We’re hurt but optimistic


June 4, 2020 | By Rupkatha B

“We’re hurt but optimistic about a gradual recovery,” states Shifa Yusuffali, CEO, IdeaCrate, commenting on the regional leisure and entertainment industry, which is incurring huge losses.

“It is one of the worst-hit industries owing to the COVID-19 pandemic. There is still a lot of uncertainty around the reopening of the family entertainment centres (FECs). We are part of an industry, where experiences can’t be offered virtually. We have to wait until our facilities reopen to be able to restart,” she adds.

“Meanwhile, we have to take care of our staff. We can’t make them redundant; we have to support them, it’s our moral responsibility. In addition, we are constantly sanitising the facilities and maintaining the rides. It all involves overhead costs,” Yusuffali continues.

Also read: Entertainment centres to reopen in phases

IdeaCrate operates edutainment concept Orange Wheels; FEC Orange Hub; and a nursery Orange Seeds. While Orange Wheels caters for children aged between six months and eight years, Orange Hub appeals to kids above seven years going up to the teenagers. And Orange Seeds is the British curriculum nursery catering for children aged zero to four years. Overall, all the three concepts are challenged currently.

Amidst the current circumstances, are the operators receiving support in the form of stimulus and rent waiver from landlords to be able to sustain?

“As of now, we haven’t received any stimulus. There has been no announcement in this regard, as yet,” Yusuffali responds. “We have received support from the landlords, such as Town Centre Jumeirah. They have waived our rent for three months, starting April 2020.”

Even when the FECs reopen, owing to the current age restrictions – which is applicable to children under 12 years – Orange Wheels and Orange Seeds still might not be able to operate. “There is no point for us to reopen amidst age restrictions, as our target age group is up to eight years for Orange Wheels and even lesser for Orange Seeds,” Yusuffali agrees. “From a public health and safety perspectives, we understand the concerns and the need for restrictions. But from a business perspective, it is difficult.”

“Think about it – we aren’t sure if Orange Seeds, which falls under the Ministry of Education, will reopen even in September. There is no clear timeline for the reopening of nurseries. In that sense, Orange Hub might be better placed as it is geared towards a slightly higher age group, compared to Orange Wheels,” she adds.

“However, we are gearing up to reopen our facilities whenever it happens. We are trying to bring registration and payments processes online. For a while, we might even allow entry on the basis of prior appointment,” Yusuffali continues.

The question remains – does it justify the operating costs for entertainment centres amidst reduced capacity of around 30% and low footfall?

“It doesn’t justify the operating costs and overheads,” Yusuffali admits. “Along with reduced capacity is the additional cost around constant sanitisation and even restrictions on employees. Having said that, I also believe if we are able to survive this crisis – let’s say until the first quarter of 2021 – we will emerge stronger, as things bounce back when an effective cure is discovered to treat the virus. And, I think, people are keen to return to normal life, as we knew it before the pandemic.”

Despite the optimism, a lot of entertainment centres – especially smaller ones – may not be able to survive the storm, as they run into cash flow issues. “That’s a possibility,” Yusuffali agrees and adds, “Several nurseries are also having to shut down or running into debts. This is really unfortunate because nurseries and edutainment centres play a big role in serving communities.”

Looking ahead, like most other industries, leisure and entertainment will also look different in the post-COVID world. In this context, Yusuffali observes, “There is bound to be a shift due to social distancing measures. I think, going forward, regional FECs will become more conscious about maintaining increased spacing between rides and seating, while investments into rides and equipment might reduce in the short term.”

In terms of spending, there will be a knock-on effect due to weak consumer confidence, especially towards discretionary spending such as entertainment. “That’s why, we have to re-strategise pricing and offer even more value to encourage our audience to return to our facilities,” she concludes.

 

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