Disneyland Honk Kong Key Facts and Figures

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The fifth Disney Park (others are in Orlando, Anaheim, Tokyo, and Paris) Is due to open in Hong Kong in 2005 or 2006. The cost of building the park will exceed US $3 billion. However, Disney itself is only investing around US $314 million, for which it will receive a 43 per cent share in the park (Far Eastern Economic Review, 23 January 2003). In other words, it will not have a controlling interest in the new park. Hong Kong Government (Disney’s partner) is investing some HK $22. 45 billion in the project, as follows: * $3. 5 billion in equity in the project; * $5. 6 billion loan to be repaid over 25 years with interest; * $13. 6 billion in land works and infrastructure costs. The company is looking for most visitors to come from Hong Kong and mainland China rather than relying on inbound foreign tourists.

Data from the Far Eastern Economic Review in January 2003 seems to indicate that this may be correct. For example, it states that: * 6. 5 million mainland Chinese tourists visited Hong Kong in 2002, compared to 4. million in 2001, a growth rate of nearly 50 per cent; * 50 per cent of mainland Chinese tourists in Hong Kong visited the destinations’ existing theme park, Ocean Park; * 42 per cent of the mainland Chinese tourists to Hong Kong came from the neighbouring province of Guangdong; these people would be unlikely to visit a Shanghai-based park instead; * Mainland Chinese tourists spent, on average HK $5169 in 2001, more than any other market. Disney expects to earn around US $100 million per annum from its involvement in the park, around 3 per cent of all the revenues of the corporation (Far Eastern Economic Review, 23 January 2003).

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Benefits the Hong Kong Government is expecting from the Park: * It has been estimated that the project will inject around HK $148 billion into the local economy over a 40-year period, including all the multiplier effects such as salaries, employees spending, extra business for local enterprises, and so on. * Around 6000 jobs will be created directly by the construction of the park at a time when Hong Kong’s unemployment rates were reaching relatively high levels. * Once open, it is believed that the park will employ around 18,000 people directly nd indirectly, again a major contribution to employment in the area. * The forecast is that Hong Kong Disneyland will attract around 3. 4 million inbound tourists in its first year, of whom 1. 4 million will be additional tourists who would not otherwise visit. * Disney’s emphasis on high environmental quality on its sites, it is thought by the government, would raise environmental awareness throughout Hong Kong. * Finally, the government thought, its deal with Disney sent an important message to the global business community.

It showed that Hong Kong could do deals with commercial operators. This was an important message just after the return of Hong Kong to China from UK control, when foreign investors had feared the new government might not be business friendly. Main Issue Although the Hong Kong government has analyzed all the long term benefits the economy may receive from this multibillion dollar investment, Hong Kong Disneyland is being developed during a difficult period in the history of the tourism industry.

For example, Ocean Park (existing amusement park in China) made a large loss in 2000–2001 and even with the rapid growth of Chinese tourists in 2001–2002 only managed a very modest profit. At the same time, the Hong Kong Park is planned to be followed by another park in Shanghai, China. The issue can be will Shanghai overtake Hong Kong if Disney eventually opens its park there and Universal opens its new Movie theme park, as planned, there in 2006.

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