Allan Zeman: Hong Kong's Mouse Killer

Vivian Wai-yin Kwok, 02.13.07, 3:59 PM ET

HONG KONG -

On a day last week when Mickey Mouse was looking increasingly lonely in Hong Kong, with Walt Disney reporting that attendance had dropped at Hong Kong Disneyland in the last quarter of 2006, Allan Zeman, chairman of competitor Ocean Park Hong Kong, was literally floating on air, arriving at his aquatic-themed amusement park in a giant helium balloon to launch its newest attraction. The famed Hong Kong entertainment tycoon had every reason to be ebullient after a year in which Ocean Park set records for attendance and profit.

In an interview earlier in the week at his headquarters in Lan Kwai Fong, a nightlife hotspot of dozens of bars and restaurants that he developed on the site of a former garbage collection center, Zeman described to Forbes.com how he gave the 30-year-old amusement park a radical face lift, beating off a challenge from Disney that many thought would sink it.

The Canadian-born businessman was appointed chairman of the government-owned Ocean Park in 2003 by Tung Chee-hwa, the chief executive of Hong Kong at the time. It was losing money and the looming threat from the Disney park, then under construction, had the Hong Kong government doubting its future. It had considered either closing down Ocean Park or moving it from its mountainside location in Aberdeen, a prime site worth billions, to remote flatlands near the airport.

Zeman, who had never visited Ocean Park, was amazed by the sea views from its cable car ride.

“They were crazy if they closed or moved the park!” Zeman said.

“There is no other theme park in the world with such a good view, and it is just 10 minutes driving distance from the very downtown of Hong Kong.”

He believed Ocean Park could survive along with Disney, and that its mountainous seaside location gave it a unique advantage.

Zeman felt that the park, built in 1977, was run down and its management tired. The first thing he did was usher CEO Randy Guthrie into retirement.

After a worldwide search, Zeman replaced him with 44-year-old Tom Mehrmann, who had launched Warner Brothers’ Movie World in Spain.

Zeman realized that Ocean Park would be doomed to failure if he just redeveloped the park to mimic Disney. He decided to leverage its seaside setting by focusing on the ocean and live animals, pitting dolphins, sea lions and pandas against Winnie the Pooh, Mulan and Buzz Lightyear.

“Disney is all about castles, fantasy, cartoon,” he said. “Ocean Park is totally different. We are about animals, ocean, environment, education and conservation.”

“Ocean Park is real and Disney is imagination.”

A team of 15 designers recruited mostly from the States helped him draw up a blueprint to transform it into a cutting-edge aquatic animal-centric theme park. Zeman also hired Randy Kalish, a former Disney executive who had helped to build Hong Kong Disneyland, to direct the redevelopment program.

A $5.5 billion Hong Kong ($705 million) revamp, financed by bank loans was kicked off last year. By the time it is finished in 2012, the park will host 33 types of animals and the number of rides will be doubled to 70.

However, Zeman isn’t sinking all the money into rides and permanent attractions. Ocean Park is concentrating on organizing special events every two months for holidays such as Christmas, Chinese New Year and Halloween.

With about 50% of its visitors coming from mainland China, Ocean Park opened an office in the nearby city of Guangzhou to expand sales.

Zeman’s efforts have already born fruit.

A record 4.38 million visitors came to Ocean Park in fiscal 2006, giving it ticket sales of $539 million Hong Kong ($69 million), also a record. New restaurants and upgraded retail outlets also helped to boost profit by 31% to an all-time high of $157 million Hong Kong($20.1 million).

The most flamboyant tycoon in town said he has applied the lessons he learned in Lan Kwai Fong — that Hong Kong consumers are hungry for the new — in running Ocean Park. “We have to keep people coming back; we have to keep people having fun.”

Zeman himself is having fun with his marketing campaign for the park. Last April, he dressed up as a jellyfish to promote the new attraction Sea Jelly Spectacular; a few weeks afterward, he put on a shining blue gown and high heels and danced a Caribbean jig to publicize Ocean Park's summer program. Last month, the chairman donned a silver wig and danced with singers to celebrate the 30th anniversary of the park. His antics have landed his picture in local and foreign media.

Meanwhile, business has been much less fun for his cross-town rival. Last Wednesday, Walt Disney (nyse: DIS - news - people ) revealed in an SEC filing that Hong Kong Disneyland drew fewer visitors from October to December 2006 than in the same period a year ago.

Disney also disclosed that if business doesn’t improve quickly at the 16-month old park, it will fail to meet performance pledges to its creditors, forcing it to refinance $294 million in debt.

Zeman reckoned that Disney didn’t understand local Chinese culture and failed to meet expectations. “They came and built a small park here, upsetting people who had expected a big Disney World.”

Most visitors find the $350 Hong Kong ($45) one-day ticket for Hong Kong Disneyland, the smallest run by Walt Disney, too expensive compared to Ocean Park, which charges $185 Hong Kong ($24). The local champion also has more rides and animals.

Hong Kong Disneyland also made a blunder by selling open-ended day passes without considering the public holiday schedule of the mainland, a major source of visitors. Thus when tens of thousands of mainland visitors turned up during last year’s New Year holidays, the park had to shut its gates to prevent overcrowding, turning away many with valid tickets.

It plans to expand by adding new attractions and it has addressed the ticketing problems, but the frustration it has caused visitors has resulted in lower attendance in the short run. Many older Chinese also don’t recognize Disney characters, and there have been complaints that the park ignores local culture.

Hong Kong's government owns 57 percent of the Disney park.

From doing business in Hong Kong for the past 37 years in the garment industry and entertainment, Zeman knows importing the Western model wholesale to Asia doesn’t work. “In Asia you have to do things quickly; we can’t let people wait,” he said.

Zeman pledges he won’t let Ocean Park be the No. 2 park in town.

“In my world, there is only first-class — I won’t accept business-class or economy.”