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How will a formidable mega resort in Singapore affect Hong Kong’s market share?
Jolene Otremba
14 September 2008
Things haven’t been easy for Hong Kong Disneyland since the start, with revenue and attendances failing to meet targets in its first three years.
The government, which is the majority stakeholder with 57 per cent equity in the park, continues to put a positive spin on the venture, but the positive stories have been in short supply. So it would appear that the last thing it needs is a major regional competitor.
But that is what it is going to have as Singapore opens the latest chapter in its long-standing rivalry with Hong Kong by launching a hugely ambitious theme park.
In less than two years, the mega Resorts World at Sentosa will open. Its aim is quite simple - to corner the Asian family tourism market.
Resorts World will feature a dizzying array of attractions, including Universal Studios Singapore (Southeast Asia’s first, which will house the world’s first Shrek castle, offering a “4D” experience), and the world’s largest marine park, spanning 8 hectares, which will be home to as many as 700,000 aquatic animals. And that’s not all. A separate 30 million litre lagoon will house whale sharks among its marine attractions.
There will also be a studio for Mark Burnett Productions Asia (which created the Survivor TV show), a Hard Rock Hotel, ESPA spa, a maritime museum, and a water theme park. There will be six hotels, along with convention and exhibition facilities, and an array of dining and shopping outlets. Its backers say it will be a one-stop shopping, entertainment and family destination that will take about five days to get around.
It would appear to be a formidable challenge for Hong Kong Disneyland and Ocean Park.
“The region has not seen any tourism product of this scale,” said Shirley Chen, deputy vice-president of resort sales at Resorts World. “We are confident that Resorts World at Sentosa will make a splash when it opens.”
If the war of the theme parks has begun, then the Lion City is firing some big guns.
The two Hong Kong parks may already be feeling the effects, because Resorts World is aggressively hiring staff here as it seeks to add 8,000 personnel by the end of the year. It says the response has been positive. “Job seekers are passionate about being part of this chapter of history in Singapore’s tourism sector,” said Resorts World spokesman Krist Boo.
“To date, we have hired about 10 managerial staff from Hong Kong, but as we gear towards our opening in 2010, we will start to ramp up recruitment, and will continue to hire from all over the world.”
The question now is what the response will be from Hong Kong Disneyland and Ocean Park.
Based on World Tourism Organisation figures, the S$6 billion (HK$32.4 billion) mega resort forecasts an estimated 15 million visitors - both local and from overseas - within the first year.
The figure does not seem so far-fetched considering Genting Highlands, a gaming, theme-park and entertainment mountain resort in Malaysia, drew 19 million visitors last year, while Universal Studios attracted about 46 million visitors worldwide.
The forecast figures trump both Hong Kong Disneyland, which saw 5.2 million visitors in the first year after it opened in September 2005, and Ocean Park, which had 4.38 million visitors in the 2005-06 financial year.
If they are worried, neither Disney nor Ocean Park is saying, as they continue to voice optimism about the future.
“Hong Kong Disneyland is offering a unique experience, unlike other scenic spots,” a spokesperson said. “We offer the Disney difference and a magical experience to our guests, and ongoing guest surveys have consistently found that over 90 per cent of park and hotel guests are satisfied with their experience at the resort and intend to visit again.”
This comes despite common visitor complaints that the park is too small.
Ocean Park chairman Allan Zeman said Resorts World wasn’t much of a threat because “we are at least three hours apart by flight. Hong Kong is lucky in that we are on the doorstep of China; Singapore is not.
“Ocean Park is of a totally different ilk ... we are a marine-animal-based theme park with a vision to connect guests with nature through education and raising awareness for conservation.
“Our attractions are geared towards enrichment and engaging guests to respect nature ... we will remain a stronghold in our own niche.”
Mr Zeman’s optimism has some merit, as Ocean Park announced in June that unaudited figures revealed it had passed the 5 million attendance figure.
Despite suffering losses of more than HK$1.5 billion in its second year, Disneyland is expected to reach its first-year attendance target of 5.6 million visitors this year.
Resorts World expects to contribute S$2.7 billion to Singapore’s economy, translating as 0.8 per cent of its gross domestic product, while creating about 50,000 direct and indirect jobs in a city with one of the lowest unemployment rates in the world.
However, the Hong Kong operations argue that they are catering to a different demographic, so there is no direct competition. And academics agree.
“About 55 per cent of inbound tourists to Hong Kong are mainlanders, because we have the advantage of geography and visa-relaxation schemes, so I don’t see any major effects in the near future,” said Leung Wai-kin, associate professor at Chinese University’s school of hotel and tourism management.
“I think it is a subtle competition between Singapore and Hong Kong rather than a direct one. Both want to become an international tourism destination, so Singapore will try to attract mainlanders, while we hope to increase tourism from Southeast Asia. So there is competition, albeit subtle.”
Hong Kong Disneyland focuses its efforts primarily on three major markets: the mainland, Hong Kong, and the rest of Asia. In its second year of operation, Hong Kong visitors accounted for 31 per cent of park admissions, 15 per cent were from southern Chinese cities, 25 per cent were from elsewhere on the mainland, and the rest were international visitors.
Forty-five per cent of visitors to Ocean Park are local, 44 per cent are from the mainland, and the rest are from Southeast Asia and elsewhere.
“The potential is huge [in the mainland], with a rising living standard among the 1.3 billion population and the growth in FIT [foreign independent travel] which comes from the relaxation of travelling restrictions,” Mr Zeman said.
To capitalise on the mainland’s outbound-tourist market, Ocean Park has set up a second representative office in Shanghai. And now it is also eyeing the South Korean and Indian markets.
“Imagine, India has huge market potential - we have 1.1 billion prospects,” Mr Zeman said.
Nevertheless, Resorts World is targeting the same markets.
It expects 60 per cent of its visitors to come from overseas. Figures from the Singapore Tourism Board show the Lion City had 10.3 million visitors last year, a 5.4 per cent rise on the previous year, but a figure that raises the question: How does the resort expect to get 15 million visitors?
In 2007, Hong Kong trumped Singapore with 28 million visitor arrivals, with mainlanders accounting for 15.4 million of that total.
Regardless, Resorts World has deployed a sales network spanning 18 cities throughout Asia, with plans to open two more in China by the end of the year. It is forging partnerships to take Hong Kong on at the conference game by painting itself as an attractive alternative.
Travel agents in Hong Kong have hinted that Resorts World presents an exciting business prospect as they would be able to offer more package tours to Singapore.
A spokesman for the Hong Kong Tourism Commission acknowledged that competition was intensifying as the “development of tourism is vigorous across the region and new tourist attractions are emerging”.
“Every tourist destination in the region needs to strive to consistently sustain its appeal,” he said.
Professor Leung agrees. “It’s not just Singapore, but it is also Macau and the mainland. Even in the area of exhibitions and conferences, Hong Kong is facing growing competition. But we are heading in the right direction, as long as we keep things fresh.”
That is exactly what Hong Kong Disneyland plans to do; to drive growth and face competition by promoting its convention facilities, while Ocean Park has abundant plans up its sleeve.
The latter’s master redevelopment plan began in 2006 and is due to be completed in 2012-13, doubling its existing attractions from 35 to 70.
The redevelopment is projected to create 37,100 jobs by 2022 and the park is tipped to contribute 0.5 per cent of Hong Kong’s overall GDP by 2012-13.
Ocean Park experienced record admissions revenue in the 2006-07 financial year of HK$619.3 million, up 12 per cent on the previous year and providing a record surplus of HK$171.3 million.
Mr Zeman said Resorts World could even benefit Hong Kong.
“With more major theme parks in the region, people in general will be more attuned and aware of the different offerings. It will help put theme parks on their discretionary `things to do’ list, and that is good,” he said.
Resorts World agrees, saying the products are very different. “I think it adds colour and variety to the leisure options for travellers in Asia,” Ms Boo said.