MALAYSIA looks set to be transformed into the theme park capital of Southeast Asia as new players enter the market and renowned international brands are incorporated into the new and existing offerings.  

A leisure component that for many years had been the domain of players like Genting Group and Sunway Group saw the likes of i-Bhd, Sentoria Group Bhd and, more recently, Khazanah Nasional Bhd’s Themed Attractions and Resorts Sdn Bhd (TAR) emerge as theme park operators.  

A few weeks ago, it was reported that Malaysian Resources Corp Bhd was keen to include an indoor theme park at the Kwasa Land development in Sungai Buloh. Not long before that, Singapore’s Oxley Holdings Ltd had told The Edge that it planned to introduce a theme park in Kuala Lumpur in the vicinity of KLCC.

The surge in the number of theme parks is believed to be driven by the industry’s multi-billion ringgit potential. A tabulation of 10 popular theme park operators in Malaysia puts the revenue of the players at close to RM800 million in 2013 (see chart). This compares to data from the Department of Statistics Malaysia, which reveals that in 2009, a total of 14 theme parks had collectively generated RM250.3 million.

As the country adds possibly 20 over new theme parks and amusement parks by 2020, Malaysia will become home to 50 theme parks nationwide, give or take a couple (see map).

And as this happens, the country may be put on the map as the region’s theme park destination. “Malaysia could be the theme park capital of Southeast Asia, comparable to Florida within five years’ time,” Sanderson Group International Pty Ltd executive director Darren McLean tells The Edge. Sanderson is an Australian-based themed-attraction specialist which has been in the theme park business for the past 25 years.

“We have Orlando, Los Angeles (the US), Gold Coast (Australia) and Japan, which have a cluster of world-class theme parks,” he says of the potential Malaysia has in providing a similar cluster for the region.  

McLean  expects that this will be made possible as more international brand theme parks and licensed intellectual properties (IPs) make their way to Malaysia, such as Merlin Entertainment Group’s Legoland Resort, 20th Century Fox World and DreamWorks Animation.

“In the next three to four years, we will have another two to three major theme parks in Malaysia,” he says of the upcoming openings, which includes Sanderson’s Malaysian joint venture with Perak Corp Bhd, which has tied up with DreamWorks for the development of a theme park in Ipoh.

Legoland Malaysia Resort general manager Mark Germyn believes that Southeast Asia holds a lot of potential to become a major destination for theme parks and other amusement parks. “There is great connectivity and efforts being invested and from Merlin’s perspective, this area is developing to position itself as Orlando of the East.”

“The theme park business will surely become a multi-billion ringgit business. Opening parks of international stature via a joint venture or collaboration is a good thing. Look at Orlando, for example — people love to have choices [of theme parks to go to],” Sunway Bhd’s CEO of shopping malls and theme parks H C Chan tells The Edge.

Managing director and CEO of TAR, Tunku Ahmad Burhanuddin, feels that the upcoming openings are a move in the right direction. “The announcement of new theme parks across Malaysia augurs well as we view this as a motivation arising from our strategic intent to spur the growth in the leisure and tourism sector. We are pleased to see that some developers are following suit towards licensing IPs for their parks and some are looking at developing their own theme parks,” he says, referring to TAR’s mandate of being a catalyst in the development of leisure and tourism sector for the country.

TAR ventured into the business in 2009 and opened Legoland in Johor in late 2012.

“The injection of new attractions alongside the expansion plans by existing theme park operators evidently demonstrates the confidence in the country while illustrating the potential of Malaysia to be a regional player in the theme park destination,” Tunku Ahmad tells The Edge.

“We take a long-term view in the shaping of our tourism landscape and these economic transformations are ongoing process, where we will refine and enhance by monitoring market trends, market growth and customer feedback.”

Tunku Ahmad says Malaysia’s theme park industry is still in its infancy compared with the US. “However, Asia is increasingly becoming an attractive tourist market with its Asian domestic demand and this is a strong reason for Malaysia to expand its tourism product,” he states.

He points out that with the growing middle class in Asia with an increasing inclination to travel abroad, Malaysia is well positioned to leverage on the increase in inbound travels.

Similarly, Chan says the surge in the number of parks may be a result of both the local and Southeast Asian market being a lucrative prospect for theme park operators, coupled with the continuous increase in their disposable income.

More theme parks needed

Tunku Ahmad opines Malaysia will need more theme parks. “The number of theme parks being developed in Malaysia may sound a lot at this moment, but if we project over 30 million tourist arrivals in 2018, we will need to provide the value proposition to attract the tourists. Disneyland Tokyo, as a single park, is already attracting 15 million visitors annually.” Malaysia projects tourist arrivals to touch 29.4 million in 2015.

He adds that the increase in the number of parks also demonstrates market confidence. “The range of quality theme parks and attractions can certainly boost the country’s attractiveness as a tourist and investment destination.

Germyn, who runs Legoland’s resort in Iskandar, Johor, is also of the view that Malaysia can take the surge in the number of theme parks provided they are quality experiences. “Each must be tailored appropriately for its respective markets and meet the expectations of the guests.”

Similarly, McLean sees huge potential for Malaysia given the 36 million tourist arrivals target in 2020.  The four major parks in the Gold Coast, he says, welcomed a total of seven million tourists annually. The country only received 6.5 million visitor arrivals in 2013, indicating that the domestic crowd helps support the business too.

If the 2009 official statistics are anything to go by, the 14 theme parks in Malaysia received 23.1 million visitors, of which 19 million were domestic and 4.1 million were foreigners, signalling a strong local market visitorship.  

No child’s play

The theme park business can enhance the value of the surrounding property but at the same time is considered seasonal, capital intensive and requires regular rejuvenation and upgrading to continuously lure traffic. The payback period takes years, by which time the owners have to look at reinvestment.      

“Theme parks impart value by increasing the value of the property in the surrounding.  On its own, it does not make a lot of money, as the business is very seasonal. To venture into this business, one would need a large parcel of land as well as refresh the rides and attractions regularly,” says property valuer and consultant Stanley Toh of Laurelcap Sdn Bhd.

He adds that to be truly successful, theme parks should be part of an integrated development, incorporate foreign IPs and have deep pockets for reinvestment.

According to Chan, the return on investments can take anything from between eight and 10 years. He oversees two of Sunway’s theme parks in the country covering 128 acres and is working on the third theme park for the group. He notes that issues that affect public sentiment like epidemics or unfavourable weather conditions can cause a drop in visitorship in the short term. “The long-term outlook is it will eventually correct itself and resume to normalcy,” he points out.

A theme park expert with 21 years of experience in the field says that the return on investment could take as few as five years or as many as 15 years depending on the investment, type of offering, carrying capacity and targeted market segment.

Chan, in acknowledging the growth potential for the theme park industry, says it is important to constantly improve the facilities, attractions and services and  carve out a niche to compete with other brands and provide enjoyment for the visitors. “It is crucial to perform upgrades within the theme park every now and then as people love novelty,” he says.  

One way of creating novelty and a truly attractive theme park or amusement park is to be affiliated with an international brand.

“International collaborations with local brands will definitely attract more attention from visitors as well as give a positive boost to achieve our tourism ambitions,” Chan says. Sunway, which started operating the Sunway Lagoon Theme Park 22 years ago, will be introducing the first-of-its-kind Nickelodeon-branded attraction in Asia in March 2015. Nickelodeon Lost Lagoon, which will be part of the existing Sunway Lagoon, is being developed at a cost of RM100 million and spread over 10 acres.

The RM1 billion Resort World Genting’s 20th Century Fox World themed attraction, on a 25-acre site, will be ready in 2016. It was previously reported that Sanderson will be trying to woo more international brands to Malaysia and that it was eyeing two large-scale amusement park jobs valued at US$300 million (RM1 billion).  

With names like Paramount Pictures and MGM said to be venturing into Malaysia for hotel operations, industry players do not discount the possibility of park operators courting these brands to incorporate their IPs into their attractions.

“Movie production houses hold hundreds of IPs that theme park operators can use as rides and attractions,” a theme park expert who declined to be named tells The Edge.

What next for Malaysian players?

To grow our local IPs externally, Tunku Ahmad says home-grown players will need to be good in what they do before they can aspire to be a true international brand.

He opines that beyond exporting local theme park brands, management expertise in designing, building and operating theme parks can serve as an export element to other countries that seek such knowledge. “We are already seeing a cross pollination of talent and industry experiences being deployed across borders. Our venture into Singapore shores to develop KidZania Singapore is an example of us bringing expertise outside of Malaysia.”

Sunway’s Chan says that “making the leap into the international scene will be not be a walk in the park, but is nevertheless certainly a golden opportunity”.

This article first appeared in The Edge Malaysia Weekly, on November 10 - 16, 2014.

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