Ocean park presentation masteredc.pptx


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Ocean park presentation masteredc.pptx

  1. 1. NYU Stern School of Business & HKUST Doing Business in China – Hong Kong Adam Behrman Andre Botelho Bastos Erin Coffey Tonantzin Esparza Ravi Shrivastava Ashley Taylor
  2. 2. Presentation Outline ¤  Introduction to Ocean Park ¤  Industry and competition ¤  Key strategic issues ¤  Government Regulations ¤  Externalities ¤  Adaptability to Local Market ¤  Competition ¤  Recommendations
  3. 3. Introduction
  4. 4. “A world leader in providing excellent guest experiences in a theme park environment connecting people with nature” •  Opened in 1977 by Sir Murray MacLehose, funded by the Hong Kong Jockey Club •  More than 7 million visitors per year in 2012 (ranked 13th overall), with about 35 attractions and rides •  Marine mammal park, oceanarium, zoo, and amusement park •  Numerous annual events, including their signature Halloween party •  Forbes ranked Ocean Park the World’s 7th most popular amusement park
  5. 5. Since his appointment as CEO in 2003, Tom Merhmann has led Ocean Park in making a number of changes, including: ¤  Substantial improvements to food and beverage options in the park, with the addition of the Bayview Restaurant and the Terrace Café ¤  Numerous additional rides and attractions, including Asia’s first floorless roller coaster, Old Hong Kong, and the Sea Jelly Spectacular ¤  Improved movement of customers while inside the park on the Ocean Express Ocean Park plans to continue this redevelopment, by updating older areas, building hotels on site and adding new species. A direct connection to the MTR will also drive attendance numbers of the park The park’s 2005 Master Redevelopment Plan has resulted in significant renewal and expansion
  6. 6. Ocean Park’s renewal efforts have increased park revenues and contributions from non-admission spend ¤  Revenue has increased at more than 11% per year in the last 5 years, and is more than 3 times what it was in 2002 ¤  While Ocean park has had a healthy surplus in recent years, overall earnings have fluctuated, affected largely by park operations, but also depreciation and financing ¤  Less than 70% of revenues are from park admission, down from over 80% in 2002; the remainder are largely from food and merchandise 0 200 400 600 800 1000 1200 1400 1600 2002 2007 2008 2009 2010 2011 2012 Revenue($HKmillion) Other Catering Income Merchandise Income Admission Income
  7. 7. Industry & Competition
  8. 8. Child attractions Adult attractions HK Culture specific Western Offerings Affordability (free entry) Number of attractions ✔ ✔ ✔ ✔ ✖ 80+ ✔ ✖ ✖ ✔ ✖ 35+ HONG KONG MALLS ✖ ✔ ✔ ✔ ✔ Numerous & growing BIG BUDDAH ✖ ✔ ✔ ✖ ✔   1 Competitive Landscape: Hong Kong
  9. 9. Asia’s Theme Park Industry: Crowded & Competitive Tokyo Disney Resort Universal Studios, Osaka Lotte World and Everland Resort, Seoul OCT and Aquarium, Beijing Qingdao Polar World OCT and Disneyland, Shanghai Spendid China, Windows of the World, Happy Valley, ShenzenOcean World, Guangzhou Resorts World, Universal Studios, Singapore
  10. 10. Key Strategic Issues
  11. 11. Government Regulations ¤  Laws and Regulations of mainland China are different from Hong Kong ¤  Ocean Park is fully owned by Honk Kong government ¤  Ocean Park board of directors is composed of 18 members ¤  According to their resumes, only 3 board members seem to have network and experience with mainland China ¤  Ordinance do not allow Ocean Park to operate outside of Brick Hill ¤  Ocean Park CEO’s Mr. James, is trying to win this approval in the following years ¤  Mainland China’s government could claim control of a park in mainland ¤  Disneyland Shanghai to launch in 2015 ¤  Disneyland Ownership: 57% 43% Chinese Government (Shanghau Shendi) Disneyland
  12. 12. Externalities ¤  SARS epidemic outbreak in 2003 caused a sharp decrease in attendance and revenues for Ocean Park ¤  Air pollution in Hong Kong is considered a serious problem ¤  Visibility is currently less than 8 Km for 30% of the year ¤  Mainland air pollution is even worse than Hong Kong ¤  Beijing last Saturday experienced its worst pollution reading since the air quality monitor on was installed in US embassy in 2008 This hazardous environment proves difficult to achieve Ocean Park’s vision to connect people with nature
  13. 13. Expansion to Mainland China ¤  Coastal cities have theme/ocean parks (high competition) but also have potential for higher attendance ¤  Challenge: Identification of low competition location(s) without compromising attendance ¤  Mainland visitors comprise more than 1/3 of the visitors to Ocean Park Hong Kong ¤  Challenge: Opening an Ocean Park in the Mainland might cannibalize Hong Kong attendance ¤  Ocean Park in the mainland would have to be based on Chinese culture ¤  Challenge: Differentiating the new park from its Hong Kong location
  14. 14. Expansion Outside China ¤  Major tourism centers already have theme/ocean parks ¤  Challenge: Identification of tourism center(s) with room for another them/ocean park ¤  Culturally different from Hong Kong ¤  Challenge: customizing offerings to resonate with local culture ¤  Animals are a core part of the Ocean Park experience ¤  Acquisition of exotic specimen can be challenging ¤  Will need to ensure availability of special materials needed for care and treatment of animals
  15. 15. Recommendations
  16. 16. Recommendations for Expansion: Clear Governmental Hurdles for Entry •  Pursue Amendment to company charter that allows Ocean Park to expand into Mainland China •  Establish a relationship with local Chinese officials •  Use Ocean Park’s history and recent years of financial surplus to demonstrate that Ocean Park is a serious partner for the government and not just engaging in land speculation
  17. 17. Recommendations for Expansion: Adapt Product for Local Market •  Survey the local competitive landscape, determine key weaknesses of area parks and exploit them •  Employ those familiar with the area in design/construction to ensure authenticity in creating a park/events with local theme •  Use past experiences as a template on how to effectively target underserved communities (e.g. senior citizens) •  Determine plan and frequency of attraction renewal •  Consider adding a focus on local conservation issues
  18. 18. Recommendations for Expansion: Mitigate Externalities That Undermine Product Quality •  Create environs for live talent that address environmental concerns/issues facing the local market entering •  Adapt conservation message to include a focus on the importance of environmental concerns facing the local area •  Consider making the message about how individuals can personally impact conservation to avoid politicizing the issue and/or offending local officials
  19. 19. Recommendations for Expansion: Neutralize Competition Within the Field •  Create a local campaign that leverages past marketing successes in appealing to a wide variety of potential park-goers (From families to teens to senior citizens) and park renewal: “Ocean Park. Every time is different.” •  Re-evaluate gate pricing scheme within context of entry into a local market. Set prices at amount that entices purchase without devaluing overall product •  Utilize government relationships to ensure delivery of public resources/ goods that would bolster attendance(e.g. Train stations)
  20. 20. Thank You!