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Discussion Starter #121
Hong Kong Disney ponders its future amid a slump
12 May 2016
Nikkei Asian Review Excerpt

HONG KONG When the deal to build Hong Kong Disneyland was struck in 1999, mainland China and Singapore probably felt envious.

Zhu Rongji, China's former premier who was then mayor of Shanghai, first approached Disney in the 1990s about building a park on the mainland. Singapore's late leader Lee Kuan Yew reportedly invited Disney executives to his official residence to win them over. "Those were the two competitors we knew of," recalled Mike Rowse, who led the Hong Kong government's negotiations with Disney.

Things are different today. Singapore is home to a popular Universal Studios park. Shanghai will have its own $5.5 billion Disney Resort in June. Hong Kong Disneyland -- the world's smallest Disneyland -- seems like a less-favored sibling hit by a triple whammy: sliding earnings, a long-overdue expansion and the likely loss of Chinese customers when the newer and three-times larger Shanghai park opens.

In April, Hong Kong Disneyland fired about 100 employees, citing the need for "operational adjustments." That was its first large-scale layoff since the park opened in 2005. The dismissals came months after it reported its first full-year loss -- of $19 million -- in four years. Turnover and hotel occupancy were all down last year, dragged lower by a fall in the number of mainland tourists, who make up about 40% of the park's visitors. International visitors make up 20% and locals the rest.

During the recent Labor Day holiday, a traditional peak travel period for mainlanders, only a third of the parking spaces reserved for tour buses were filled. Admission tickets, which once required advance booking, were available at the gate. The wait for a ride on the Space Mountain roller coaster was only 30 minutes, half that of two years ago. In Shanghai, meanwhile, some 40,000 people reportedly flocked to the new Disney metro station on May 1 for a glimpse of the unopened park.

SIZE MATTERS Situated on the outlying island of Lantau, Hong Kong Disneyland has an area of about 1.26 sq. km. While its small size is often seen as its fatal flaw, the Hong Kong park is getting bigger: It is adding a third hotel with 750 rooms next year. New attractions that will open later this year include one based on Marvel's "Iron Man" franchise and a revamped Space Mountain ride that will incorporate elements from the "Star Wars" movies.

But that is only the beginning. Hong Kong Disneyland, in which the local government has a 53% stake, could double in size with the construction of a second theme park. This would be equivalent to the addition of DisneySea to the neighboring Tokyo Disneyland, or placing Disney's California Adventure park next to its main park near Los Angeles. The Nikkei Asian Review has learned that the original Hong Kong deal struck in 1999 gives Disney priority on the acquisition of an adjacent 0.6-sq.-km site and the option to develop a third theme park.

"We gave them a 100-year lease once Disney put their name up. The prestige of the company depends on making that theme park a success," said Rowse, now retired, who was Hong Kong's first commissioner for tourism. "The idea of Disney moving away from Hong Kong is just silly."

According to the deal, Disney can decide by 2020 whether it wants to go ahead with a second park in Hong Kong, but some say the company should make its intentions clear as soon as possible. "The deal was signed without the [knowledge] that a second park would be built in China," said Yiu Si-wing, a lawmaker who represents the tourism sector in Hong Kong. "If there are further signs they are withdrawing investment here, this is unfair to Hong Kong. Disney is morally responsible to maintain the park's competitiveness."

But skepticism has begun to creep in. One suggestion is that Disney is deferring investment in Hong Kong, while keeping its eyes on a potentially bigger market in mainland China. "They probably want to wait and see how things go with Shanghai Disneyland," said Yiu. "But four years of waiting is simply too long."

After the deal was signed, the Hong Kong government poured money into infrastructure to prepare for the park's opening. A second reclaimed site has been reserved for the expansion and a Disney-themed metro line was built to connect the park to downtown.
 

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Discussion Starter #122
Disney Adding ‘Frozen’ Land in $1.4 Billion Hong Kong Expansion
Bloomberg Excerpt
November 22, 2016













Walt Disney Co. is embarking on a $1.4 billion expansion of its Hong Kong Disneyland resort, which reported a loss last year, with features that include the first "Frozen" and Marvel-themed lands in its parks.

The six-year construction project, which will begin in 2018, will include two attractions based on the animated film “Frozen” and a related dining area, new rides tied to Marvel’s superheroes as well as entertainment additions to the existing Sleeping Beauty Castle. The park recorded a loss of HK$148 million ($19 million) in the fiscal year ended last October amid a slower Chinese economy and political unrest in Hong Kong. Figures for the latest fiscal year are not yet available.

"Hong Kong tourism is in an adjustment period," the city’s commerce secretary Gregory So said at a joint briefing with Disney in Hong Kong that featured actresses posing as the main "Frozen" characters "Elsa" and "Anna." The expansion is a strategic development to attract tourists who would stay overnight and spend more, he said.
 

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Discussion Starter #123
The Standard Excerpt
So sees big pic in Disney plan
Nov. 24, 2016

The government is investing "real money" in Hong Kong Disneyland's HK$10.9 billion expansion project to draw more tourists to the SAR, not so much to generate revenue, said Secretary for Commerce and Economic Development Gregory So Kam-leung.

His remarks came after the 11-year- old theme park bared on Tuesday a six- year development plan involving the construction of two new theme zones based on the hit movie Frozen and Marvel superheroes, a revamped castle and a new performance venue.

So told a radio program yesterday that during the first 10 years since its opening in 2005, Hong Kong Disneyland generated more than 58 million visitors who made additional spending of HK$136 billion in Hong Kong. Such spending, he said, brought an additional HK$74.9 billion to the SAR, accounting for 0.38 percent of gross domestic product.

While taxpayers will be forking out HK$5.8 billion and Walt Disney Co the rest for the expansion, questions had been raised as to whether it is worthwhile for the government to inject capital into the theme park, which suffered a HK$148 million loss last year. Questions also stem from the fall in attendance to 6.8 million in the last fiscal year, down significantly from 7.5 million in the earlier period.

"We aren't doing it for the purpose of adding money to the government's treasury," So said. "Instead, we are improving our infrastructure to attract more visitors [to Hong Kong] so the city's economic efficiency can be boosted."

He said some of the park's new attractions - including the one based on Star Wars which opened in June and the "Iron Man Experience" ride to be launched in January - did not involve government capital injection.

"They were built with capital from Disney and the profit that we kept in the joint venture," he said. "But this time, we are both putting real money into it, which shows the park's confidence in Hong Kong."
 

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Discussion Starter #124
Hong Kong Disneyland on roller-coaster ride amid expansion plans
Analysts question whether the US theme park remains a worthwhile investment for the city after it reports a loss for the second consecutive year
South China Morning Post Excerpt
February 20, 2017

It would hardly be an exaggeration to say that Mickey Mouse had a roller-coaster ride in Hong Kong last year.

The Lantau-based Disneyland theme park ended the Year of the Monkey with a loss of HK$171 million due to dwindling visitor numbers from the mainland.
This comes as the park is planning a controversial HK$10.9 billion expansion project, of which more than half will be footed by taxpayers.

While Disneyland’s management is expected to come before the city’s Legislative Council with a funding request for HK$5.8 billion in the coming months, a question is left hanging in the air: is the US theme park still a worthwhile investment for Hong Kong?

The park operator is optimistic. “I am confident that the government, Disney and the Hong Kong community will support and continue to invest in this park,” Disneyland managing director Samuel Lau Wing-kei said at its annual results press conference on Monday, adding that the park was a major tourism infrastructure project to attract world visitors to the city.

First negotiated in 1998 when Hong Kong was desperate to recover from a financial crisis, the theme park, which opened in 2005, has blossomed alongside the city’s decade-long tourism boom.

But 12 years on, with fierce competition from the mainland and the region as well as a bleak business performance due to declining visitor numbers, it seems the Magic Kingdom will have to overcome a number of obstacles.
The Hong Kong government, which owns 53 per cent of the park, has not lost faith in the venture, strongly believing that the six-year facelift will bring substantial benefits to the community.

“Governments are willing to inject public money into theme park projects if they can generate additional tourist traffic, create new direct and indirect jobs, and also tax revenue if the park becomes profitable one day,” said Pascal Martin, partner at OC&C Strategy Consultants.

More : http://www.scmp.com/news/hong-kong/article/2072398/hong-kong-disneyland-roller-coaster-ride-amid-expansion-plans
 

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Discussion Starter #125
Hong Kong motoring body, lawmaker press for Formula One circuit at Sunny Bay reclamation
Automobile Association joins up with Michael Tien in pressing the government for the project, saying the circuit could also be used for vehicle testing and carnivals
South China Morning Post Excerpt
March 23, 2017

The city’s only authorised motor-racing organisation has joined hands with lawmaker Michael Tien Puk-sun in pressing for the construction of a multi-purpose Formula One race circuit on a proposed reclamation site in Sunny Bay as Hong Kong has been lagging behind in motorsports facilities.

The Hong Kong Automobile Association, the city’s only authority for issuing motorsport competition licences, made the appeal along with Tien as they said the planned 80-hectare site was ideal for building an international race track.

As the site proposed for reclamation is close to the Disneyland resort and the airport, they thought the proposed circuit would help boost tourism and the economy.

“Apart from hosting racing events, this circuit could also serve other purposes such as conducting tests for vehicles and hosting carnival events for tourists,” association president Kenneth Ng Shing-yip said.

“We have been longing for a race circuit as Hong Kong’s motor-racing culture has existed for many years. Up to now we’ve issued over 600 competition licences. It’s a great pity that we have the software but not the hardware,” he added.

Tien of the New People’s Party said the circuit could also cater to cycling and marathon events, so it could be fully utilised and self-sustaining.

He said the Sunny Bay site was very suitable for building a race circuit because it was slated for leisure, entertainment and tourism purposes and not housing.

“The government has consulted me about this site’s purpose. Since it cannot be used for residential use while the environment is very noisy as it is near the airport, the only feasible proposal is to build a tourism spot that can tolerate noise. An open-air race circuit will fit the bill,” he said.

The government will seek HK$99.8 million from the Legislative Council’s Finance Committee for a planning and engineering study for the reclamation project.

More : http://www.scmp.com/news/hong-kong/economy/article/2081620/hong-kong-motoring-body-lawmaker-press-formula-one-circuit
 

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Discussion Starter #126
South China Morning Post Excerpt
HK$350 million proposed for struggling Hong Kong Disneyland by US parent company
Funding application in city legislature also reveals plan to partially waive management fees for two years, but lawmakers say not enough on offer
March 29, 2017

Walt Disney has agreed to inject an extra HK$350 million into its Hong Kong theme park’s six-year expansion plan and waive part of its management fees for two years after renewed public outcry over the deal’s “unequal” financial arrangements.

The concession came after loss-making Hong Kong Disneyland pushed for approval of a HK$10.9 billion facelift project in the city’s Legislative Council last year – with more than half the bill to be footed by taxpayers. It cited fierce regional competition and dwindling mainland visitor numbers.

Some lawmakers earlier vowed to veto the funding application if the government – the park’s largest shareholder – failed to renegotiate a better deal with the American media giant. Questions have been raised as to whether the newest concessions were significant enough to benefit the city.

Addressing concerns expressed by lawmakers in previous discussions, the government and Walt Disney agreed to fund the project on a 50:50 basis, instead of the previous ratio of 53:47, based on its current shareholding structure, a paper submitted to Legco on Tuesday shows.

That means taxpayers would pay HK$350 million less to fund the project at HK$5.45 million after the renegotiation. But the government’s share in the park would drop to 52 per cent.

In addition, “adjustable management fees” – ranging between 0 to 8 per cent of its earnings before interest, taxes, depreciation and amortisation – are to be waived in fiscal years 2018 and 2019.

Under the plan, the Lantau Island-based theme park could pay up to HK$114.4 million less to Walt Disney during the two-year period based on its financial figures in 2016.
 

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Discussion Starter #128
Call to hit Disney for losses with fee cut
The Standard Excerpt
Apr 7, 2017

Hong Kong Disneyland should receive less management and franchise fees from the government if it runs a deficit, a lawmaker has suggested.

In a Legislative Council Finance Committee special meeting yesterday, New People's Party deputy chairman Michael Tien Puk-sun said both pro- democracy and pro-Beijing parties agreed to his motion last week that if the park suffers a loss, the deficit should be offset in the management fee and franchised fee from the government.

Although the theme park lost HK$600 million over the past seven years, the surplus made in profitable years totaled HK$1.3 billion, he said.

"Had the contract stated that Disney's loss would be offset in their management fee and franchised fee, we would have earned a profit of HK$700 million in the past seven years," Tien said.

The government is seeking lawmakers' approval for HK$5.45 billion to fund the park's expansion, with Walt Disney putting in HK$5.45 billion. Tien said he would support the funding if the government agrees to the offsetting mechanism, adding that Walt Disney's headquarters earned HK$3 billion during the seven years in fees.
 

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Discussion Starter #129
Disney in red three years running
Feb 21, 2018
The Standard Excerpt

Hong Kong Disneyland dipped into the red for the third consecutive year, with losses doubling to HK$345 million in the last financial year.

That was despite revenue increasing eight percent to HK$5.1 billion, the second highest level since it opened, and attendance increasing three percent to 6.2 million.

Despite earnings of HK$914 million before interest, tax, depreciation and amortization, 28 percent higher than the previous year, the park still experienced a high net loss mainly because of depreciation, the park's managing director, Samuel Lau Wing-kee, said.

"We opened a new hotel with 750 rooms," Lau said. "We opened a new attraction - Iron Man Experience - and we also had associated increased depreciation from expansion projects. We took out some of our attractions to refresh for our new expansion, so together that explains the majority of the net loss."

Lau said it was difficult to predict if next year's depreciation would be reduced, but the park would focus on how to grow revenue and attendance.

He also said there were positive indicators.

Among visitors, 41 percent were locals, while mainlanders accounted for 34 percent and international tourists 25 percent.

Lau said the international attendance increased 5 percent to a record high of about 1.6 million people since the park opened in 2005.

Visitors from South Korea recorded a 53 percent increase, from Japan 32 percent, Indonesia 21 percent and the Philippines 20 percent.

The park is looking forward to attracting more tourists from Indonesia and Malaysia with Muslim-friendly policies, and to get more male visitors with Marvel attractions.
 

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Discussion Starter #130
Hong Kong government welcomes proposal to convert unused Disneyland plot into temporary Dutch floral park
Plan is subject to approval by lawmakers while supporters say project could bring more visitors to the city, especially since the theme park will not develop the site until 2023
South China Morning Post Excerpt
June 19, 2018

A reserved plot of reclaimed land for the second phase of Hong Kong Disneyland’s expansion could be temporarily converted into a Dutch-designed garden for visitors, the company behind the project said on Monday.

The proposed short-term use of the 60-hectare (148-acre) site came after lawmakers grilled the government over the idle plot amid the city’s notorious shortage of land supply.

Secretary for Commerce and Economic Development Edward Yau Tang-wah, who is on a 13-day Europe work trip with Chief Executive Carrie Lam Cheng Yuet-ngor, said the government welcomed the plan after witnessing the signing of a memorandum of understanding in the Netherlands.

The agreement, which was inked in the town of Noordwijkerhout, was between Alan Fang, a Hong Kong-based entrepreneur behind construction work to be carried out on the Disneyland plot, and Dutch floriculture expert Ibo Gülsen, who will oversee the creative part of the project.

Called Kaleido Park, the European-style garden, if approved by lawmakers, would be the first of its kind in Hong Kong, according to Fang.

“One of the criteria for the usage of this land is tourism,” he said.

Fang added that the government sought partners interested in using the land for a period of time. The site, to the east of Disneyland, is reserved for the second phase of the theme park’s development.

Tourism sector lawmaker Yiu Si-wing said the proposed garden would help attract more visitors, especially those from western Guangdong province after the completion of the Hong Kong-Zhuhai-Macau bridge.

“Disney is not likely to start the phase two expansion before 2023 since they are still building projects from phase one,” Yiu said.
 

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Discussion Starter #131
Hong Kong’s Disneyland Resort aims to become city’s biggest producer of solar power by 2019 in bid to tackle climate change and reduce carbon emissions
Resort aims to generate 1.86 MWh solar power a year, equivalent to annual consumption of 564 three-person households
Power will be sold to CLP Power Hong Kong to encourage use of clean energy for domestic and commercial purposes

July 9, 2019
South China Morning Post Excerpt

Hong Kong Disneyland Resort is installing the city’s largest solar power system, which will generate 70 per cent more clean electricity than the biggest such facility at present.

The theme park on Lantau is setting up more than 4,500 solar cells aiming to produce at least 1.86 megawatts-hour (MWh) of electricity per year, equivalent to the annual electricity consumption of 564 three-person households, senior officials said on Monday.

The solar cells will be placed at the rooftop of its buildings spread over 7,000 square metres (about 75,000 square feet) – the size similar to a standard football field.

The electricity will be sold to CLP Power Hong Kong as part of a feed-in tariff scheme introduced by the government in 2018. The scheme encourages use of renewable energy for domestic and commercial purposes.
The project aims to reduce Disneyland’s carbon emissions by 1.18 million kilograms a year upon completion by December 2019.

Disneyland will be able to sell the solar power for HK$5 million (about US$637,000) per year, or at an average of HK$4 per unit.

More : https://www.scmp.com/news/hong-kong/health-environment/article/3017760/hong-kongs-disneyland-resort-aims-become-citys
 

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Discussion Starter #133
Protests could cost us HK$135m, Disney warns
South China Morning Post Excerpt
Nov 8, 2019

Anti-government protesters have taken the sparkle off Hong Kong's magic kingdom, with the city's Disneyland Resort estimating the social unrest will have cost it US$135 *million in income by the end of the year.

And the loss-making theme park's United States-based parent company has warned of a *significant full-year drop in *income in 2020.

Yesterday, Walt Disney revealed income for Hong Kong Disneyland Resort on Lantau Island shrank by US$55 million year on year between July and September, and expected the *income would decline by another US$80 million between October and December. For the financial year ending September next year the income would be US$275 *million lower, it said.

"The circumstances in Hong Kong have led to a significant *decrease in tourism from mainland China and other parts of Asia," Walt Disney chief financial officer Christine McCarthy said.

The Hong Kong government has a 53 per cent controlling stake in the theme park, with Walt *Disney owning the remaining 47 per cent through a joint venture.

The city's tourism has slumped since July, after protests sparked by the now-withdrawn extradition bill.

The ongoing political chaos has wrecked havoc on tourist *arrivals, which dropped 4.8 per cent in July, 39.1 per cent in *August, and 34.2 per cent in *September, from the same period last year. In the first 15 days of *October, the drop was 50 per cent.

Mainland *residents account for the city's largest group of *visitors, at nearly 80 per cent,and there were 42.3 per centfewer of them visiting the city in August, and 35 per cent fewer in September.

Those figures added to the woes of a resort that had lost money for four consecutive years, although the loss narrowed to HK$54 million in the financial year ended September 2018, from HK$345 million the year before.

Attendance at the resortwas partly hurt by reduced and disrupted rail services. Of the *visitors to the park last year, 40 per cent were locals, 34 per cent *mainlanders and the rest from other markets.

Tourism sector lawmaker Yiu Si-wing said Disneyland was among the victims of the *downturn in the industry, and called on Disney to cut, or even waive, the royalty fees it required from the Hong Kong resort *annually, which are equivalent to between 5 per cent and 10 per cent of its *revenue, as well as *management fees, which are equal to up to 8 per cent of annual earnings before *interest, tax, *depreciation and amortisation.

"The parent company should ease the burden on the resort to avoid it laying off staff or *temporarily cutting salaries," he said.

"I hope they will remember their social mission of creating jobs and value for the economy as mapped out 14 years ago when the resort was brought to the city."

A spokeswoman for Hong Kong Disneyland said the *company had launched seasonal offers on tickets, hotels and meals to attract visitors, and additional deals would be available for *upcoming annual shopping events such as Double 11 and Black Friday.

The spokeswoman did not respond to questions about potential lay-offs and salary cuts.

The theme park is in the *process of a six-year HK$10.9 *billion expansion plan forfuture growth from 2018. The *government was contacted for comment.

More : https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3036882/hong-kong-protests-could-end-costing-disneyland
 

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Discussion Starter #134
Hong Kong Disneyland to lend vacant sites to government for quarantine facilities
South China Morning Post Excerpt
Feb 14, 2020

Hong Kong Disneyland has agreed to lend vacant sites to the government for building coronavirus quarantine facilities so residents stranded in Wuhan can be brought back in batches, officials said on Friday, confirming an earlier report by the Post.

“We have secured consent from Disneyland,” Commerce and Economic Development Bureau chief Edward Yau Tang-wah said, referring to a 60-hectare site reserved for the theme park’s expansion on Lantau Island.

“We leave no stone unturned [when identifying sites for building quarantine facilities],” he said at a government press conference.

More : https://www.scmp.com/news/hong-kong/health-environment/article/3050729/coronavirus-hong-kong-disneyland-lend-vacant
 

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Discussion Starter #135
Hong Kong Disneyland Resort losses double to HK$105 million as bosses attribute decline to anti-government protests
Mar 16, 2020
South China Morning Post Excerpt

Hong Kong Disneyland revealed on Monday its losses doubled to HK$105 million (US$13.4 million) in 2018/19, attributing the decline to the city’s anti-government protests.

The theme park on Lantau Island said the figure covering the year to September 2019 reflected very bad performance during last summer’s escalating social unrest sparked by the now-withdrawn extradition bill. The attraction’s net loss was HK$54 million in 2017/18.

The three months between July and September last year eroded the strong growth it had recorded in the preceding nine months, it said.

More : https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3075373/hong-kong-disneyland-resort-records-hk105-million
 
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