Disneyland seeks HK$809m loan from government for third hotel
As profit and attendance rises, resort seeks an extra HK$809 million from the government to help pay for a 750-room complex at the park
Hong Kong Disneyland is seeking a fresh loan of HK$809 million from the government to build a third hotel, after it recorded a second consecutive year of profit in eight years of operation.
Revenue rose 15 per cent year on year to HK$4.9 billion during the last fisnancial year from October 2012 to September 2013, the theme park reported yesterday.
With a record attendance of 7.4 million and an occupancy rate of 94 per cent at its two hotels, net profit more than doubled to HK$242 million, it said.
Instead of giving out dividends to shareholders - the Walt Disney Company and the Hong Kong government - Disneyland would plough the profits back into the facility, managing director Andrew Kam Min-ho said.
"We put our emphasis on long-term development of the park," Kam said. "There are still sites for building additional hotels and themed areas, and both parties are committed to reinvesting the profit."
The park had reached an agreement with the government to open a third resort hotel by early 2017 featuring a tropical forest theme and 750 rooms, he said.
It will cost HK$4.26 billion - of which Walt Disney will contribute HK$1.7 billion in cash and lend another HK$1.15 billion to Hong Kong Disneyland. The theme park itself will put in another HK$600 million. It aims to borrow HK$809 million from the Hong Kong government, which must secure Legislative Council approval.
The government, to maintain its shareholding in the theme park at 52 per cent, would have to convert HK$1.7 billion of its previous loans into equity.
Taking all the financial changes into consideration, the government would have HK$1.1 billion in outstanding loans to the park, down from HK$2 billion.
Kam said Disneyland's hotels turned away one out of five visitors because of high occupancy.
Tourism-sector lawmaker Yiu Si-wing asked Disneyland to provide more information on the hotel project, including its profitability and estimated impact on visitor numbers, and by extension the local economy.
"The loan involves public money, so we have to ensure the park can repay it," Yiu said. "More importantly, the government should assess how appealing the enhanced park will be, and how many more visitors it will draw."
Professor Terence Chong Tai-leung, executive director of Chinese University's Institute of Global Economics and Finance, said risk would increase if government loans were converted to equity. He had reservations about the government lending more money to the park before it receives any dividend.