CASE STUDY 1
Ocean Park: In the Face of Competition from Hong Kong Disneyland Bennett Yim In April 2006, Ocean Park, Hong Kong’s only home-grown theme park, launched a syndicated loan to raise HK$4.1 billion for a master plan to revamp the Park.1 The master plan represented the Park’s strategic response to the arrival of Hong Kong Disneyland, which had opened the previous year. Ocean Park had expected attendance to drop significantly with Disney’s opening, but attendance at the Park had remained strong. Nonetheless, the competition posed by Disney was not to be underestimated. How would the commercial banks assess Ocean Park’s strategic plan? Would they buy the Park’s strategy in light of the competition posed by Disney?
The Tourism Industry in Hong Kong Ocean Park Competition Impact of Competition on Ocean Park Ocean Park’s Positioning
THE TOURISM INDUSTRY IN HONG KONG
Tourism was a major pillar of the Hong Kong economy. In 2004, the territory recorded 21.8 million visitors who spent HK$91.85 billion,2 which was 2.9% of its GDP.3 China formed the key source market for tourists to Hong Kong, with 56.2% of its inbound visitors coming from China [see Exhibit 1].4 Hong Kong had been a favourite destination for 1 2 3
Cash Strapped Master Plan Put to Test
US$1 = HK$7.80. Hong Kong Tourism Board. (2005). A Statistical Review of Hong Kong Tourism 2004. Hong Kong Census and Statistics Department. Hong Kong Statistics, http://www.censtatd. gov.hk/hong_kong_statistics/statistical_tables/index.jsp?subjectID=12&tableID=189 (accessed August 19, 2006). Hong Kong Census and Statistics Department. (2006). Hong Kong in Figures.
208 CASE STUDY 1: Ocean Park: In the Face of Competition from Hong Kong Disneyland
Inbound Tourists and Mainland Tourists Visiting Hong Kong by Year Number of Inbound Tourists (in Millions)
12.97 11.27 10.16 11.33 13.06 13.73 16.57 15.54 21.81 23.36
Number of Mainland Tourists (in Millions)
2.39 2.36 2.67 3.20 3.79 4.45 6.83 8.47 12.25 12.54
Percentage of Mainland Tourists among Inbound Visitors to Hong Kong 31.00% 26.60% 27.13% 28.24% 29.02% 32.41% 41.22% 54.50% 56.17% 53.70%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Hong Kong Tourism Board. (2006). “A Statistical Review of Hong Kong Tourism 2005.”
mainland Chinese since the early 1980s, but it had found itself competing increasingly with other Asian destinations in the 1990s as the Chinese government liberalised travel policies toward other countries such as Thai land, Malaysia, and Singapore.5 The Asian financial crisis hit Hong Kong badly in 1997 and raised concerns about the structure of its economy, which relied heavily on the finance and real estate sectors.6 The crisis highlighted the need for Hong Kong to diversify its economic base, and the government began to call for the development of industries based on knowledge and driven by innovation while continuing to strengthen the service industries which were key con tributors to the territory’s economy, such as finance, logistics, and tourism. Hong Kong was run as a laissez-faire economy under British colonial rule, and the Hong Kong government continued using this system after the territory reverted to Chinese rule in 1997. But the government took a more active role when market forces alone appeared to be insufficient to drive the territory’s structural transformation.7
Zhang, H.Q. and Heung, V.C S. (2001). “The Emergence of the Mainland Chinese Outbound Travel Market and its Implications,” Journal of Vacation Marketing, 8 (1): 7–12. Official Record of Proceedings of the Hong Kong Legislative Council, http://www.legco.gov.hk/ yr98-99/english/eounmtg/hansard/981111fe.htm (accessed November 11, 1998). Leung, T.K. (2005). “A Review and Outlook of Hong Kong Industry’s Restructuring,” http:// www.tdctrade.com/econforum/boc/boc050302.htm (accessed October 29, 2006).