markets – including concern about retirement savings, investments, etc.
- Specific concern about change in financial situation – including anticipating an income reduction
- Credit payments – including credit cards and other loans coming due
- Overnight lodging costs – including hotel prices
- Change in financial situation – including layoff, income reduction, etc.
- Labor availability and costs – including affordable childcare and senior care shortages
- Admission prices – including ticket prices
- Rent abatement expiring – including eviction moratorium expiring
For better or worse, a typical cultural organization can’t do much to meaningfully impact most of the items on this list. Taking $3 off your admission prices won’t offset an airplane fare costing $400 more than it did last year. Nor will it reduce the amount of fuel required to visit or improve the ROI for someone’s 401k. More to the point, there is scant evidence that a significant number of high-propensity visitors are even asking organizations to lower their admission costs.
The conversation about pricing psychology and behavioral economics is a big one, and it’s one that we talk about in depth with specificity as it relates to our partners and clients. As a few helpful, brief reminders: “Affordability” is binary, and there are a whole host of proven detrimental issues associated with discounting. Not only that, discounts do not generally attract new audiences.
Multiple, seemingly linked concepts can be opposite and true at the same time. Yes, there currently exists significant concern about the economy and people expect to spend less in support of their cultural experiences. But admission price is not currently a significant contributing factor as a cost-related barrier to visitation.
Tampering with your ticket prices in reaction to broad economic perceptions risks doing more harm than good. While admission pricing may be one of the few cost-related factors within our control, the research indicates that it is not a notable barrier for those with interest in attending.
Instead, the solutions are strategic: Keep engaging digitally to motivate attendance. Underscore your credibility with fantastic content. Continue to strive to be relevant. Keep being your inspiring, amazing institutional self, such that the quality of your experience cannot be ignored. Your museum or performing arts organization may not have much luck singlehandedly combating inflation. But much is indeed still in our control. Your organization may best be poised to keep your communities engaged and inspired while times are tough.
IMPACTS Experience provides data specific to organizations or markets through workshops, keynote presentations, webinars, and data services such as pricing recommendations, market potential analyses, concept testing, and Awareness, Attitude, and Usage studies. Learn more.
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