GOSHEN, N.Y. — Merlin Entertainments, the British entertainment company with attractions all over the globe, sees this bucolic town in New York’s Hudson Valley as the perfect spot to build its most ambitious and expensive project: the world’s largest Legoland theme park.
The 150-acre park, expected to open in 2020, will have eight themed areas and a 250-room hotel that will look as if it were constructed of Lego bricks.
Behind their whimsical facades, amusement parks are a big and sometimes risky business. The cost of entry is often in the hundreds of millions of dollars and can reach a billion or more.
Attendance at the top 10 parks grew 8.6 percent in 2017, according to a report from the Themed Entertainment Association. Although Legoland also did well, regional parks like it have their own set of challenges, the report said, including smaller budgets for marketing and investment in new attractions. Operators are adjusting by creating more reasons for visitors to stay longer.
Merlin believes it has found a community with a bounty of undeveloped real estate at a price that fits its business plan and is near several large population centers.
“The town of Goshen is great,” said Julie Estrada, Merlin’s director of public relations for North America. “There are so many people within driving distance who can come here and spend the day or spend the night.” The biggest asset, she said, is its proximity to New York City.
In the United States, regional parks are close enough to big cities that they can be visited in a day. They are a $10 billion-a-year business, according to the International Association of Amusement Parks and Attractions, a trade group. Attendance at regional parks outpaces that of large destination parks like Disney World and Universal Studios.
Fear of an influx of visitors set off opposition to Legoland in Goshen.
Reynell and Judith Andrews, who live less than a mile from the site of the park, thought the project was too big and would overwhelm the community of just over 15,000 people.
“They’re estimating 10,000 people a day coming into Goshen, which is a pretty small town,” said Mr. Andrews, who served for 18 years on the town planning board. “Traffic will be horrendous.”
So developers and town leaders are stressing the economic benefits that Legoland will bring to the area.
Merlin is planning to invest $500 million in the Legoland project in Orange County and is expected to pay property taxes of about $87 million over 20 years, according to Lynn Allen Cione, president of the Orange County Chamber of Commerce.
“Fifty percent of our town is off the tax rolls,” because the land is either owned by the government or nonprofit organizations, which do not pay taxes, Ms. Cione said. She said she worried for the town’s economic future, but said that Legoland would increase the tax base. “That’s incredible,” she said.
The industry makes a distinction between regional and destination parks, which are open year-round and tend to draw visitors from all over the world. But parks like Legoland, Knott’s Berry Farm in California and Hersheypark in Pennsylvania are blurring the lines. They have added restaurants, shops and hotels to take advantage of a theme park strategy that dates to the 1960s.
When Walt Disney was making plans for Walt Disney World near Orlando, Fla., he considered 14 years of visitor behavior at Disneyland in California, which had opened years earlier, in 1955.
Disney wanted to keep visitors at the park as long as possible, said Wonwhee Kim, a director at the Park Database and a private amusement park consultant. “He said, ‘Why not create an attraction that instead of spending seven hours they spend seven days?’” Mr. Kim said.
Legoland’s developers learned that lesson. The park in Goshen will be the first Legoland to have a hotel on opening day.
“We are unique in what we offer, but on track with what everyone is doing,” said Ms. Estrada, who has two sons.
“If my kids love it, I’d much rather stay on site and create maximum memories with one step,” she said. “It’s a trend in the industry and it’s what people are doing.”
Construction of new parks is waning in the North and Latin America and Europe, the theme park trade group reported, but a building boom is underway in other parts of the world, including in China, South Korea, the Philippines and the United Arab Emirates. With hotels, the cost of these projects can approach a billion dollars.
With such enormous financial investments at the front end, it can take a decade for investors to begin making money, Mr. Kim said.
“Most of the theme parks in the U.S. were investments from decades ago,” he said. “That was when the economics were better and land prices were cheaper.”
But sometimes, Mr. Kim said, profit is not the primary concern. “Parks are getting done for governmental reasons,” he said. “They’re a source of tax revenue, or to boost their profile on the world stage or have economic impact on the region.”
Regional theme parks do not need other tourist attractions nearby to succeed, but Merlin executives and officials in Orange County say they are confident that the momentum created by other new developments nearby will encourage more visitors to linger.
For instance, Resorts World Catskills, a casino that also offers family activities, opened in February in Monticello, N.Y., a little over 30 miles away.
“It takes a lot of real estate,” said Charles Degliomini, a spokesman for Empire Resorts, which operates Resorts World Catskills. “You couldn’t put our entertainment village and our 1.6 million-square-foot casino on a piece of property that is small. You need the expansiveness. That’s what this region provides.”
The resort is home to the state’s largest casino and has a 325-room hotel. The entertainment village, indoor water park and 18-hole golf course will open in the next year or two.
South of the Legoland site, the 250-store Woodbury Commons outlet mall just completed a $170 million renovation to improve the experience for the 13 million shoppers who visit each year. And New York Stewart International Airport, about 25 miles from Goshen, has undergone a $200 million makeover.
As the business evolves, industry insiders expect to see more indoor parks created in repurposed and underused real estate like shopping malls and empty big-box stores. Nickelodeon Universe in the Mall of America in Minnesota and Ski Dubai in the U.A.E. already offer year-round entertainment in areas of the world with extreme seasonal temperatures.
This kind of park presents “a large market opportunity for retail landlords and operators,” Mr. Kim said.
The Hollywood entertainment company Lionsgate plans to open a 50,000-square-foot indoor theme park in Manhattan next year. The studio will use its television and movie story lines as themes for traditional rides with enhanced technology.
“There’s a model for creating an indoor experience smaller in scale but still create a theme park experience,” said Jenefer Brown, who oversees location-based entertainment for the film studio. “What we’re rolling out in Times Square will open sooner and be something that the capital investment isn’t as high. So, assuming you get the attendance, it can be quite lucrative.”