Sunday, August 24, 2014

Was Seattle’s Great Wheel a great investment or a colossal blunder?

Seattle Great Wheel
Seattle's Great Wheel at Pier 57
Rising 175 feet over Elliot Bay, Seattle’s Great Wheel occupies a dominant spot on the ever-changing Seattle skyline. Since opening at Pier 57 in June 2012, the Great Wheel has secured a spot as one of the most popular tourist destinations in Seattle by promising a fun ride with spectacular views of the city, the Puget Sound, and beyond.

A Ferris wheel renaissance begins
Ever since the London Eye debuted to huge success in 2000; countless other cities throughout the United States and the world have raced to build Ferris wheels. The London Eye kicked off a Ferris wheel construction renaissance, with over 35 other Ferris wheels launching around the world. Several Ferris wheels have cropped up in the United States, including the High Roller in Las Vegas, the Capital Wheel in Maryland, the Great Smokey Mountain Wheel in Tennessee, and the SkyWheel at Myrtle Beach in just the last three years.

A Ferris wheel comes to Seattle
It came as no surprise that in 2012 the Griffith family proposed the construction of a Ferris wheel at Miner’s Landing on Pier 57, their family property and a heavily trafficked tourist area in Seattle. At a construction cost of $20 million, the Great Wheel is a relative bargain compared to some other Ferris wheels around the world, with costs reaching into the hundreds of millions to build the largest Ferris wheels. At 175 feet, the Seattle Great Wheel is only the 56th largest Ferris wheel in the world as of 2014. Despite its limited stature on the world stage, the Great Wheel has become an icon on the Seattle waterfront. 

Evaluating the soundness of building the Great Wheel
Was it a sound financial decision to build a Ferris wheel when so many other cities are rushing to build Ferris wheels? The Griffith family originally projected 450,000 to 500,000 riders per year in its 42 gondolas with eight seats each, which is reasonable considering that the Space Needle, another Seattle icon and attraction, draws over one million visitors per year. Additionally, with a plethora of cruise ships departing to Alaska from Seattle each week, Seattle is flush with tourists during the summer months.

With adult ticket prices reaching $13, senior tickets at $11, and youth tickets at $9 per ride, the Great Wheel makes approximately $11.66 revenue per rider, assuming a normal distribution of the population rides the Great Wheel. With 500,000 riders a year, the Great Wheel stands to earn close to $6 million per year or close to $30 million over 5 years. At first glance, this seems like a home run investment. However, with interest, staff, electricity, maintenance, taxes, etc., the Great Wheel is most likely only breaking even on the $20 million investment after five years in operation.

The verdict
Even though the Great Wheel itself may not be hugely profitable, the Ferris wheel attracts countless tourists to Miner’s Landing, another Griffith property. With the ride lasting only 15 minutes, riders are sure to spend time dining and spending cash around the waterfront area before and after the ride, increasing the incomes of adjacent properties. With roadway construction occurring in the area, the wheel serves as a reminder that the waterfront is open for business. At the end of the day, the construction of the Great Wheel was most likely a great investment that is not only enriching the business owners but also bringing prestige to Seattle and increasing the beauty of its skyline.

Seattle Great WheelSeattle Great Wheel

Seattle Great Wheel at night

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