Hong Kong Disneyland must prove that public funding for expansion is worthwhile

Even before the world’s smallest Disneyland officially opened in Hong Kong on September 12, 2005, there were plans for the theme park to eventually expand. After 11 years of operation, a major new facelift has been announced. While the need for further development is beyond doubt, the question is how to go about it. With a price tag of HK$10.9 billion – more than half of which is to come from the public coffers – taxpayers have to be fully convinced that the investment will be worthwhile.

The figures provided by Disney and the government appear to be reassuring. The number of attractions will increase from 110 to 130 between 2018 and 2023. Visitor numbers are expected to grow from 6.8 million last year to 9.5 million by 2025. Up to 8,000 jobs will be created across the tourism industry following the upgrade. The total economic benefit could reach HK$41.6 billion over a 40-year period.

Only time will tell whether the numbers are correct. If history is any guide, officials tend to be overly optimistic. During the early years, the theme park was struggling to meet some its business targets. It fell into the red again earlier this year, and some staff had to be laid off. The future is further clouded by competition from its Shanghai counterpart, which has just announced an ambitious expansion plan of its own just months after its opening in June. Its impact and that of other theme parks in the region on Hong Kong Disneyland cannot be ignored.

As the major shareholder in the venture, the government has a role to play in the expansion. But the public is also entitled to ask whether there are alternative financial arrangements. In the previous expansion, the government contributed its part through converting an old loan into equity in Hong Kong Disneyland, effectively sparing taxpayers from committing new capital. This time, the government is to ask the Legislative Council to approve an injection of HK$5.8 billion.