Introduction Ocean Park, Hong Kongs only homegrown theme park, was opened in 1977. It is the largest marine-based theme park in Asia, focusing on providing facilities for educational, recreational and conservation activities to the public. The park houses fourteen rides, an assortment of aquariums, a giant panda exhibit, observatories and educational laboratories. It is also the only Asian Park to be accredited by the American Zoo and Aquarium Association. Problem- Hong Kong Tourism In 2004, the tourism industry in Hong Kong composed of 2. 9% of its gross domestic product (GDP). With approximately 21.
8 million visitors that year, the majority of tourists came from China. However, this was likely to change because of Chinas less stringent requirements for traveling to other counties. In addition, the amusement park industry was not the highlight of Hong Kong tourism. Hong Kong was known to be a business city and was associated with deal-making, dining, and shopping. After the economic devastation from the 1997 Asian financial crisis, Hong Kong realized that they needed to diversify their economy. With this new outlook, the Hong Kong government began focusing on developing industries based on knowledge and driven by innovation.
In 2001, the Hong Kong government announced the development of five tourism clusters to increase the attractiveness of Hong Kong to tourists. Included in this process was the redevelopment of Ocean Park. Problem Statement In order for Ocean Park to attract more tourism, it launched a syndicated loan to raise HK$4. 1 billion to revamp itself. How will the banks assess Ocean Parks strategic plan? Would they buy the parks strategy in light of the competition posed by Disney? Outlook Ocean Park will be a fierce competitor in the Hong Kong entertainment industry.
Despite rivalry from Hong Kong Disneyland, the new master plan from Ocean Park poses various opportunities and strengths for the theme park. TOWS Analysis The major threat for Ocean Park is the emergence of Disneyland into the Hong Kong entertainment market. Disney already operated seven out of the top ten theme parks in the world and annual revenues were growing 10% at the time of the parks grand opening. Ocean Park is a local Hong Kong park with no global recognition or additional locations and now has to compete against the leader in the global theme park industry.
However, the upside of this new-found competition is that Disneys presence in Hong Kong would bring more visitors and turn the region into a family destination and therefore create an opportunity for Ocean Park. An additional threat to Ocean Park is the increased competition from a range of other areas such as the growing tendency for families to spend long weekends on the mainland or other parts of Asia and increased competition for families to spend time and money at shopping malls. There are various opportunities for Ocean Park.
The government first provided for growth of tourism through development of five tourism clusters to increase the attractiveness of Hong Kong, the redevelopment of Ocean Park being one of them. An additional opportunity is the Ocean Park focus on reality as opposed to Disneys focus on fantasy. Ocean Park focuses on animals and nature and that difference of reality can connect people with nature through ocean and animal encounters to differentiate itself from Disney. Ocean Park also has the opportunity to brand itself as home grown so Hong Kong people can take pride in it, while Disney is labeled as an American brand.
The biggest opportunity is park growth. The number of attractions could double, shows could triple and the number of animals could increase. With the proposed park changes under the master plan, Ocean Park has the opportunity to grow by 50% daily. Few weaknesses are apparent for Ocean Park. First, tourist activities in Hong Kong were biased strongly towards shopping with 50% of tourist expenses spent on shopping and only 3% spent on sightseeing. This proves to be a weakness for Ocean Park currently with only 15% of revenue coming from in-park shopping and spending.
A second weakness is that Ocean Park uses no formal metrics for measuring service excellence and thus has no way of enhancing the knowledge of employees and customer service at the park. Ocean Park has many strengths that could lead to opportunities for success in the future. Tourism is a major pillar of the Hong Kong community and the theme park industry is forecasted to grow 5. 7% by 2009. In order to take advantage of the tourism, Ocean Park offers a 20% discount to travel agents who send guests to the park as opposed to Disneys lower 10% discount.
In addition, with Disneys higher prices, Ocean Park kept prices affordable and provides 80% of the bang for 60% of the buck. In order to increase the revenue and keep costs low, the park also recently brought retail, food and beverage operations in-house. Ocean Park also caters to all ages from young children to grandparents to make a total family experience. Ocean Park also focuses on education and conservation in addition to providing entertainment in order to make a fully satisfying experience for all guests. Investing in Ocean Park: Answering the Problem.
Commercial Banks should not be hesitant in loaning the remainder of the money to Ocean Park for revamping of the park. Ocean Park fills a giant void in the Hong Kong market and will continue to be successful, especially with the proper financing needed to revamp the park. New management, along with new ideas, will help the popularity and profitability of the park to continue to climb. Disneys over-powering size is no match for the pride that the people of Hong Kong place on home-grown businesses like Ocean Park. As Hong Kongs only home grown theme park, Ocean Park attracts visitors that find a disconnect with Disneyland.
Unlike Disneyland, Ocean Park appreciates and fully understands the gap between American and Chinese culture. This gap does not exist for Ocean Park because it is a home-grown theme park. Locals understand this and are more likely to visit Ocean Park over Disneyland for this very reason. Ocean Park also understands the local customs and culture. Many mainland visitors choose Ocean Park over Disneyland because the prices are less. And Chairman of the Board, Allan Zeman understands this, vowing to always keep prices lower than those at Disneyland.
Ocean Park also works better with local travel agents, giving a 20% discount versus Disneylands 10%. A major point that should stand out to commercial banks is the fact that Disneys opening did not yield a major impact on Ocean Park. Attendance only dropped 1,000 people from the year before; 11,000 per day, down to 10,000. A local poll showed that 80% of people found their experience at Ocean Park to be comparable with Disney and two thirds disagreed that most people would like to visit Disney more than Ocean Park.
In all actuality, Disneys entrance into the area was good for Ocean Park because it brought more people to the Hong Kong area and turned the area into a family destination. When complete, Ocean Park will host more than 70 attractions, 12 shows, and add more than 30 new animal species. There will be 27 restaurants and more than 19,000 square feet of retail space. The redevelopment would increase the daily attendance capacity from 36,300 visitors to 53,600 visitors and projected attendance in 2021 would be more than double what it is today.
Revenues would rise to HK$1. 3 billion annually with the first phase, and HK$2. 1 billion with the second phase. Ocean Park would contribute 0. 5% of Hong Kongs GDP by 2010. The fact that Ocean Park was designated a public sector entity by the Hong Kong Monetary Authority favors the park when lenders assess the risk in participating in the syndicated loan. The government guarantee also serves as a strong token of confidence for the project. Based on the projected revenues, commitment to service, and low risk commercial banks.