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It’s a slow year after all: Hong Kong Disneyland reports first annual business loss since 2011

Fall in mainland China tourist numbers and strong Hong Kong dollar cited

PUBLISHED : Monday, 15 February, 2016, 3:32pm
UPDATED : Tuesday, 16 February, 2016, 1:28am

The slump in mainland tourists has taken its toll on Hong Kong Disneyland, which yesterday reported a loss for the first time since 2011, amid an official forecast of a further drop in visitor numbers this year.

The theme park, celebrating its 10th anniversary, lost HK$148 million last year, compared with a profit of HK$332 million a year ago, as 23 per cent fewer mainland tourists visited Disneyland.

At the same time, the Hong Kong Tourism Board predicted that overall tourist numbers would dip another 1.8 per cent this year, following a 2.5 per cent decline in 2015. Some tourism insiders consider that as still too optimistic.

“This year will be difficult,” said Andrew Kam, Hong Kong Disneyland’s managing director.

Total visitor numbers to the park were down 9.3 per cent to 6.8 million in the fiscal year ending in October 2015 compared with the previous year.

Mainland visitors last year accounted for only 41 per cent of total tourist figures, down from a peak of around half of Disneyland’s guests between 2012 and 2013. However, local visitors saw a 14 per cent increase compared to the same period a year ago.

Kam said the financial performance last year would not affect its expansion plans, as he recalled a time in 2009 when the park’s situation was even worse. The local Disneyland’s two shareholders – the Hong Kong government and Walt Disney Co – would still inject fresh capital to expand the park.

Revenue at Disneyland also fell 6.4 per cent to HK$5.11 billion, the first year-on-year decline since it started to release financial figures in 2009. The park’s hotel occupancy rate dropped sharply last year to 79 per cent, a marked decline from 93 per cent in 2014.

READ MORE: One country, two Disneys: can Shanghai and Hong Kong theme parks share the spoils in battle for the tourism dollar?

Aside from the local economic slowdown, Hong Kong Disneyland is expected to face stiff competition from its Shanghai counterpart, which will open in June. Shanghai Disneyland will be three times bigger, but ticket prices will be similar to that charged by the Lantau park.

In anticipation of the competition, Hong Kong Disneyland planned to offer discounted entrance fees and hotel room rates, Kam said. A one-day ticket, for example, would cost about 400 yuan and include a free lunch, while hotel room rates would be discounted by up to 30 per cent .

“Once you’ve established your own brands, I think you don’t need to worry about the competition” Kam said, adding there was enough regional demand to be shared between the two parks.

READ MORE: Is the fairytale over for Hong Kong Disneyland? Analysts see tough times ahead for 10-year-old theme park amid tourism slump

Ocean Park, Hong Kong’s other big tourist attraction, has already reported disappointing figures, with profits cut in half. For the fiscal year that ended last June, profit was down 53 per cent at HK$45.2 million, while revenue fell slightly to HK$1.97 billion – a drop of HK$600,000 over the previous year.

Mainland visitors will see a drop 3.2 per cent in 2016, compared with a 3 per cent decline last year, according to a panel paper submitted to the Legislative Council by the Tourism Board.

The board also expects overnight visitor per capita spending to drop 4 per cent this year to HK$6,948 compared to the same period last year, down from its peak of HK$8,123 in 2013.

Legco’s tourism representative, Yiu Si-wing, said the official tourism forecast was “rather aggressive”, based on the number of visitors during the Lunar New Year holidays.

In the seven days from February 7 to 13, the number of visitors dropped 10 per cent to 1.07 million, while mainland tourist figures fell 12 per cent to 870,000.