Laying new foundations for the attractions industry in Asia
By Thibault Paquin
Thibault Paquin (left) is the founder and principal of Celebrating Life Asia, an independent consultant and development company for the leisure & entertainment industry. He is also the managing director of iVenture Card Asia, which is operating attractions passes in Hong Kong, Macau and Singapore.
Originally from France, Thibault holds an MBA from HEC Paris; he is an expert in hospitality and leisure development in Asia where he spent the last 10 years, partly with Accor Hospitality, between Thailand, Indonesia, Philippines, South Korea, Vietnam, Singapore and Hong Kong.
The first of a series of reflections on the recent evolutions of the Asian attractions industry, here I look at how our industry has gained incredible traction and become much more integrated. In this pivotal moment new foundations were laid: money, brands and synergies.
For anyone who does business in Asia, it’s easy to experience the constant obsession with money. But the money I am talking about here is not the ‘making money’ one but the ‘capital money’ one; what every business needs to be able to innovate, transform and create value. Well, good news, this capital money is definitely coming to Asia. Investors from the region and beyond seem to have decided it is time to seriously look at Asian attractions.
Take Shanghai Disneyland for example. Together, the Chinese government (Shendi Group) and an American investor (Disney!), decided to embark on Asia’s biggest theme park project: a US$4.6billion investment (incl. hotels and additional facilities). A US$2billion loan from 12 banks – syndicated by the China Development Bank – was already secured. Now, that’s a leap of faith! But like for other theme parks, Disney and its partners are expecting great economic impact from Shanghai Disneyland. Recently, the Shanghai Statistics Bureau said the park was behind much of the 30% increase in FDI in Shanghai this year.
Going down the list of the world’s largest attractions companies, let’s look at Merlin. 2012 was a big year for the Blackstone-owned group in Asia: 3 new Madame Tussauds (Bangkok, Busan, Tokyo), Legoland Discovery Centre in Tokyo and the first Legoland in Asia (Malaysia) at a cost of US$240million and for which Merlin already said they want to increase their equity share to 20%. Here the message is the same: now is the time to invest in Asia. The company is not afraid of sharing its ambitious development objectives: more attractions in Malaysia (maybe Madame Tussauds in Kuala Lumpur), Legoland in Korea and Japan (Nagoya), Legoland Discovery Centre in Bangkok, Hong Kong and of course entering the Singapore market!
Beyond foreign investors' confidence, the story of Themed Attractions and Resorts (TAR) is even more revealing of the overall climate. The leisure arm of Malaysia’s sovereign fund Khazanah – which portfolio includes KidZania Kuala Lumpur, Legoland Malaysia, Hello Kitty Town and 2 other attractions – has already, together with partners, fueled US$290million worth of investment. And it recently announced that it was exploring to grow via public offering: the ultimate sign of confidence. The combination of strong tourism growth in South East Asia, good performance of recently opened attractions and long term views when other industries can’t offer the same have made Asian attractions hot even for small individual investors.
In summary: get started with visible projects, create some buzz, attract institutional investors and then maybe go for IPO! Isn’t it the same for any other established industry?
Wonderla, which operates a theme park in Bangalore in India and is building another one in Hyderabad, also has dreams of IPO. But will it be possible without an international brand? And this leads to my second point: our industry has become very brand conscious in Asia.
Yes, Ocean Park is beating Hong Kong Disneyland in attendance. But who would put their money on such a big non-branded theme park today!? Let’s face it, we have become obsessed with brands and IPs.
Universal Studios Singapore does not have enough of its own IPs so they had to acquire more from Dreamworks (Madagascar) and Sesame Street. Hong Kong Disneyland went with Marvel for its new zone announced for 2017.
Smaller regional parks also see a huge advantage in branding and are prepared to pay for it. In Pattaya, the Cartoon Network water park will benefit from a definite advantage over its competitor the Ramayana water park when they both open by 2014-15. And in Perak (Malaysia) theme park developer Sanderson Group is counting on the strong appeal from international IPs for its animation theme park set to open in 2015.
IPs that had gone a bit quiet are coming back such as Hello Kitty (Malaysia, China) and IPs that I would consider more like a short term phenomenon even have their own theme park: Angry Birds in China.
In China still, where everything is bigger, large theme park developers are courting the few big international IPs left to stand a chance to compete against Disney. The newly formed Oriental Dreamworks joint venture plans to build the US$3billion ‘Dream Centre’ around Shanghai. Game on!
Local IPs participate in the trend too. Asian attractions are now used to build visibility and appeal for local IPs. This is no different than what Disney or Universal Studios did early days in the USA, Asterix in France or Lego in Denmark. China took the lead in Asia with the 2 largest theme park operators, OCT and Fantawild, being also media companies. In fast developing South East Asian countries local IPs also have big ambitions. Ask the owners of Upin & Ipin in Malaysia and they will tell you how much they would love to have their own theme park!
With the entry of new players like Trans Studio (Indonesia) and Wanda Group (China), the model just described – and prevailing in China – of integration with a combination of theme park, media company, ride manufacturer and developer is evolving towards a new model more based on synergies.
Actually OCT probably started the trend. In a big announcement in late 2011 they said they were evolving from a ‘traditional business model’ to become a champion of the culture industry in China with new businesses in art museums, art performances, high-tech entertainment and education.
Next was the Wanda Group, one of the largest property developers in China, who announced, following the acquisition of AMC Theatres in September 2012, the creation of the Beijing Wanda Culture Group featuring film, TV, theatre and theme parks. Wanda’s chairman said he wants to bring his group in the top 10 of global culture industry players, not too far from Disney! Beyond the use of a theme park to complement (or justify) a new residential area – which China was blamed for doing too often – it is about creating sustainable synergies between cultural & entertainment content and the group’s other activities.
In Indonesia, Trans Studio took everyone by surprise when it opened first in Makassar and then in Bandung 2 huge indoor theme parks. The owner, CT Group, is one of Indonesia’s biggest conglomerates, which started in natural resources and diversified in consumer market industries: bank, insurance, media (TV), retail (Carrefour), lifestyle, travel and now entertainment. For its owner, Mr Chairul Tanjung, theme parks are a way to leverage his other businesses. Take Trans Studio Bandung for example: the content comes from the group’s 2 TV channels and it is integrated with the Bandung Supermal (featuring Carrefour and owned by the group). To this add further cross-promotion opportunities with the group’s bank and insurance customers and its own travel agencies, coffee shops and hotels on site.
But thinking about it. It all comes from the growing Asia middle class. It brings domestic growth therefore confidence of foreign investors, new levels of wealth for local tycoons and disposable income for small local investors to look at new industries. It brings growing domestic consumption therefore an overall climate where brands perform well and are in demand. It brings more sophisticated consumers who seek a more cultural and holistic form of entertainment.
So let’s all thank the 1 billion+ middle class in Asia for allowing our industry to lay new foundations.