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CIRQUE DU SOLEILA Growth Capturing
StrategyTeam 6 – HKUST
Alex Wong | Jasmine Ling | Ula Xue | Vivien Yip
Agenda
• Situational Analysis• Market Analysis• Recommendations• Financials
Situational Analysis | Market Analysis | Recommendations | Financials
Strengths
• Brand name: 15 shows with more than 70M tickets sold • Creativity: Established structured creation process
Opportunities Threats
Weaknesses
Situational Analysis
Situational Analysis | Market Analysis | Recommendations | Financials
Opportunities Threats
Strengths
Weaknesses
• Lack of diversification:Las Vegas Resident shows for
50+% total revenue and much great portion of profit
Situational Analysis
Situational Analysis | Market Analysis | Recommendations | Financials
Opportunities
Strengths Weaknesses
Threats
• Saturated market in North America:
US tourism industry growth rate: -5%
Situational Analysis
Situational Analysis | Market Analysis | Recommendations | Financials
Weaknesses
Threats
Strengths
Opportunities
• Expand into emerging markets in Asia• Expand the creative platform and leverage on brand name
Situational Analysis
Situational Analysis | Market Analysis | Recommendations | Financials
Strengths Weaknesses
Opportunities Threats
Brand name Creativity
Heavy reliance on Les Vegas shows
Emerging marketsExpand the creative platform
Saturated market in North America
Situational Analysis
Need for Diversification
Situational Analysis | Market Analysis | Recommendations | Financials
Economy Growth
GDP growth (AP GDP growth of 7% in 2010 vs. 2.7% globally, China average 10% growth)
Affluent Population
Discretionary spending of affluent population in the three biggest cities in China: Reach 4.9 billion USD in 2015
2010 tourism industry estimates: Asia rise 4%, North America -5%, Europe unchanged (by IPK international)
Rising Tourism Industry
Lack of sound brand of entertainment show troupes
Market Not Mature
Potential for Asia Markets
Situational Analysis | Market Analysis | Recommendations | Financials
Affinity to Popular Culture
Government Lead
Asian Market Analysis
Spending Pattern
20%
80%
Las Vegas
Gaming Revenue
Non-gam-ing rev-enue80%
20%
Macau
On average, a tourist will stay in Macau for 1.23 days
Separation of Gambling and Entertainment
Situational Analysis | Market Analysis | Recommendations | Financials
Spending Pattern
Affinity to Popular Culture
Asian Market Analysis
1. China World Expo in Shanghai2. Singapore government actively called for bids for the two
casino resorts3. HK government`s involvement in HK Disneyland4. Thai government boosted the “Amazing Thailand,
Amazing Concept” value, with exemption of visa fees and reduced takeoff and landing fees
Government Lead
Situational Analysis | Market Analysis | Recommendations | Financials
Government Lead
Spending Pattern
Asian Market Analysis
1. Disneyland, Universal Studio, Hollywood movies and Western-style entertainment diffused in Asia
2. New popular trends often emerge and spread over
Affinity to Popular Culture
Situational Analysis | Market Analysis | Recommendations | Financials
Asian Market Analysis
Leverage on popularity of Western culture
Affinity to Popular Culture
Cooperate with government to gain support and backup
Rethinking partnership in Asia
Casinos may not be the best
Government Lead
Spending Pattern
Situational Analysis | Market Analysis | Recommendations | Financials
Recommendations
Resident Shows Limited Runs
Asia
Touring Shows
Expand footprint in Asia
Resort in Shanghai Branding and recognition
Situational Analysis | Market Analysis | Recommendations | Financials
Staged Performance in Asia
• Still immature and not well established• Popularity among customers to be improved
Asian Markets
• Root and core competence • International reputation and experience
Cirque du Soleil
Brand Building and Creating Markets
Enable Diversification
Situational Analysis | Market Analysis | Recommendations | Financials
Touring Shows
Montreal & N. America
(4-5 years)
Europe(3 years)
Asia(2-3 years)
Australia(1 year)
S. America(1 year)
Existing Schedule
Situational Analysis | Market Analysis | Recommendations | Financials
Touring ShowsStart and extend the tour in Asia
Asia(3-4 years)
Australia(1 year)
S. America(1 year)
Europe(3 years)
N. America & Montreal(3 years)
Situational Analysis | Market Analysis | Recommendations | Financials
Limited-Run Shows
• Shorter show time: 1.5 hours• Mix of creativity and legacy• Revamp or extract the most exciting components
from previous successful shows• Innovation on storylines
• New use of existing costumes and props• Strong marketing and PR efforts• Relate to CSR or festive events
Situational Analysis | Market Analysis | Recommendations | Financials
Limited-Run Shows
Drawing attention
Create scarcity
Creative challenge
Impacts
Gone-is-gone
Mix-and-match
Limited-run Shows
Marketing and PR
Situational Analysis | Market Analysis | Recommendations | Financials
Resident Shows
• 7 shows in Las Vegas• Only at Macao and Tokyo in Asia• Room for further growth
Situational Analysis | Market Analysis | Recommendations | Financials
Singapore Hong Kong Shanghai Taipei Seoul Bangkok
Purchasing power
Show compatibility
Tourist traffic
Infrastructure
Total 2 2 1 5 4 6
Expansion into Asia
Situational Analysis | Market Analysis | Recommendations | Financials
Comprehensive Experience: Resort
GovernmentCirque
du SoleilProperty
Developer
Artistic concept provider and stage performer
Promotion, land and infrastructure support
Shopping malls, hotel, theatre, restaurant, spa, and entertainment facilities
Situational Analysis | Market Analysis | Recommendations | Financials
Strategic Advantages of Shanghai
Complexes Failure in London
No such obstacles in Shanghai
• Lack of creative control
• Slow project development
• Aggressive scale
• Government support
• Industry preference for upscale projects
• High expected demand
Situational Analysis | Market Analysis | Recommendations | Financials
Strategic Advantages of Shanghai
• Local government– Economic indicators matter– Prefer land use for tourism
• Real estate developers– Face restrictions by central government– Switch from residential projects to resort
• Expected demand– Shanghai: Important tourist destination
Situational Analysis | Market Analysis | Recommendations | Financials
Cirque du Soleil and Resort
• Wholly responsible for art design and creative content
• Instil Cirque du Soleil feeling into every point of contact with customers
• Hardware: Interior design, decorations, beds, costumes
• Software: Interactions and atmosphere
Situational Analysis | Market Analysis | Recommendations | Financials
Other Resort Revenue
Cirque du Soleil
Box Office
(Capital Investment)
Government and Developer
(Property Construction)
Partnership Deal Structure
(Production)
Show
(Creative Royalty)(Theatre Operations)
(Show Operations)
Operating Profit
Situational Analysis | Market Analysis | Recommendations | Financials
100% (Property Construction)50% (Production) 50% (Production)
50% Box Office 50% Box Office100% Creative Royalty
50% (Theatre Operations)50% (Theatre Operations)50% (Show Operations)50% (Show Operations)
3% Resort Revenue97% Resort Revenue
-
-
Timeline for Resort PartnershipYear
12 13 14 15Issues
Negotiation
Design and Construction
Show production
First Phase performance
Review
2nd Phase Performance
09 10 11 16
Situational Analysis | Market Analysis | Recommendations | Financials
Revenue
2012 2013 2014 2015 20160
5
10
15
20
25
30
35
40
45
7 8 8 8 8
10 10 11 11 11
20 2122 23 23
Local
Other tourists
Tourists in Hotel
65%13%
8%5%10%
Revenue from Hotel Tourists
Ticket
Accommodation
Shopping
Food
entertainment
Situational Analysis | Market Analysis | Recommendations | Financials
Profit
Revenue Production cost Operation Cost Theater Cost Profit0
5
10
15
20
25
30
35
40
45
50
44.645
15
15
5
7.145
USD Million
Situational Analysis | Market Analysis | Recommendations | Financials
Asian markets with most opportunities
Different business landscape
Creativity and brands
Over-reliance on Las Vegas
Uncertain US tourism outlook
Potential of emerging markets
Touring shows into Asia
Limited-run shows to stir up markets
Resort collaboration
New revenue sources
Operations diversification
Tap the potential in Asia
New inspirations for creativity
Situations Markets Strategy Impact
Backup SlidesTouring Shows Shanghai
Resident Shows Affluent Population in Shanghai
All Shows Resort Partnership
Resort World Sentosa Financial Details I
Marina Bay Sands Casino Financial Details II
Singapore Casinos Financial Details III
Asian Markets Financial Details IV
Touring Shows
Resident Shows
All Shows
Resorts World Sentosa• Built by Malay’s Genting Bhd for $4.4 billion opening
on March 2010• The 49 hectare integrated resort will cost S$600
million solely for land• S$1.6 billion on Southeast Asia’s first Universal Studio
theme park called Universal Studios Singapore.
Marina Bay Sands Casino
• Opening: Apr 2010• By Las Vegas Sands• Fixed $1.2 billion cost of 6m sq. Feet, The most
expensive casino in the world• Three hotel towers with 2,500 rooms (>52,000
people)
Singapore Casino
• Visitor arrivals in Singapore rose 24% in February from 2009 since its first casino opening
• Hotel occupancy rose 4.9• Each casino expected to contribute 0.5% to
Singapore’s GDP by 2015
Asian Markets
• Economic growth2010– Asia: 7%– China: 10%– Global: 2.7%
• Affluent population
Source: AllianceBernstein
Shanghai
• Rapid development and active brand building• Financial center and tourist hub in Asia• Welcome foreign investment• World Expo 2010
Affluent Population in Shanghai
• Defined as earning US$6,000 to US$25,000 per year, numbers grew from practically zero over a decade ago to estimated 87 million in 2005; 317 million in 2015
Resort Partnership
• Upscale Property Developers in China• With experience in running shopping malls,
hotels and entertainment facilities
Financial Details
Revenue For Cirque du Soleil
USD Hotel Tourists Other TouristsLocal
Population Total(in mil) 19 19 20% Population Visiting 0.5% 1% 2%Ticket 100 100 100Accommodation 330Shopping 200Food 130Entertainment 250 50 20 Total consumption per person per stay 1010 150 120Total Revenue per year (in mil USD) 7.3435 9.785 20.24 37.3685
Financial DetailsRevenue for Developer and Government
USDHotel
Tourists Other
TouristsLocal
Population Total
(in mil) 19 19 20
% Population visiting 0.5% 1% 2%
Ticket 100 100 100
Accommodation 330
Shopping 200
Food 130
Entertainment 250 50 20
Total share 82.555 18.05 27.2 127.805
Financial Details
Capital Investment (per Show Program)
Production Cost 15
Variable Cost per Year
Operation Cost 17.5
Theatre Operation 5
Total Variable Cost 22.5
Financial Details
Location Spending per Mainland Visitor
HK US$882
Taiwan US$1471