Hong Kong's Disneyland struggling to work its magic

Disney's Shanghai park, set to open in June, could lure more mainland Chinese visitors away from Hong Kong.
Disney's Shanghai park, set to open in June, could lure more mainland Chinese visitors away from Hong Kong.PHOTO: EUROPEAN PRESSPHOTO AGENCY

With fewer visitors from China and Shanghai rival coming up, theme park will up its game

HONG KONG • As Walt Disney readies to open its first Disneyland resort in mainland China and its sixth in the world by June, its decade-old theme park in Hong Kong has tumbled back into a loss, portending challenges ahead amid the country's slowing economic growth.

Hong Kong Disneyland recorded a loss of HK$148 million (S$27 million) in the year ended October last year, its first loss in four years, after fewer Chinese tourists visited the city. The resort had suffered seven years of losses from its opening in 2005, before turning in its first profit in 2012.

The former British colony has already seen retail sales slump as fewer mainland Chinese tourists visit, hurt by a combination of China's slowdown and a weak yuan, relative to the Hong Kong dollar, that has dulled the city's attractiveness.

WHY HONG KONG

It's very easy for us to visit Shanghai. We will definitely go later... There are more things to do in Hong Kong, as well as other famous attractions like Victoria Peak.

MS LU MEI-YIN, 45, a graphic designer from the northern coastal city of Qingdao in China, who visited Hong Kong Disneyland earlier this year.

WHY NOT HONG KONG

Who will go to Hong Kong Disneyland when we have one at our door? Even if we want to visit a foreign Disney park, I will go to Tokyo, which many of my friends have recommended.

MS HUANG SHILIN, a 33-year-old mother of two children from Hangzhou, in Zhejiang province.

  • MIXED FORTUNES FOR ASIA'S DISNEYLANDS

  • Hong Kong Disneyland

    Opened: Sept 12, 2005

    Visitor numbers: 6.8 million last year, down 9.3 per cent from the year before

    Ticket prices: General adult entry fee is HK$539 (S$98); the park is planning to give discounts

    Size: 126ha

  • Shanghai Disneyland

    Opening: June 16, 2016

    Visitor numbers: 15 million people expected in the first year; projected yearly visitor numbers of 25 million to 30 million

    Ticket prices: Peak period adult ticket costs HK$590 per day; HK$438 at other times

    Size: 400ha

  • Tokyo Disneyland

    Opened: April 15, 1983

    Visitor numbers: Traffic for the entire fiscal year expected to fall 3 per cent to 30.4 million for the fiscal year through next month. Attendance in 2013 and 2014 was up sharply, due to factors such as the park's 30th anniversary and the launch of large attractions

    Ticket prices: Starting from April 1 this year, adults will pay 7,400 yen (S$91) for a single-day ticket, a 500-yen increase

    Size: 200ha

Revenue at the Hong Kong resort fell 6.4 per cent to HK$5.1 billion, while annual attendance slipped 9.3 per cent to 6.8 million, it said.

With Disney's Shanghai park set to open on June 16, more Chinese could be lured away.

Mainland Chinese customers helped boost Hong Kong Disneyland to a record profit of HK$322 million in fiscal year 2014.

Last year, they formed the biggest group of visitors to Hong Kong Disneyland, accounting for 41 per cent, followed by Hong Kong residents at 39 per cent, and international visitors at 20 per cent, the resort said in a statement on Monday.

It will be contending with a sister resort in Shanghai that is three times larger in size, and with similar ticket prices.

Adult tickets at Shanghai Disneyland will be more expensive than at its counterpart in Hong Kong during peak times, such as at weekends and on holidays, but cheaper during other periods.

Recruitment and staff training are now under way at the Shanghai theme park, the South China Morning Post (SCMP) reported.

"The next two years will be very challenging," Hong Kong Disneyland managing director Andrew Kam told reporters on Monday.

In anticipation of the stiff competition, Hong Kong Disneyland will offer discounted entrance fees and hotel room rates, he said.

A one-day ticket, for example, would cost about 400 yuan (S$86) and include lunch, while hotel room rates would be discounted by up to 30 per cent, SCMP reported.

A 750-room hotel is due to open next year.

Mr Kam said new attractions this year include a revamp of the Space Mountain roller coaster, with elements from the Star Wars movies, and a themed area based on Marvel's Iron Man franchise.

"Our asset is really differentiation," he was quoted as saying by Nikkei Asian Review. "We will focus on serving customers around the region."

Falling numbers from China have encouraged the theme park to look harder at South-east Asian markets, including countries like Indonesia, the Philippines and Thailand.

Hong Kong Commerce and Economic Development Secretary Greg So said the Shanghai park highlights more Chinese characteristics, while Hong Kong is an "international playground".

Hong Kong's other big tourist attraction, Ocean Park, is also feeling the heat, with profits down 53 per cent at HK$45.2 million for the fiscal year that ended last June. It has announced plans to seek new markets in Asia and boost its retail and food sectors, SCMP reported.

In an editorial published on Wednesday, the Hong Kong English-language newspaper said mainland tourists are increasingly spoilt for choice amid a proliferation of theme parks in the region. It called on Hong Kongers to change their attitude towards mainland Chinese visitors.

"There is another cloud in Disneyland's outlook that only Hong Kong people themselves can disperse - anti-mainlander sentiment, which has a negative impact on Hong Kong's image as a safe, welcoming city.

"Sadly, it is compounded by violent incidents such as the Mongkok riot," SCMP said.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on February 19, 2016, with the headline 'HK Disneyland struggling to work its magic'. Print Edition | Subscribe