Hong Kong Disneyland Resort losses double to HK$105 million as decline attributed to anti-government protests

Denise Tsang

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

The theme park on Lantau Island said the figure covering the year to September 2019 reflected poor performance during last summer’s escalating social unrest, which was sparked by the now-withdrawn extradition bill.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.

Stephanie Young, Hong Kong Disneyland Resort’s managing director, said: “The city has certainly faced a very challenging situation in the past several months and every aspect of Hong Kong has been affected by the social unrest, which began last June, as well as more recently the coronavirus development, not only here, but around the world.

“Even the Disneyland park, along with major tourist venues across the continent, had to close to prevent the spread of the coronavirus.

“The position we find ourselves in today is unfortunate … It’s important to remain vigilant and optimistic to weather the storm and come out of it stronger.”

Earnings before interest, taxes, depreciation and amortisation (Ebitda), shrank 17 per cent to HK$1.1 billion in 2018/19, while revenue of HK$6 billion that year was virtually unchanged from 2017/18, according to the figures published on Monday.

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Visitor numbers dropped 4 per cent to 6.5 million in 2018/19. However, during the nine months to June 30 last year, Ebitda was up 20 per cent and revenue was 5 per cent higher year-on-year.

The poor performance revealed on Monday afternoon marks the fifth straight year of losses at the theme park.

Since June last year, opposition to the now-withdrawn extradition bill in Hong Kong has morphed into a broader anti-government movement, with radicals and police engaged in violent clashes.

More tough times are ahead for the resort, which has been closed since late January because of Covid-19. Photo: K.Y. Cheng

But the worst is yet to come for Disneyland, which has been temporarily closed since January 26 to prevent the spread of the coronavirus.

Speaking at a media briefing, Young said a decision had not been made on reopening. And she declined to rule out lay-offs or pay cuts at the theme park, which employs 5,500 full time staff members and 2,400 part-timers.

The pandemic has taken a heavy toll on tourism, with the government closing all but three checkpoints at the border with mainland China and people across the world avoiding international travel.

Tourist visits to Hong Kong in February were nearly wiped out, with numbers cut by more than 96 per cent on the same month last year.

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To reduce its reliance on visitors mainland China, Young said the theme park would explore new sources of customers from markets such as Japan, Thailand and South Korea.

Mainlanders accounted for nearly 80 per cent of Hong Kong's tourist arrivals and a third of Disneyland guests last year.

Young said the revamped Castle of Magical Dreams attraction was due to open this year and would be followed by a new Frozen-themed area under a planned HK$10.9 billion expansion between 2018 and 2023.

Tourism lawmaker Yiu Si-wing said he expected Disneyland to suffer further losses this year and would press for its shareholder Walt Disney to waive the loyalty and management fees levied on the Hong Kong resort.

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Young did not reveal the size of the charges in 2018/19 or whether an exemption would apply, but she added the fees were part of the contract between the American company and Hong Kong government.

The government has a 53 per cent stake in Disneyland, with the rest controlled by Walt Disney in a joint venture.

The coronavirus outbreak prompted Disneyland theme parks across the globe to close temporarily. The resort in Shanghai partially reopened earlier this month.

Walt Disney said a two-month closure at its Shanghai theme park could cost the American firm US$135 million in operating income over the second quarter ending March 31.

This article Hong Kong Disneyland Resort losses double to HK$105 million as decline attributed to anti-government protests first appeared on South China Morning Post

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