Source:
https://scmp.com/comment/insight-opinion/article/2134362/hope-hong-kong-disneyland-despite-more-losses Comment
Hope for Hong Kong Disneyland despite more losses
After announcing a deficit of HK$345 million, the Lantau Island attraction may be encouraged by a growth in visitors and rebound in the tourist sector
Mickey Mouse and Minnie Mouse dressed in festive Chinese New Year clothes in celebration of Chinese New Year at Hong Kong Disneyland. Photo: Winson Wong
Hong Kong Disneyland reported some positive numbers last year, with an 8 per cent increase in revenue to HK$5.1 billion largely driven by a 3 per cent rise in visitors to 6.2 million. Alas, they were not reflected in a doubling of the theme park’s financial deficit to HK$345 million, due to erosion of the balance sheet by a major park expansion, asset depreciation and higher operating costs.
The third straight year of losses adds a dismal chapter to what has turned out so far to be a disappointing deal for the government, majority owner of the park, conceived as an economic boost during the Asian financial crisis. The only winner remains Disney, which continues to draw millions in royalties and management fees.
As it struggles to attract customers amid rivalry from other Disney attractions and theme parks in the region, Hong Kong Disneyland is banking on a HK$10.9 billion revamp and expansion – half paid for by the government – for a sustainable turnaround. But that is a six-year project to create a more credible leisure and entertainment package.
Meanwhile, it is relying on a recovery in tourism after official figures showed arrivals have resumed growing. But the days five or six years ago when mainlanders accounted for 50 per cent of visitors are unlikely to return. Locals topped visitor numbers last year at 41 per cent followed by mainlanders on 34 per cent.
There is no practical way out of the present arrangement without Disney making a concession, much as foregoing some royalties during sustained losses. However, that would undo a good deal that persuaded it to come here in the first place. Hong Kong Disneyland must continue trying to do better in a dauntingly competitive market for the tourist and leisure dollar. It could well reflect on tourism sector lawmaker Yiu Si-wing’s comment on the overall 70 per cent occupancy rates of the three hotels on the Lantau Island site compared with more than 80 per cent on Hong Kong Island, and consider his suggestions of more conventions and exhibitions to boost business. Despite the disappointing result, amid optimism about visitor numbers and tourism, Disney has invested in its most valuable asset – its 5,000 full-time staff – with pay rises of 2.8 per cent to 5 per cent on top of a bonus in December.