What made Chimelong or Hong Kong Ocean Park fall into rumors is the 2019-2020 fiscal year data disclosed by Ocean Park at the beginning of the year: Among them, Ocean Park has owed government-affiliated loans and commercial loans up to HK$5.09 billion, and interest payable is close to HK$1.28 billion; at the same time, the cash deficit generated by annual operations will exceed HK$600 million.
The subsequent COVID-19 epidemic caused the 43-year-old Hong Kong Ocean Park to usher in an unprecedented "midlife crisis".
Ocean Park has always been one of the popular attractions for Hong Kong tourism. It opened in January 1977 and was built by the Hong Kong Jockey Club. Later, it was independent from the Hong Kong Jockey Club and was responsible for its own profits and losses.
In 2005, Ocean Park launched the "New Development Plan", which cost 5.55 billion Hong Kong dollars. The park's attractions and mobile games increased from about 35 to 80, and was divided into eight theme areas. It has become a world-class theme park in one fell swoop, becoming one of the most popular theme parks in the world with the largest number of visitors. In 2012, he also won the World's Best Theme Park (The Appause Award). Since its opening, Ocean Park has received more than 140 million tourists.
But now it is no longer glorious as it used to be. It has been plagued by debt for many years. Standing at the crossroads of the "midlife crisis", restructuring the development direction has become the top problem it has to face.
A travel agency person admitted to the 21st Century Business Herald reporter that the operating model of Ocean Park has almost not changed over the years, and has changed very little in the past few decades. In fact, it has attracted relatively few local tourists from Hong Kong, mainly mainland tourist groups. With the rise of mainland theme parks such as Chimelong, its competitiveness has been weakened.
At that time, the boy was proud
If Hong Kong Disneyland was a fairy tale world, then Ocean Park was a paradise of adventure. From the initial donation of the Jockey Club to the self-profit and loss and gradual growth, it once became a benchmark for the global ocean theme park. For many older generation Hong Kong people, going to the Ocean Park has become an indispensable happiness in childhood memories.
Ocean Park opened on January 10, 1977 and was originally built by the Hong Kong Jockey Club and managed by the Jockey Club. In the first half of the year of opening, Ocean Park has more than 1.31 million visitors.
In January 1979, the Ocean Park introduced the murderous whale "Haiwei", which became a selling point of the Ocean Park. There were not many facilities in the early stages of the park. Therefore, since 1980, the Ocean Park has been expanded, and large-scale mobile games have been added, and facilities such as water parks, shark halls, torii, mountaineering elevators and Jigu Village have been built one after another.
On July 1, 1987, Ocean Park broke away from the Jockey Club and became a non-profit organization. It began to bear its own profits and losses, and instead operated through commercial methods. In order to increase the number of visitors to the park, Ocean Park has also begun to add new projects. In 1999, the park received two giant pandas and introduced more large-scale mobile games, such as building jumpers and mine speedsters.
Ocean Park launched a new development blueprint in 2005, and the number of attractions and mobile games increased from 35 to 70. In 2007, the number of visitors reached 4.9 million, ranking 16th in the world and 5th in the Asia-Pacific region. In 2009, the world ranking of Ocean Park visitors jumped to 14th, ranked 5th in Asia and 1st in China.
In 2005, Hong Kong Disneyland just opened. In the following years, Hong Kong Ocean Park still dominated Disneyland with differentiated competition, so that the then CEO Sheng Zhiwen was called the "Mickey Mouse Killer". The "Asian Animal World" completed by
in 2009 is the first launch project of the development plan, displaying precious Asian animals such as giant pandas and red pandas. The "Dream Water Capital", one of the world's largest aquariums, also debuted in early 2011.
In 2011, the layout of Hong Kong Ocean Park was divided into 7 areas. The mountain-seat garden is connected to Nanlang Mountain by a mountaineering cable car and an ocean train that opened to traffic in 2009. The hiking elevator is connected between Nanlang Mountain and Dashuwan, which is the second longest outdoor escalator in the world.
At that time, the reason why Ocean Park was able to gain a place in the competition for theme parks was that its strategic thinking was simple and clear. It took a differentiated route for Disneyland, focusing on cultivating Hong Kong people's feelings for Ocean Parks, and vigorously developing the mainland market.
2014 public data shows that among the mainland tourists from the Ocean Park, 80% come from southern China - except for Shanghai and its surrounding areas, the rest are all concentrated in Guangdong Province. Since 2003, the market promotion expenses of Ocean Park for the mainland have increased from 5% to 30%. In 2006, it opened a representative office in Guangzhou. In addition to promoting it with many consumer brands such as Carrefour, Coca-Cola, KFC, China Merchants Bank , UnionPay and other organizations, it also actively attracts domestic tourists through text messages and the Internet.
But from profit to loss, the performance turning point of Hong Kong Ocean Park appeared after 2014. Comparing Hong Kong Disneyland's data, coincidentally, the highest number of visitors also appeared in 2014, reaching 7.5 million this year, and at the same time, the best performance in history, with business revenue of HK$5.466 billion and profit of HK$332 million. Hong Kong Disneyland has been operating for several years and its first profit was in 2013. 2014 is the second year of profitability.
However, since 2015, Hong Kong Disneyland has also suffered losses for four consecutive years, with no more than 7 million tourists each year. As the smallest Disneyland in the world, it has not forgotten to expand its losses every year. At the same time, the ranking of Hong Kong Disneyland is also moving forward, reaching the highest level of 17th.
In 2014, 60.84 million tourists visited Hong Kong, and 65.15 million tourists visited Hong Kong in 2018. There are 7% more tourists, but fewer people go to Hong Kong's two major theme parks. Considering that mainland tourists account for 77% of tourists visiting Hong Kong, the choice of mainland tourists is the main factor. Over the years, the proportion of tourists in Hong Kong Ocean Park has been around 4:4:2 in the mainland, Hong Kong and overseas.
The "young proud" Ocean Park has not continued its previous glory, because the number of tourists in the mainland has decreased, the equipment is outdated, the business model is relatively single, and the number of similar competitive categories has increased, Ocean Park has begun to face more and more challenges.
Transformation under the midlife crisis
Marine Park exposed the first key point of the midlife crisis was reflected in high debt.
Since 2005, Hong Kong Ocean Park has borrowed nearly HK$5.5 billion from the Hong Kong government and commercial enterprises for a new expansion project. By 2013, it has borrowed another HK$2.29 billion from the government to build a new water park, involving a total of approximately HK$7.8 billion in loans. Among the two loans, the government lent a total of HK$3.67 billion, while the remaining over RMB4 billion were commercial loans (partial loans were guaranteed by the government).
According to the 2018-2019 annual report of Hong Kong Ocean Park, government-affiliated loans and commercial loans and interest owed by Ocean Park have reached HK$6.37 billion. By fiscal year 2019, Hong Kong Ocean Park had suffered losses for four consecutive years. Heavy debts have become an important reason why Ocean Parks are unable to make ends meet.
On May 11, the Hong Kong Special Administrative Region Government Commerce and Economic Development Bureau Director Yau Teng-hua said that the SAR government has applied to the Legislative Council of the SAR, intending to allocate HK$5.4 billion to the Hong Kong Ocean Park to support the maintenance of operations of the Ocean Park, otherwise the park may face the risk of bankruptcy in June.
On May 29, 2020, the Financial Committee of the Legislative Council of the Hong Kong Special Administrative Region reviewed and passed the proposal to "Add HK$5.42 billion to Hong Kong Ocean Park". The amount will assist the park in continuing operations for 12 months, and re-determine its future development strategy during this period to help the park overcome difficulties. On June 26, the Hong Kong Special Administrative Region Government appointed Liu Mingwei as the new chairman of the board of directors of Ocean Park Company. The new leadership team will re-plan the park's positioning and development direction.
On the other hand, Hong Kong Ocean Park's own profitability also faces many challenges.
A common harsh test that the theme park that enters middle-aged is repair. Public information shows that the latest major renovation of Ocean Park was 8 years ago. In 2019, Kong Lingcheng, then chairman of Hong Kong Ocean Park, said that due to the damage caused by the super typhoon mangosteen, it has led to a significant increase in maintenance expenses, as well as various expenses involved in depreciation of new infrastructure and new facilities, the operating costs of the ocean park increased.
In addition, Hong Kong Ocean Park also needs to face fierce competition caused by the increase in theme parks in the district.
The authoritative research institution of the World Theme Parks, the American Theme Entertainment Association (TEA), and the third-party tourism industry research and consulting agency AECOM Group, the United States, jointly released a 2017 global theme park survey. The Chinese theme parks shortlisted for the list include Shanghai Disneyland , Zhuhai Hengqin Chimelong Ocean Kingdom , and Hong Kong Disneyland, ranking 8th, 11th and 18th respectively. Hong Kong Ocean Park only ranked 20th.
"In addition to attracting mainland tourists from surrounding areas and reducing the demand for Hong Kong Ocean Park, many Hong Kong tourists also tend to visit Zhuhai." A travel agency person said, "For Hong Kong Ocean Park, the direct competitors are Zhuhai Chimelong Ocean Kingdom and Sanya Haichang Ocean Park. In 2014, Zhuhai Chimelong Ocean Kingdom was officially opened to the public. As the world's largest marine theme park, it received 8 million tourists that year. In 2018, tourists were received throughout the year. The number exceeded 10 million for the first time and ranked 11th among TEA global theme parks. It is also a marine theme, and in the Guangdong-Hong Kong-Macao Greater Bay Area, Zhuhai Chimelong Ocean Kingdom invested 50 billion yuan, and its natural vision and sensory experience are better. Moreover, in terms of customs clearance convenience, Zhuhai Chimelong has another advantage. "
, and Haichang Ocean Park is the largest marine theme park and supporting commercial property developer and operator in China. It has the highest animal ownership in the industry, with a total of more than 66,000 marine organisms, and its conservation level and operation management level are in the leading position in the industry. From the first ocean park in 2002 to the Sanya Dream Ocean City in January 2019, Haichang Ocean has 8 ocean theme parks and 3 comprehensive entertainment theme parks.
At the same time, the guests who went to the Ocean Park to visit are gradually disappearing.
Since June last year, social unrest in Hong Kong has caused the number of tourists visiting Hong Kong to decrease. The number of inbound tour groups and free travelers in Hong Kong Ocean Park fell by more than 60% year-on-year from July to December 2019. In order to encourage employees to overcome difficulties with the park during difficult times, Ocean Park will distribute red envelopes of 600 yuan and 300 yuan to full-time and part-time employees in the spring New Year, respectively, and the amount is also reduced by half compared to last year.
This year, due to the impact of the epidemic, Hong Kong has been in seclusion for nearly three months, and Hong Kong Ocean Park also announced its closure in January. At the same time, due to the severe operating environment, the park has implemented a number of cost control measures without affecting daily operations, including animal care, service, performance activities and tourists' safety, including "freeze wages" and encourage employees to apply for unpaid leave or retire early, but will try to avoid layoffs.
CEO Li Shengzong told the media on May 8 that the park has lost 1 million passenger flow since its closure, and its revenue has been greatly affected, and he is worried that the capital flow will not be in the past September. Li Shengzong himself will leave office and retire in July.
Former Chief Executive Leung Chun-ying once publicly stated on social media, "The financial difficulties of the ocean park may be in management, but no one seems to have discussed a very important factor - external competition. In 2013, the Chimelong Ocean Kingdom located in Zhuhai opened. Hong Kong's Ocean Park is no longer a single city business. Mainland residents do not need to apply for a pass to visit. Today, 7 years later, Chimelong covers an area of 2,000 acres and has 5,000 hotel rooms. There are more than 10 million tourists entering the venue every year. Now there are plans to expand. Friends who care about the survival of the ocean park. It is recommended that everyone inspect with a learning attitude."
" Ocean Park is in danger." , In fact, the problem is not complicated. If the epidemic passes two or three months later and mainland tourists re-spent, will there be demonstrations again and the park is irritating? These answers determine the life and death of the Ocean Park. In the past, some banks borrowed from the Ocean Park, but now they don’t lend. Why? Let’s look at the feasibility of government funding for Ocean Park with a completely uncomplicated way of thinking: If the government pays off or removes all debts, and then sends out the entire Ocean Park for free (but not stops operations), will any merchants dare to take it? I think it’s time for the government to let go. Financially we can’t afford this hole. Ocean Park without mainland tourists will definitely go bankrupt." Liang Zhenying said.
But losses seem to become a doom that Hong Kong theme parks cannot escape.
Public information shows that as of the end of September last year, Hong Kong Disney's net loss in fiscal year 2019 was approximately HK$105 million, a sharp increase of 94% compared with the net loss of HK$54 million in 2018.
In contrast, Hong Kong Disneyland held an online press conference on April 12 and announced its performance report. The report shows that from October 2018 to September 2019, Hong Kong Disneyland's revenue remained at HK$6 billion, the same as the revenue for the 2018 fiscal year. In the first nine months of the fiscal year 2019, namely from October 2018 to June 2019, Hong Kong Disneyland performed strongly, with revenue rising 11% year-on-year, number of admissions rising 5%, and hotel occupancy increased by 8 percentage points.
Hong Kong Disney CEO Shanni Yeung said that the security problems caused by the social unrest in Hong Kong in the second half of last year hit the local tourism industry, affecting Hong Kong Disney's performance from July to September last year, resulting in the park's profit before interest, taxes, depreciation and amortization for the whole year falling 17% to HK$1.1 billion, with a net loss of HK$105 million.
Under the mid-life crisis, Hong Kong Ocean Park has begun to accelerate its transformation.
Hong Kong Special Administrative Region Government Commerce and Economic Development Bureau Secretary Yau Teng-hua said on May 21 that Hong Kong Ocean Park plans to transform its traditional theme park into a resort with education and conservation functions.
According to him, Ocean Park will consolidate and give full play to its advantages in education and conservation in the future, and be committed to relevant research and promotion; depart from the traditional theme park model, reduce the construction or investment in mobile games and other facilities, and rely on the natural and cultural landscape of the South District of Hong Kong Island to build a resort and leisure area.
In addition, in terms of business model, Ocean Park will re-examine the five issues of fund source, operation model, legal framework, land use, and southern district development, so that the park can increase revenue and reduce expenditure, avoid funding from the SAR government, and operate more resiliently.
The Bureau of Commerce and Economic Development added that the Marine Park will reduce the scale of the park. At the same time, adjust the operation model, functions and legal framework of the Marine Park, consider allocating some facilities to be managed by other institutions, or cooperate with commercial institutions to change the charging model, etc.
Based on this, industry insiders generally believe that the future development of marine parks is inevitably inseparable from the pace of accelerated commercialization.
and supporting the park to take the commercialization route is not necessarily equivalent to full privatization and marketization. For example, in terms of operation and appointment of management, market elements can also be added to increase the motivation of the park to pursue huge profits. Since the Ordinance states that the members of the board of directors of the park are appointed by the Chief Executive, and the Hong Kong government, under this power, may consider adding assessment standards for board members during the term of appointment, such as the increase in admissions and income, as considerations for renewal or accountability; or in terms of board remuneration, a reward and punishment mechanism is added to measure the financial performance of the park.
Editor-in-chief Li Wu
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