Hong Kong Disneyland Loss Narrows to $93 Million as Park Attendance Climbs

Walt Disney Co. narrowed the annual loss at Hong Kong Disneyland and said it expects the business to turn profitable “fairly soon” as visitor numbers rise and the park expands.

The net loss shrank to HK$720 million ($93 million) in the 12 months ended Oct. 2 from a HK$1.3 billion loss a year earlier, according to a statement distributed in Hong Kong today. Park attendance increased 13 percent to 5.2 million visitors, boosting sales 19 percent to HK$3 billion.

The theme park benefited from a 27 percent surge in arrivals from mainland China in Hong Kong last year as wealth generated in the world’s fastest-growing major economy spurred outbound tourism. New areas of the park scheduled to be completed in 2014 may lure more visitors.

“We hope they can accelerate the expansion and add more rides,” said Joseph Tung, executive director of Hong Kong’s Travel Industry Council.

The park, a venture between Hong Kong’s government and the Burbank, California-based company, plans to add rides including “Toy Story Land,” “Grizzly Trail” and “Mystic Point” after the city approved the conversion of part of its loan to the park into equity in 2009 and Disney agreed to pay HK$3.5 billion.

“The expansion is very crucial to our profits in the future,” Hong Kong Disneyland managing director Andrew Kam told reporters today.

China Visitors

Hong Kong’s government owns about 53 percent of the theme park. Disney, the world’s largest media company, owns the rest.

The expansion plan is on time and on budget as the park signed most of the outsourcing contacts in 2009 that allow it to avoid a rise in raw-material costs, Kam said. “Toy Story Land” will be completed this year, he said.

The share of Hong Kong Disneyland visitors coming from mainland China rose to 42 percent from 36 percent, while Hong Kong’s contribution declined to 33 percent from 41 percent.

The park had earnings before interest, taxes, depreciation and amortization of HK$221 million. Hotel occupancy increased 12 percentage points to 82 percent.

Ticketing generates the most profit, Kam said, followed by merchandising, food and beverage and hotel businesses. He said 98 percent of the theme park's 5.2 million visitors last year paid for their tickets.

Total visitor arrivals to the former British colony surged 22 percent to 36 million in 2010, according to the government- backed Hong Kong Tourism Board. China’s National Tourism Administration said outbound tourism increased 17.5 percent last year to 56 million people, Xinhua News Agency reported Jan. 12.

Hong Kong Disneyland expects attendance to grow 10 percent in 2011, in line with a forecast from the city’s Tourism Board, Kam said.

To contact the reporter on this story: Wendy Leung in Hong Kong at wleung12@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

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