While the rest of the world’s economies seemed to be stuck by the side of the road with their hoods up and smoke pouring from their radiators, Asia was zooming by, leaving everyone else in the dust. That was the picture in March. But by April, news had arrived of a deadly virus called SARS—severe acute respiratory syndrome. So far, the disease has claimed far fewer lives than the flu in an average year, but the psychological trauma of this untreatable virus has been devastating in lost business and tourism. Streets in Peking, normally crowded with jostling pedestrians, cyclists, and buses, are virtually deserted. Public spaces are being restricted or closed until the government has regained the upper hand in controlling the outbreak, and no spaces are more likely to be impacted than amusement parks. The unanswered question at this moment is how long and how painful the SARS episode will be. However, the essential building blocks for an expansion of Southeast Asia’s attractions industry remain in place, and those involved in the region remain convinced that the crisis is a transitory one. Even before the SARS outbreak, trying to assess any single topic concerning Asia was all but impossible, and the amusement park industry is no exception—there are so many countries, with such vastly different economies, cultures, histories, and expectations. Still, it’s easy to look to the East and find good cause for long-term optimism in the attractions industry once the dust has settled and the tourism industry returns to business as usual. Bob Rogers, head honcho of BRC Imagination Arts, is unequivocal about the prospects for the amusement biz in the East. “Asia is waking up and it’s going to roll,” says Rogers, “It’s probably got the biggest potential of anywhere in the world over the next 20 years.” That rosy assessment has some legitimacy in spite of current events. With manufacturing burgeoning in countries like Singapore, Malaysia, Thailand, and more recently China, the discretionary free time and money of the teeming Asian populace is changing relatively quickly. Entertainment entrepreneurs from both sides of the Pacific have flocked to the area to create entertainment sites to help those folks find uses for their newfound leisure dollars. That included the world’s largest media/entertainment corporations, Disney and Universal Studios. Japan has already reaped the benefits of their ongoing rivalry. Mickey got first dibs in 1983, with Tokyo Disneyland, USJ opened in Osaka in 2001, and Disney Sea opened adjacent to Tokyo Disneyland six months later. The parks have all been successful despite the country’s well-documented financial slump. And the battle goes on elsewhere in Asia. The Disney Company plans to open its Hong Kong park in 2005, and both corporations are waging open war to gain access to mainland China. For independent operations, the results have been somewhat more mixed. Mario Mamon, president/CEO of the Enchanted Kingdom in the Philippines, points out significant differences between entities like Disney and Universal and less-established attractions. “These media and entertainment giants have seen the potential of the Asian Market,” comments Mamon, “But we should remember that they are selling established brands in the amusement business, brands and characters that are household names. Independent and local entrepreneurs have found it quite difficult to maintain and sustain their initial successes.” There’s also the simple fact many Asian countries until recently had no attractions at all to speak of, a factor emphasized by Jack Rouse, CEO of Jack Rouse Associates. Says Rouse, “In [the U.S.] it’s a mature industry. Disney’s been around for 50 years. [In Asia] you’re dealing with an emerging industry.” With so much room for growth, the expansion of the entertainment business is perhaps not so surprising. “It wasn’t too long ago these were third world countries,” Rouse states. The stagnant economies in the rest of the world provide the backdrop for the zeal for Asian projects. JRA President Keith James puts it bluntly, “We own a design and production company—we tend to go where the work is, and there is no work in the U.S. entertainment industry. Right now the entertainment work in the world is focused in Asia.” James is candid about the effect the downturn in the U.S. economy has had on entertainment venues. “Notwithstanding what Washington says, our industry has been in a recession, and it’s not coming out,” says James. “Our industry is discretionary. People don’t have to do what we do. When the economy’s bad, we’re an easy thing to eliminate.” However, prior to the havoc SARS wreaked on the region and the controversy that followed, the explosive growth in the Asian attractions industry wasn’t merely a function of the momentary relative health of those countries’ economies. And ironically, the country most poised for an economic boom was China—the same country that’s taking the brunt of the SARS beating. The Chinese Phenomenon A few months ago, China’s amusement industry was flourishing, says James. “I think that China is an entity unto itself,” he says. That particular opinion was repeated by every industry observer. The country has become a manufacturing giant, a fact confirmed by the ubiquitous “Made in China” label. In the 27 years since Mao Tse-tung died, China has transformed itself from a dour communist state to a thriving capitalist economy. James says, “China is trying to jump several generations at once . . . they have a very, very well-educated and rapidly growing middle class. Those people want to be entertained.” No one has had a better view of China than Randolph Guthrie, who worked extensively in the Asian hospitality industry before taking the reins at Hong Kong’s unique sea-life-themed Ocean Park. “China is one of the few countries that still had economic growth while the rest of the world slowed down,” says Guthrie. “Today there are hundreds, perhaps thousands, of millionaires in China, entrepreneurs who have done very well.” He points to the explosive growth of China’s travel services industry, which for all intents and purposes didn’t exist prior to 2000. Governmental travel restrictions have been falling by the wayside, with predictable results—in three years the number of authorized Chinese booking agents has gone from four to 500. The impact on Ocean Park’s visitor profile has been noticeable. A few years ago, Chinese visitors arrived mainly from major metropolitan areas. But that began to change. “We have [visitors] from Mongolia, from Szechuan Province, and Hunan Province we see a much larger variety and much larger numbers.” The experience of Mike Demetrios, chairman and CEO of Intra-Asia Entertainment Corporation, is a paradigm for the new Chinese entertainment model. The Fuhua Amusement Park in Weifang was acquired by Neo-Luck, a state-run conglomerate that now boasts $400 million in assets and $300 million in sales. Intra-Asia was created as an instrument to access American financial institutions. “The Chinese are very good businessmen; they’re very frugal with their funds, very cost conscious,” says Demetrios. What they don’t yet have, however, is a sense of entrepreneurial imagination. “They really need the creative input from the West,” Demetrios says, “because they don’t have a culture for that yet in the amusement park business.” Anyone doing business in China must acknowledge the financial and social constraints of the culture, a fact Demetrios takes as an article of faith. For example, the pricing structure of the Weifang park reflects the realities of China’s one child/family policy. “When a family comes to the park, it’s often seven people,” states Demetrios, “Four grandparents, two children, and one grand-child. So you can’t have one ticket price, because you’re not going to have grandparents on the roller coasters. Entrepreneurs who disregard those kinds of realities in China do so at their peril. The country is not a golden goose that automatically lays golden eggs. Remarks Jack Rouse, “There have been some colossal failures.” The demise of those parks may have been partly the result of a naive and simplistic view of China. Explains Demetrios, “People think, my God, there are 1.3 billion people over there, there’s gotta be a market. Well, the managers make $3,000 a year, and other people make $2,500.” The Intra-Asia exec recounts the collapse of American Dream Park, near Shanghai, that suffered from its misconceptions regarding the facts of Chinese daily life. “It took an hour and three quarters by taxi to get from downtown Shanghai. It was sized for an attendance of three million, and in an industrial area.” In a country where the vast majority of the population still relies on bicycles and buses for transportation, this proved to be a miscalculation that closed the park. But years of building and success and strong foundations are suddenly suffering from the tourism paralysis caused by SARS, putting China’s on-deck success on the back burner, at least for now. The Road to Riding High In spite of SARS and all the bad press that followed, many entrepreneurs believe Asia will bounce back and still experience major success. Given that scenario, attraction developers who hope to succeed in Asia still have work cut out for them. The profile is distinct—they must be people who revel in the challenges posed by dealing in foreign cultures, with unfamiliar governmental rules and regs, and vastly different approaches to the planning, building, and running of the parks. “The economic model of these parks is considerably different than you’d find elsewhere in the world,” says James. “The attendance potential is quite high, but the availability of capital is not that high.” That general rule does have exceptions, especially in cases where there is substantial government funding. Ocean Park is a case in point. It opened in 1977 as a modest aquarium and sea lion facility under the auspices of the quaintly named Royal Hong Kong Jockey Club. Ten years later it became an independent statutory corporation of the Hong Kong government, charged with a unique blend of responsibilities—entertainment, recreation, education, and conservation. The result is a one-of-a-kind hybrid institution that manages to be a dynamic learning center, state-of-the-art sea-life preservation organization, and theme park. Although the park’s genesis is not typical of many Asian facilities, which often start as simple amusement parks in town centers, its rides are indicative of Asian tastes and expectations. Notwithstanding the recent installation of the towering Turbo Drop that can bring hearts into the throats of its passengers, many Americans would find the adrenaline level fairly tame. “There are many Asians who really want to max the thrill factor,” says Guthrie, “but that has not yet taken hold here in the way it might have in Europe, or certainly North America.” Although the park has its share of double loop and negative-gravity coasters, Guthrie admits, “We’re not in the business of trying to push the envelope.” Beyond the complexity of the rides, anyone aspiring to create a profitable attraction in Asia will need to think in Asian terms. This means paying scrupulous attention to cultural idiosyncrasies and preferences. Says Bob Rogers, “You have to make sure that you have local cultural advisers at every step that are capable of helping you understand the differences, and getting it right for the local audience.” That site-specific sensitivity extends to the financial models used to develop projects in Asia. Rogers says, “When you move into some of the emerging markets, you have to understand what’s going to work in their market, not only from a creative and cultural point of view, but also from a price point and budgetary point of view. You need to be able to think on a much more modest budgetary scale.” Keith James offers much the same advice. “There aren’t a lot of locations where you’re going to be able to walk in and do a Disney or Universal. That’s not practical, because notwithstanding the middle class is growing, those projects cost too much to build, and the tickets cost too much.” Those considerations are even more critical in countries that have barely begun to climb out of the economic basement brought on by the ’97 Asian meltdown, according to Mario Mamon. “The initial high cost of setting up a park from design to construction and operation also contributes to how it can survive in the long run, because it extends the time when a rate of return can be realized, especially in economies where the per capita spending of the target market is very low.” Mamon knows this from firsthand experience. He opened the Enchanted Kingdom just as the implosion began. He’s frank enough to admit that the going’s been difficult. “It was only at the turn of the century that we have experienced a steady rise in revenues and attendance.” Westerners becoming involved in Asian projects above all need to set aside their preconceived notions about how things should be done. “The basic entry point is leave your perceptions at the door,” offers Rouse. It’s his belief that Asian business partners are looking for energy, enthusiasm, and creativity, not facile answers that don’t work in the Asian model. Concludes Rouse, “There’s a very steep learning curve . . . when we step into another culture. There’s an awful lot of shut up and listen.” Clearly, that advice is all the more urgent now with the arrival of SARS. The news is not all glum. There is some legitimate cause for hope. As of this writing, two areas have had their travel advisories downgraded to an alert—Vietnam and Toronto. Scientists are close to issuing a reliable diagnostic test that will confirm or rule out the presence of the virus. Governments around the world, China included, have put control of the disease at the very top of their agendas. SARS is not likely to disappear any time soon. Still, it’s not unrealistic to hope that it can be managed well enough to let the world breathe easily again. The SARS Factor Last November, villagers in China’s Guangdong province were diagnosed with a new and troubling disease. They had a dry cough, a persistent fever, and other lingering respiratory symptoms. The illness seemed impervious to all known antibiotic and anti-viral treatments, and while some recovered, a disturbing percentage succumbed to the mysterious infection. The ailment now has an all-too-familiar name—SARS, severe acute respiratory syndrome. Not since the Tiananmen Square uprising in 1989 has China faced a public crisis of the magnitude of SARS. The new disease has brought the chugging economic machine to a virtual standstill, with tumbling retail sales, and a near collapse in domestic and foreign tourism and nonessential business travel. While the long-term prospects for the country and its immediate neighbors still remain promising, the months ahead may be very painful for the government, businesses, and citizens alike. Sadly, much of the misery was avoidable. It’s now clear that Chinese officials kept the outbreak quiet for critical weeks, either through mere bureaucratic bungling or a deliberate attempt to avoid the economic impact of a perceived health emergency. Their mismanagement of the situation allowed the SARS virus to gather momentum, when world health organizations could have provided expertise to confine the outbreak. At the time of this writing, the disease has claimed at least 588 lives, with more than 7,500 cases reported in 29 countries worldwide. While the vast majority of those who become ill survive, the prospect of a highly communicable disease with no effective treatment has added a new level of concern for parks that rely on crowds of visitors. SARS is now confirmed to be a member of the coronavirus family, which includes viruses responsible for the common cold. Researchers are convinced that the disease spread from animals to humans and categorically dismiss any suggestion that it could be the work of terrorists. At present, the principle tools available to fight the outbreak are isolation of infected patients, avoiding unnecessary travel to areas with high infection rates, wearing surgical masks in public spaces, and common sense precautions that include frequent hand washing with liquid soap and the use of disposable towels. The Chinese government has quarantined several hospitals and is closing all public spaces. Hong Kong has been struggling to cope with the situation. Ocean Park’s Randolph Guthrie has already witnessed the impact of the disease on attendance. “We had 5,000 people on a Sunday, and normally we would have 15,000.” He believes that SARS is gathering momentum. “It could get worse before it gets better.” The park has reduced the numbers of visitors that can tour enclosed exhibits at any one time and has hired additional workers to help sterilize the facilities with disinfectants. Any staff member who has a family member infected with the disease is given a paid leave of absence for the duration of the illness and its subsequent incubation period. Events scheduled for the amusement industry itself have been impacted, including the cancellation of the Asian Attractions & Theme Park Summit in Shanghai and IAAPA’s Asian Amusement Expo in Singapore, which was scheduled for July 16 to 18. But some are more hopeful. “We're weeks away from clearing this up, not months,” says Darrell Metzger, chief executive of Singapore’s Sentosa Development Corp. Metzger was collaborating with IAAPA on bringing in speakers to the Expo. Keith James shares Metzger’s basic optimism on the subject. “I don’t expect it to do anything more than possibly slow down the projects we’re working on,” he says. He’s confident that as scientists learn to identify, manage, and eventually cure the disease, the crisis will subside. And it hasn’t dampened his enthusiasm for the continent, or his work there. Though he admits to having surgical masks in his briefcase, James says, “I can hardly wait to get back.” James’s fervor is admirable. The unanswered question—can amusement park visitors wait to get back?
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