Turning a Profit: Can the New York Wheel Pull in More Cash than the Empire State Building?
Investors in the under construction New York Wheel see the future Wheel as being among the city’s most profitable attractions. T here’s no doubt they have grand ambitions: CEO Richard Marin affirm ed that the goal “is to create the next global icon on New York Harbor ,” reported the New York Business Journal in May. Wheel sponsors expect it to complement– and compete with–existing iconic structures in the city like the Statue of Liberty and Empire State Building.
According to its planners, the Wheel is expected to see an estimated 4.5 million visitors per year. Its main purpose is to bring new life (and tourism dollars) to the less-visited area of Stat en Island. While accessible by a free ferry service from New York, Stat en Island at present does not have a whole lotto offer for visitors. As such, the W heel is the centerpiece of the larger St. George waterfront project. It includes a 340,000square-foot shopping center, a 190room hotel, and a massive parking garage, which will be known for its eco-friendly “green roof” –a parklike area filled with hundreds of trees, a vast law n, picnic area, and concert space.
Over $750 million in private investment will be thus generated, investors believe, with over 1,300 perm anent jobs created once all is complete. Beyond that, however, project planners are optimistic that the Wheel will be more profitable than the Empire State Building’ s observatory deck.
According to The Real Deal, the New York Wheel is projecting firstyear pre-tax revenues of $127.85 million in 2017. By contrast, the Empire State Building’ s much visited observatory deck brought in $111.5 million in revenue in 2014. However, that projection was made in 2015, and with the Wheel construction running behind schedule, it is unlikely that such a result w ill be attained- at least not in 2017. CEO Richard Marin said recently through Time Warner Cable News that“There’ s a lot of testing and commissioning work that has to bed one, so we probably won’ t have our grand opening until the beginning of 2018.”
Regardless, project backers anticipate profits from the 630- foot tall New York Wheel will exceed $166.52 million annually by 2021. These figures would only be met, how ever, if the W heel received 4 million customers in 2017, and 3.5 million customers annually after that. Tourists riding the wheel would pay $35 per ride ($4 m ore than a trip to the 86 th floor of the Empire State Building ).
For its part, the Empire State Building has a known and historic position as the top site in New York, and count son a steady stream of visitors to guarantee its leading status. Its observatory draw s around 4.3 million tourists per year, while the Statue of Liberty gets 3.5 million visitors.
But estimating the profitability of giant wheels can be difficult. While the London Eye has become one of the most recognizable sites in the modern British capital, Las Vegas has not succeeded in inspiring tourists to a similar degree. Whereas investors had expected 8,000 to 11,000 visitors per day (or, 3 to 4 million a year ), just under 5,000 ride the High Roller each day, according to recent figures. As one commentator quipped in March of this year ,“the new generation of visitors prefers a Ferris to a roulette w heel, the thinking goes; except that they don’t, apparently.”
C om pared to the revenue of both the Las Vegas High Roller and the upcoming New York Wheel, backers of the Dubai Eye Wheel are expecting estimated revenues of $100m in the first year of operation, with a growth of $200 man nu ally expected after 2020. When completed, Dubai Eye Wheel will be the world’ s tallest, and thus have pride of place among world Wheel aficionados. Further, the sophisticated additional shopping, hotels, entertainment and other attractions coming to the Dubai Eye’ s island location mean it will almost certainly beam ore iconic attraction for tourists than is the case in Las Vegas( or even New York ).
First, however, the Dubai Eye has to actually be built. Its opening date is expected by 2018, but it faces some uncertainties because of potential budget shortcomings. It had been running neck-and-neck with the New York project, but has been extended due to tim e concerns. Nevertheless, while New York project’ s budget has risen from $200 m to $580– makingi tone of the most posh and expensive Wheels ever–the Dubai Eye’ s original 2013 budget has not been adjusted to reflect the actual costs and the additional work time required. This discrepancy has left some considering whether the project will be finished as planned.
If it can indeed be completed, planners are optimistic that the Dubai Eye will leave both New York and Vegas behind, when it comes to visitor numbers and revenue. But first it needs to be built, which will probably require additional funding. For their part, this fact leaves the New York project backers relatively unconcerned about the com petition, since they them selves are finding ways to leverage new financing. Since the New York project has had its share of controversies (including lawsuits over project management and perceived slow progress ), project backers there are being especially proactive about guaranteeing they w ill be able to fund the enterprise- an attitude that seems curious ly absent in Dubai currently.
However, New York has other benefits on its side. Along with assured project funding and a more flexible deadline for completion, the fact is that the Wheel will be built in one of the world’ s great cities, with a population of 8.4 million people, and an average number of tourists that just keep son rising. The New York Times reported earlier this year that a record 59.7 tourists visited the city in 2015, and that city planners are confident that that number will reach 67 million tourists by 2021.
By contrast, Las Vegas only receives 41 million annual tourists, who come specifically for the gambling and entertainment options. New York has a much wider appeal. For its part, Dubai only received 14.2 million visitors in 2015. While visitors to the latter two desert destinations might be more willing or able to spend a lot of money, since the various W heel ticket costs are all similar, New York should win by sheer volume-whether or not it ends up being the world’ s tallest W heel or not.