External factors that have affected Hong Disneyland

This is the second part of a two-part series examining Hong Kong Disneyland.

Demographic Factors

Located on the south-east coast of China, Hong Kong occupies an area of 1,104 square kilometers and has a population of over 7 million. Hong Kong is one of the biggest hotspots in the world. The island has gained a status as one of the busiest and most populated locations. Hong Kong is a shopping place and is visited mostly for frequent shopping sprees by most mainlanders and tourists. The target market for Hong Kong Disney consists predominantly of family-oriented Asian visitors, particularly those from mainland China, Taiwan, and Southeast Asia.

The focused target market for Disneyland would be families and Disney enthusiasts that are both in the region but also tourists that come to Hong Kong for tourism. Since Hong Kong is quite a wealthy city, as it is one of China’s financial capitals, Hong Kong Disneyland’s ticket price reflects what the average Hong Kongers family can afford with many exceptional packages to make the experience worthwhile. The average household income of Hong Kong residents is around HK$28,000 and HK$16,500 for individuals, both for those living in the cities (South China Morning Post, 2018). From the median household income, if we can infer or presume that the figures given are the overall reflection of the entire population in Hong Kong, the price will most likely be affordable for most Hong Kong residents.

The population would have some outliers, which means that others will have exceptional worth and will crash on one end of the continuum. Therefore, others would earn even less than the median household income. Hong Kong is still comparatively recognized for its high cost of living, despite having a very respectable income per family. Furthermore, it is also ranked by CNN Travel as the joint-most elevated cost of living cities in the world (CNN Travel, 2019).

Economic factors

With an economic freedom index ranking of 90.2, Hong Kong maintains its position as the freest economy in the world for 2019. Hong Kong has a looser monetary policy that back in 2018 triggered intense economic development.

In January 2020, average commodity prices rose by 1.4 percent (compared to the same month a year earlier). It is smaller than the comparable rise of 2.9 percent back in December 2019, considering an improvement. The expected inflation for the year 2020 is to be 2.5% by the Hong Kong administration. Sian Fenner, an Asian economist at Oxford Economist, stated that 'the protests are impacting retail sales' and also the mass protest indirectly 'impacting tourism'. Additionally, if it impacts exports, the US-China trade war 'adds oil to the flames' of Hong Kong's slowdown economy. Fenner also said that Hong Kong 'going to see further contraction'.

We are currently in a global recession induced by the COVID-19 pandemic, where all sectors of the economy are brutally suffering from the economic turmoil that the virus has cast upon us. Hong Kong is no different than it was in the year 2019. Hong Kong officially announced that its economy had contracted due to the ongoing protests and the American-Chinese trade war.

In simple terms, a recession drives demand down as people are saving their money to avoid overspending and even more importantly managing a safety net of wealth as the recession drives inflation. The turtle-like economy and weak consumption will lead to unemployment in the services sector. Disneyland falls into the service sector quite well and will experience their fair share of losses during this economic downturn. There is not a clear future for the company as for now as the government will rely on both Disneyland and Ocean world to drive tourism once borders open and COVID-19 subsides. Ironically enough, the park was opened after the first SARS epidemic to uplift the mood of the Asian economy.

Natural Factors

In Hong Kong, available land is a rare and valuable commodity. The theme park, constructed on Penny’s Bay on Lantau Island includes not just the overall design of the theme park but also several schemes for ancillary activities. The government decided to take up its typical procedure of reclamation to provide sufficient space for the development of the Disneyland theme park. The reclamation process lasted 16 months in the case of Hong Kong Disney, and the amount of land acquired at Penny's Bay was about 290 hectares. Next, the use of this land will be for the growth and development of a theme park, a water leisure center, resort hotels, public/institutional / community services, bridges, highways, ferry piers, and related amenities.

The essence of a day at a theme park will always be perfect weather. Since Hong Kong experiences every season, Disneyland will see slow months during the offseason. The chilly wet season often dissuades families with toddlers and young kids. The crowd would pile up during Christmas to celebrate the auspicious Disney style event though the weather is the least of Hong Kong Disneyland’s problems since the recent outbreak of COVID-19, on the 26th of January 2020 the Theme park had to keep its doors to slow the spread of the virus (Lau, 2020).

Technological Factors

Running a theme park is very technologically forward, as the user experience, not only on the ride, is significant. Everything from ticketing to enjoying the thrill of the rides must be seamless to ensure the best user experience. Hong Kong Disneyland is like no other as the high-end technologies are readily available due to Hong Kong’s strategic location. One of the most impactful investments that Hong Kong Disneyland received a lot of praise for was their Magic Bands that came with RFID technology. It allowed easy access to purchasing any merchandise as users would reload their band with money and perform transactions within Disney’s parameters. This had allowed a universal method of ease as customers did not need to worry about cash and hotel room keys.

Political Factors

The People’s Republic of China’s Government passed an immensely controversial bill in April of 2019. The Extradition Bill led to a dispute that sparked demonstrations between the people of Hong Kong and the Hong Kong administration. Originally, the rallies had been limited in scale. However, after the Chinese government had ignited the blaze, the residents of Hong Kong decided to make it rage by intensifying their demonstrations. With relentless mass disturbances, day-in-day protests over the past year, as a result, several corporations suffered a toll, which had included HKD. It also had a massive effect on the income of Hong Kong Disneyland as its sales dropped entirely as its clients were primarily Hong Kong locals and, most notably, people from mainland China. Figures published by Disney say these ongoing protests could end up costing Hong Kong Disneyland a whopping US$ 135 million, with a deficit of US$ 55 million for the last six months of 2019, a loss from July to September, and an upcoming US$ 80 million shortfall for the final quarter of the annual financial period.

However, Hong Kong Disneyland is one extensive blessing that also doubles as a curse. The fact that Hong Kong Disneyland’s majority-owned by the government means that they can get access to funds that allows people to forward products. However, political unrest amongst the people of Hong Kong means that they have the power and the tact to boycott government-funded projects like Disneyland.

Cultural Factors

Disney removed alcohol from the park's restaurants when Disneyland Paris opened in 1992, as it saw this intoxicant as incompatible with family entertainment. Due to their working conditions, they started to walk away days after it opened in protest. The cultural insensitivity of Disney sparked outrage among the French people, driving one activist to brand the park a "cultural Chernobyl".

Disney worked hard to be culturally sensitive in designing Hong Kong Disneyland after learning its lessons. At the early design point, at the suggestion of a feng shui practitioner, the architecture of the park was rotated several degrees. In line with Chinese practice, for the launch and completion of all the park's structures, auspicious dates were chosen. In the park, the number eight, meaning wealth in Chinese culture, abounded, while the number four, synonymous with death, did not even appear on lift keys. For the comfort of Chinese visitors, park signage and instructions for attractions were written in both Chinese and English. The park also provided local music and cuisine, including the first Main Street Chinese eatery. Disneyland opened with just 16 attractions, as opposed to 52 at Disneyland Paris, taking into account the unfamiliarity of the Chinese with Disney's tales. Hong Kong Disneyland was the smallest of the Disney theme parks at 126 hectares, and it just takes 30 minutes to stroll around the entire park. One thing Disney launched was the Fantasy Garden, the first in any Disney theme park, for guests to take pictures with Disney characters, mindful of the passion of Chinese tourists for taking pictures.

To conclude, I think Hong Kong Disneyland started with a lot of potentials. They had the right marketing plan but faced challenges that could have been predicted such as the renovation of Ocean park, as a new upcoming theme park-like theme would challenge the likes of a 30-year-old competitor. Hong Kong Disneyland was in a hurry to open its doors to make a profit. However, they had lacked market research for what makes an excellent experience with such a small space. They could have been like a Universal Studios Singapore as that city faces similar problems of land and space. However, Disneyland most dominantly should have done in-depth research on China’s market. One thing Hong Kong Disneyland must do now is figuring out how they will battle to find customers after the COVID-19 pandemic with the 'new normal'.

No corporation is too big to struggle. There are seven terms that I think clearly summarise Disney and their eleventh theme park correctly. Ever since HKD opened its doors to the world in 2005, with occasional moments of solace in the years they made money, it has been nothing but an uphill struggle for Disney. Looking back now, when they wanted to open a theme park in Hong Kong, it looked like Disney had a moment of naivety surrounding them. They were not prepared for the Chinese market.

In the western hemisphere, whatever operated with them had to be fully altered or discarded before HKD began working. Disney was ill-prepared, as I see it, and they brought the utter grunt of the Chinese sector and its unpredictability. Despite all this, the efforts of Disney to develop HKD as a whole must be commended. Where credit is due, I will provide credit. To enhance facets of the park, such as customer service and technical development, they double their efforts.

5.0 REFERENCES

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Tsang, D. (1969, December 31). Struggling Hong Kong Disneyland raises one-day entrance fees by 3 percent, the fifth price increase at the park since it opened in 2005. Retrieved October 08, 2020, from https://www.thestar.com.my/news/regional/2019/04/24/struggling-hong-kong-disneyland-raises-oneday-entrance-fees-by-3-per-cent-the-fifth-price-increase-a