Theme is upbeat as Disneyland eyes a good year

PUBLISHED : Monday, 06 September, 2010, 12:00am
UPDATED : Monday, 06 September, 2010, 12:00am

Five years after opening, Hong Kong Disneyland is expected to record one of its best years, with higher attendance and greater profitability.

Buoyed by an upsurge in mainland and overseas visitors and their increased spending, the theme park has probably welcomed far more visitors than the 4.57 million reported a year ago, park insiders said.

They said internal studies showed fears that Shanghai's World Expo would hurt attendance figures were unfounded.

Profitability, as measured by ebitda - earnings before interest, taxes, depreciation and amortisation - would also swing back to the black after a HK$70 million loss last year, they said. But after deducting depreciation, amortisation and other finance costs, the park will continue to record a loss.

The improving results bode well for Disney and the government, which own the park under a joint venture. Positive ebitda, which is equal to revenues less costs and expenses, means Disney can resume collecting its management fees, which are now linked to the park's performance.

Last year, the formula for its base management fee was changed from 2 per cent of gross revenue to 6.5 per cent of ebitda, or HK$65 for every HK$1,000 of earnings. Disney is also entitled to a variable management fee of up to 8 per cent of ebitda. In an attempt to shore up the park's finances, Disney agreed to forgo its management fees in 2007-08 and 2008-09. The park makes money from selling tickets, food, merchandise and other goods and services. Disney can still benefit handsomely from a loss-making park as long as people spend on food and merchandise, the source from which it derives most of its royalties.

The government, which is the majority shareholder, is desperate to show that the public's investment in the venture is paying dividends. A HK$3.63 billion expansion to add three new themed areas and more attractions is under way. Toy Story Land is on schedule to open at the end of next year and preliminary infrastructure work to develop the new areas, like building power substations, has started.

'Over the past five years, we have had more than 20 million guests,' managing director Andrew Kam Min-ho said. There had also been an 18-percentage-point increase in the occupancy rate at the park's two hotels.

Fifth anniversary celebrations next year would feature temporary and permanent attractions that were new to the region and the world.

Since the park opened in 2005, the number of visitors has see-sawed, reaching about 5.21 million in the first year, then dropping to 4.17 million before rebounding to about 4.45 million in 2007-08 and 4.57 million in 2008-09.

Disney's financial year runs from October to September.

Last year's summer attendance, especially from the mainland, suffered because of fears of human swine flu. Hong Kong Tourism Board data show the number of visitors to the city was up 38.9 per cent year on year in May, 43.5 per cent in June and 31.9 per cent in July. The number of mainland visitors rose by 46.8 per cent in May, 54.5 per cent in June and 40.4 per cent in July.

Between April and June, there was a 35 per cent rise in the number of visitors to the park year on year, mostly from the mainland and overseas, said Jay Rasulo, the Walt Disney Company's senior executive vice-president and chief financial officer.

Numbers up

From April to June, Disneyland visitor numbers rose 35 per cent

Over the past five years, the number of visitors to the theme park has exceeded: 20m



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