Hong Kong Disneyland has only itself to blame for 2015 losses

Albert Cheng says the theme park must offer more exciting rides and promote itself better, not just write off its disappointing performance based on the fall in visitor numbers to Hong Kong

PUBLISHED : Thursday, 25 February, 2016, 4:12pm
UPDATED : Thursday, 25 February, 2016, 4:44pm

The decade-old Hong Kong Disneyland is in the red again. In explaining its disappointing performance, the theme park cited a drop in mainland visitors as the main reason why it made a loss of HK$148 million last year.

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

The theme park, which opened in September 2005, managed a net profit (of HK$109 million) for the first time in 2012. The honeymoon lasted barely three years. In 2015, the park’s tally of visitors fell by 9.3 per cent to 6.8 million, of which 2.8 million were from the mainland.

Last year, local residents made up 39 per cent of the total attendance. Mainlanders accounted for 41 per cent, while the remainder were foreign tourists. Revenues for the year were HK$5.11 billion, compared with HK$5.47 billion in 2014.

Instead of addressing its own inadequacies, Hong Kong Disneyland pointed to a list of external factors to account for the deficit. These include the fact the Hong Kong dollar has remained strong, other tourist destinations have eased visa restrictions, and budget airline services have mushroomed, presenting a much wider choice of destinations for travellers.

This is, at best, a half-truth. Despite the overall decline in visitor arrivals last year, the figure still surpassed the 50 million threshold. The total for this year is expected to be more or less the same. While tourists might have opted for destinations elsewhere, such a high number of visitors would be the envy of any other city.

Hong Kong was eager to lure Mickey here to boost the economy in the wake of the severe acute respiratory syndrome outbreak. Preferential terms were conceded and taxpayer money was used to make a direct investment in the project. Hong Kong Disneyland was subsequently launched as a joint venture, in which the government holds a 53 per cent majority stake.

Disney has some serious soul-searching to do to find out why it has failed to tap better into the existing huge pool of tourists

While the project was in preparation, Beijing introduced the individual visit scheme in July 2003 to allow Chinese residents in selected cities to visit Hong Kong and Macau individually for the first time. In 2003, 15 million tourists visited Hong Kong. Since then, the figure has quadrupled, before officials put a lid on the influx in reaction to local complaints about overcrowding.

Disney cannot simply explain away its poor business performance by suggesting that others were doing better. Per capita spending of visitors to Hong Kong Disneyland has actually grown. Yet, the company still could not make a profit. It has some serious soul-searching to do to find out why it has failed to tap better into the existing huge pool of tourists.

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

There is further bad news down the track; Shanghai will welcome the first customers to its own Disneyland in mid-June. Hong Kong Disneyland has tried to play down the competition by suggesting that Shanghai would appeal to a different category. That is wishful thinking.

Disney has betrayed Hong Kong in this regard. During initial negotiations, it pledged to refrain from building a second park in China. But that’s what it has done.

The task now is for Hong Kong Disneyland to upgrade itself to become a unique and appealing tourist attraction. However, instead of focusing on innovative ideas and rides, its management is apparently interested in erecting more hotels. Such a strategy is not going to help turn things around. It is putting the cart before the horse: first, it needs to figure out how to give visitors more reasons to stay overnight.

Hong Kong Disneyland should take a two-pronged approach to reform. It should redouble efforts to promote the cartoon characters to children in China, as many mainland kids are not familiar with the stories. At the same time, hi-tech rides and games should be installed that are exciting enough to attract not just mainlanders but also international tourists.

Land has already been reserved in Penny’s Bay for future expansion of the theme park. It is now up to the Hong Kong government, as the major shareholder, to ensure Disney comes up with better ideas than just hotel beds.

Albert Cheng King-hon is a political commentator. [email protected]