Park Profile
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Dinner with the penguins at Tuxedos restaurant
Symbio ligts up Aqua City
Walruses are among the animal
inhabitants of Polar Adventure
.We did
not take the normal approach to feasibility, which is
sometimes to build the park you want rather than the park you can afford. We wanted to build a park that never becomes a burden to the taxpayers of Hong Kong
Polar Adventure
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taxpayers of Hong Kong. Even though we are ultimately owned by Government, every cent that has been lent to this park will be paid back. Nothing has been given for free; even our interest rates on the government loan are higher than current market rates. Ocean Park has always been a frugal and prudent company. I have to give a nod to my entire management team – they are extremely good at what they do. I am really proud of the fact that we generate a nearly 35% EBITDA, which for a 365-day a year animal-based park, is a rather unusual figure. As I will often say, not-for-profit is not a business plan, it’s a tax status. We never had any loans prior to the MRP and I admire the fact that, even through the very tough years, the park was able to survive on its own cash reserves. By the time I arrived in 2004, we were down to about HK$100 million (about US$12 million) in reserves. That was maybe enough to fund three months of business. We then set about generating cash reserves that would cover about two years of operating expenses if no revenue was coming in. That was a very conservative place to be but we felt that we had no other option as a government-owned facility with an obligation to the employees and the people of Hong Kong. In the last seven years we have taken our reserves to over HK$2 billion and exceeded both revenue and attendance expectations, which will allow us to pay back the MRP loan over a roughly seven-year period.
Outstanding results We have achieved some results that I think are really outstanding in the industry. In terms of attendance we are three years ahead of our plan, with over 7 million guests in the last 12 months. We are only a few weeks into the next fiscal year but we are already tracking higher than last year. I think one of the greater challenges now will be to see if we can spread demand out over the year rather than having attendance peaks that go beyond our theoretical capacity in the park. Before the MRP we were not even offering one entertainment unit per guest per hour during peak periods; we were offering maybe 0.7. That meant guests were waiting between an hour and maybe two hours for attractions during peak conditions. We wanted to take that metric to a different level and increase our instantaneous capacity in the park to 36,000 people who, even under the most extreme conditions, could enjoy two entertainment units per hour. This became a critical driver for us as we chose new attractions and examined capacities and throughput. I can say very confidently we are now looking at about 80,000 entertainment units per hour. The challenge now is to operate efficiently and ensure guests get a real value for their money when they choose to spend a day at Ocean Park. We are charging a lower price than some local attractions, but the comparative experiences in the Mainland tend to be cheaper and we still have a very price-sensitive customer.
In this southern part of Asia, there are many destinations, along with new attractions appearing all the time. But I believe, kind of like Central Florida or Southern California, more parks create critical mass and more opportunity. We really are a complement to Disney, and a complement to the OCT parks, Chimelong, and to Macau. As long as we remain culturally relevant to the markets we serve, Ocean Park should always be on the itineraries of visitors coming to Hong Kong.
Attendance is so good the park is shouting about it on its T-shirts!
oceanpark.com.hk Tom Mehrmann was talking to Owen Ralph
SEPTEMBER 2012
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