Industry Overview
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INDUSTRY OVERVIEW This section contains information and statistics relating to the economy of China and the industry in which we operate. Unless otherwise indicated, the information and statistics presented in this section are derived from various official government publications and other publications and from a market research report prepared by Euromonitor based on those official sources and trade opinion surveys to build estimates of market conditions, which was commissioned by us. Research by Euromonitor should not be considered as the opinion of Euromonitor as to the value of any security or the advisability of investing, or not investing, in our Company. Neither we nor Euromonitor makes any representation as to the correctness or accuracy of government or official information contained in this section. We believe that the sources of such information are appropriate and we have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading or that any fact has been omitted that would render such information false or misleading in any material respect. The information has not been independently verified by us, the Joint Sponsors, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, nor any of their or our directors, affiliates, advisors or any other parties involved in the Global Offering and no representation is given as to its accuracy. SOURCES OF INFORMATION In connection with the Global Offering, we have engaged Euromonitor, an independent third party, to conduct a research report on China’s theme park and marine theme park markets. Founded in 1972, Euromonitor is a research institute focused on strategy research for consumer markets. We have included certain information from the Euromonitor report in this prospectus because we believe such information facilitates an understanding of the industry. The Euromonitor report was prepared based on (i) publicly available background information, (ii) annual reports and financial statements published by leading operators or other peer companies, and (iii) in-depth interviews with leading industry participants and industry experts. We have agreed to pay a total of RMB320,000 in fees for the preparation of the report. As of the Latest Practicable Date, our Directors confirmed, after taking reasonable care, that there had been no adverse change in the market information set forth herein, since the date on which Euromonitor issued its report. For the avoidance of doubt, the term “theme park” as used in this prospectus is as defined in the section entitled “Glossary of Technical Terms,” and differs from a “Theme Park Under 2013 Opinions” which is defined in the section entitled “Definitions” with reference to the relevant PRC regulations. Theme parks used in this section are defined from the perspectives of their business operations and the existing or expected public perception of them as amusement or entertainment parks offering a variety of entertainment attractions, rides, shows and other events. Theme parks so defined from a business point of view may not constitute Theme Parks Under 2013 Opinions. See “Definitions” and “Glossary of Technical Terms.” – 69 – INDUSTRY OVERVIEW OVERVIEW OF THE GLOBAL THEME PARK MARKET 357.8 million people visited the top ten theme parks in the world in 2012, representing an increase of 6.4% from 2011. The table below sets forth the top ten theme parks worldwide by the number of visitors in 2012: Growth Rate Visitors in 2012 Visitors in 2011 in 2012 (’000) (’000) (%) WaltDisneyAttractions.................. 126,479 121,821 4.7 MerlinEntertainmentsGroup............. 54,000 46,400 16.4 UniversalStudiosRecreationGroup........ 34,515 31,990 7.9 ParquesReunidos..................... 27,130 26,220 3.5 SixFlagsInc.......................... 25,750 24,300 6.0 SeaworldParks&Entertainment.......... 24,310 23,600 3.0 CedarFairEntertainmentCompany........ 23,600 23,400 0.9 OCTParksChina...................... 23,359 21,731 7.5 TheEnlargedGroup*................... 9,400 7,550 24.5 CompagnieDesAlpes.................. 9,300 9,300 1.0 Source: AECOM 2012 Theme Index Global Attractions Attendance Report * taking into account the Additional Theme Parks and based on the admission attendance of the Enlarged Group The theme park market in North America has been driven by reinvestments in parks run by major operators. In Asia, extensive investments in new attractions, significant marketing efforts and a substantial growth in tourism have contributed to strong attendance figures. European theme park market, on the other hand, continues to be affected by the region’s stagnant economy. OVERVIEW OF PRC DOMESTIC TOURISM MARKET The PRC domestic tourism market has expanded significantly over the last five years due to the economic development, infrastructure improvement, improved income growth, a higher standard of living and the change in holiday policies. Many Chinese have adopted travel as part of their lifestyle and, with more developed transportation infrastructure, traveling within China has become much more convenient than before. Since 2008, the number of domestic tourists has increased at a CAGR of 14.7%. In 2011, the number of domestic tourists increased by 25.6% year-on-year to 2,641.0 million. Despite the economic slowdown, the total number of domestic tourists still increased by 12.1% to 2,960.0 million in 2012. – 70 – INDUSTRY OVERVIEW The table below sets out the number of domestic tourists in China for the years indicated: 3,500 30% 25.6% 2,960 3,000 2,641 25% 2,500 2,103 20% 2,000 1,902 1,712 12.1% 15% 1,500 11.1% 10.6% 10% 1,000 6.3% 500 5% 0 0% 2008 2009 2010 2011 2012 Domestic Tourists (million) Growth (%) Source: National Bureau of Statistics of China The table below set out the expenditure per tourist for the years indicated: 1,000 30% 900 25% 800 731.0 767.1 700 598.2 20% 600 22.2% 511.0 535.4 500 15% 400 10% 300 11.7% 4.9% 4.8% 200 5% 100 0 0% 2008 2009 2010 2011 2012 Expenditure per Tourist (RMB) Growth (%) Source: National Bureau of Statistics of China Historically, the traveling pattern has been correlated with domestic economic growth: sightseeing (when GDP per capita reaches USD1,000), leisure travel (when GDP per capita reaches USD2,000), and vacation travel (when GDP per capita reaches USD3,000). China’s GDP per capita exceeded USD3,000 in 2008 and continued to grow thereafter. Increasingly, more people travel during their holidays and the traveling pattern is expected to shift from sightseeing and leisure travel to vacation travel. – 71 – INDUSTRY OVERVIEW According to the National Bureau of Statistics of China, domestic tourist visits increased from 1,712 million in 2008 to 2,960 million in 2012 and the total national tourism receipts increased from RMB874.9 billion in 2008 to RMB2,270.6 billion in 2012. Despite rapid growth in recent years, China’s per capita spending on travel is still significantly lower than developed countries. In 2012, the annual per capita spending on travel was RMB767.1 in China, representing approximately 2% of China’s GDP per capita, as compared with USD1,685 and USD831 in the United States and France in 2003, respectively (both exceeding 5% of its GDP per capita at the same year). The relatively low per capita spending creates a significant room for growth in the PRC tourism industry. The table below sets out selected information on China’s tourism industry for the years indicated: 2008 2009 2010 2011 2012 Nominal GDP (RMB in billions) . 31,404.5 34,090.3 40,151.3 47,310.4 51,932.2 National Tourism Receipts (RMBinbillions)............. 874.9 1,018.4 1,258.0 1,930.5 2,270.6 GrowthRate(%)............. 12.6% 16.4% 23.5% 53.5% 17.6% Tourism Earnings as of GDP (%) . 2.8% 3.0% 3.1% 4.1% 4.4% Source: National Bureau of Statistics of China OVERVIEW OF PRC THEME PARK MARKET Although theme parks in China were not established until 1979, China’s theme park industry has grown significantly in the past three decades. In the 1980s, theme parks associated with TV shows or movies and amusement parks featuring thrill-oriented rides and attractions started to emerge. In the early 1990s, the number of theme parks increased dramatically and the industry was characterized by extensive investment, increased market awareness but high risks. During the late 1990s, the theme park industry experienced a steady pace of development. As the construction of more theme parks is underway, the competition is expected to further intensify. However, it is likely that the theme park industry as a whole is expected to continue to develop which, in turn, will boost the annual attendance. Industry data showed that the total attendance of theme parks increased 5.8% from 2011 to 109 million in 2012, and is expected to rise at a CAGR of approximately 6.7% to 132 million by 2015. The table below sets forth the number of China’s theme park visitors for the years indicated: CAGR% CAGR% 2010 2011 2012 10-12 2013E 2014E 2015E 13-15 E Theme Park Visitors (million) ............ 96.3 103.0 109.0 6.4% 115.9 123.4 132.0 6.7% GrowthRate(%)....... – 7.0% 5.8% – 6.3% 6.5% 7.0% – Source: Euromonitor estimates from trade interview and desk research Major Types of PRC Theme Parks Theme Parks for Amusement This kind of theme parks offers a group of entertainment attractions and thrill rides for the enjoyment of visitors, such as the Suzhou Amusement Land, Happy Valley parks throughout China and Jinjiang Action Park in Shanghai. Amusement parks usually target younger customers and enjoy a relatively higher rate of repeated visits. – 72 – INDUSTRY OVERVIEW Theme Parks for Artificial Scene Theme parks featuring an actual movie studio or TV show fall under this category, such as the Three Kingdoms and Outlaws of the Marsh Town in Wuxi and Hengdian World Studios in Zhejiang.