Singapore Flyer operator runs into financial trouble

[Musicwhiz]

Disappointing, but not unexpected. It must cost a bomb to operate that huge wheel!

The Straits Times
www.straitstimes.com
Published on May 29, 2013
Singapore Flyer operator runs into financial trouble
Main lender says it is owed money and places firm under receivership
By Jessica Lim Consumer Correspondent

THE company behind the Singapore Flyer has been placed under receivership by its main lender, just five years after it opened.

The Straits Times understands that the main lender is a bank which has taken action because it is owed money by the wheel's operator, Singapore Flyer Pte Ltd.

Partner Tim Reid of the appointed recovery firm Ferrier Hodgson said he was confident that the receivers would be able to "identify investors with the vision to manage, diversify and enhance the Singapore Flyer, thereby securing its long-term future as a significant Singapore attraction".

Mr Reid, along with Ms Theresa Ng and Mr Tan Aik Kiat, were appointed as receivers and managers yesterday. Expressions of interest will be called shortly.

Adding that the company would work with tour operators to ensure smooth operations throughout the receivership, Mr Reid said it would be "business as usual" at the Singapore Flyer.

A check of the Accounting and Corporate Regulatory Authority's database showed Singapore Flyer Pte Ltd has three directors: British citizen Paul Francis Hodgson, Dutchman David Paulus Schuilwerve and Singaporean Ong-Hahl Boon Li Patsy.

The 165m-high wheel was officially launched here in April 2008 to much fanfare.

Trouble surfaced soon after.

In December 2008, the wheel was shut for a month after it broke down, leaving passengers stranded for close to six hours in its cabins. After the incident, a group of 14 business owners took legal action against the company for losses incurred during the breakdown.

In 2009, the company's German investors tried to oust several Singapore Flyer board members, citing under-performance. Rider numbers have also been reported to be below targets.

Mr Gevin Png, a senior lecturer at Temasek Polytechnic's hospitality and tourism management programme, put the Singapore Flyer's situation down to the lack of a local customer base.

"Locals are priced out and they can view similar scenery from tall buildings nearby. It's not unique," he said, adding that attractions need local support to be successful. "Look at the Singapore Zoo. It is packed with locals on weekends."

Profit margins have also been watered down by steep discounts given to travel agents in recent times to entice them to include the Singapore Flyer in their tour packages, he said.

An adult ticket for a ride there is priced at $33. Children aged three to 12 pay $21. Those below the age of three ride for free.

The Singapore Tourism Board, which leases land to the Singapore Flyer, told The Straits Times it will be "engaging the various parties involved to ensure the best possible outcome that enhances the tourism sector".

However, liquidators like Mr Abuthahir Abdul Jafoor of the accounting firm Stone Forest Corporate Advisory point to the possibility of a bleaker picture.

"If the sale of the assets does not cover the debt, the company could potentially be wound up," he said. "If that happens, any remaining assets would be sold off to the highest bidder including overseas buyers."

Singaporeans such as Ms Poh Yen Li, 29, said they hope the Flyer continues to operate.

The accountant, who has taken rides there five times, called it an "iconic attraction". "It really defines the skyline. It would be a pity to see it go," she said. "It's a fun experience but the tickets are quite expensive."

limjess@sph.com.sg

[lonewolf]

The problem with a giant ferris wheel is that the attraction is largely fixed and there is nothing really much you can do to refresh the attraction. What else can you do to enhance the experiencing of riding in the flyer? I know they have dining and champagne currently but can't really see what else you can do. IMO, they are not leveraging of the one thing which is unique to the flyer experience - the fact that you are given a view like no other. But frankly its not easy since that experience is quite hard to leverage on.

Other attractions like USS, zoo, GBTB can more easily add new attractions every few years to attract returning customers.

Of cos the lack of a local base will be cited but I think that just lazy analysis. I also dun think its the steep price either since the proliferation of discount sites like groupon etc allowed you to buy attractive packages all the time. (I purchased a duck tour + flyer for around $28 per adult).

At the end of the day, once you ride it once during the day and once at night, why would you want to take another ride?

[cfa]

Expected ! Next will be garden by the bay , provided relevant authority continue to provide burning oil.

[mulyc]

somebody needs to come up with a better plan for this thing before it turns into a white elephant.

perhaps a proper shopping mall connected just behind the F1 building might help.

[cfa]

The 2-durains is as good as a white elephant, but the show must continue.

[sgd]

Casinos seem to have a knack at managing theme park attractions, sentosa island had many failed attractions before Genting came in.

Maybe can sell the flyer to MBS for $1 and ask them to continue this baby.

[CY09]

Interestingly, we can look at Korea (N seoul tower) and Taiwan (Taipei 101). While they are not direct comparison to our ferris wheel attraction, I would say that they are close enough to be compared.

Taipei 101's commercial success is because it mixes residential and office business with the aspect of tourism. N seoul tower is less biz like. There are only a few restaurants and a few retailer cart spaces. However, what made N seoul tower successful was their marketing. N seoul tower is best remembered as a place where couples show their love "by padlocking it". This is where N Seoul has been successful, its marketing and making itself an icon for something besides portraying itself as an attraction for Seoul's skyline. This results in many people too taking the cable car up to the tower and for the elevator up to the skyline (it was packed on the 2 occasions I took it in 2012 and 2008.)These are lessons our flyers management can learn. Coincidentally, the 2 attractions I have mentioned are run not by govt tourism boards but by corporations.

Also one has to note that the corporations that operate them are conglomerates; while I am not entirely sure if Taipei 101 and N Seoul are breaking even financially, I believe they are so, otherwise their owners would have tried to divest these iconic structures for money.

[cfa]

This biz model is totally out of date long time ago.

[byfaith]

hope they can give a discount before they closed shop.........

[cfa]

Hotel in the air, maybe.