Disney's Hong Kong Theme Park Finally Turns a Profitby
Hong Kong Disneyland’s boss, Andrew Kam, has just brought some welcome Year of the Snake news to local taxpayers: After years of disappointing results, the government-backed Magic Kingdom project is finally making money. Kam, managing director of Hong Kong Disneyland, on Monday announced that the theme park owned by Walt Disney and the Hong Kong government was in the black, earning 109 million Hong Kong dollars ($14 million) during the fiscal year ending September.
That’s the first profit since Hong Kong Disneyland opened in 2005. It comes after the government, which owns 52 percent of the park, and Walt Disney, which owns the rest, made desperately needed additions to the world’s smallest Disney theme park. Hong Kong Disneyland offered just Main Street USA and three “lands” when it opened: Fantasyland, Tomorrowland, and Adventureland. With such a small footprint, the park just didn’t have enough rides and other attractions to keep visitors returning for more.
Now Hong Kong Disneyland is in the midst of a major expansion. A new land based on the Toy Story movies opened in 2011 and a Wild West-themed land called Grizzly Gulch debuted last year. A third new land, called Mystic Point, is scheduled to open later this year. Further expansion may lie ahead, with Kam telling reporters that the joint venture is looking at additional steps. “We are still negotiating with all the shareholders,” he said. “The expansion is a matter of when, how, and what scale.”
Hong Kong Disneyland probably needs to keep growing in order to match the competition across the border. The number of theme parks has exploded in mainland China. The business makes sense: Chinese are growing wealthier and—thanks to the one-child policy—lots of parents and grandparents are eager to splurge on their Little Emperors or Empresses. The People’s Daily in December reprinted a column from the Worker’s Daily about China’s surfeit of Disneyland imitators. The headline: “Time to Abandon Obsession with Theme Parks.” China is in the midst of “theme park fever,” the Communist Party paper reported, with more than 100 new parks opening in 2012.
Notwithstanding restrictions that are supposed to prevent developers from opening new parks, there’s no shortage of innovative ways to find loopholes, as with so many other things in China. Plenty of parks are in the works. For instance, district governments in the southwestern city of Chongqing have announced plans for two projects, each covering more than 1,200 acres. The cost of one park will be 3.5 billion yuan ($560 million), the other 10 billion yuan ($1.6 billion).
The developing park with the highest profile of all is Shanghai Disneyland. Disney and its local partner, Shanghai Shendi Group, are investing $4 billion on a 963-acre resort that will include the theme park, as well as two hotels. The park is scheduled to open in 2015, and the resort’s website is vague about what attractions it will have. Shanghai Disneyland will have “several” lands, the site says.
That’s not encouraging. If it wants to win over Chinese tourists, who have no shortage of theme park choices, the House of Mouse should learn from its Hong Kong experience and not skimp.