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Hong Kong Disneyland Rebounds Despite Shanghai Opening

Hong Kong Disneyland bounced back in the third quarter, despite the recent opening of the Shanghai Disney Resort and despite recent losses.

But local tourism insiders call for an accelerated development of the second phase of the Hong Kong park so that it can maintain a competitive edge.

Speaking on an earnings call earlier this month, Christine M. McCarthy, Walt Disney Co.’s chief financial officer and senior executive VP, said that opening costs of Shanghai Disneyland had contributed to a decline at the group’s international parks division. “But we saw improved results at Hong Kong Disneyland,” she said.

Robert A. Iger, chairman and chief executive officer, added that “actually Hong Kong has strengthened.” The performance represents a turnaround for HKDL, though neither Iger or McCarthy provided specifics.

In February, Hong Kong Disneyland reported a net loss of US$19.1 million (HK$148 million) in 2015 – its first loss since 2011. The number of visitors in 2015 was also down to 6.8 million, 9.3 per cent less than the previous year. The number of mainland Chinese tourists went down by 23% from 3.6 million in 2014 to 2.78 million in 2015. That may be a reflection of the impact of Shanghai, or the wider slowing of the Chinese economy.

Andrew Kam, HKDL’s former managing director, warned in February that 2016 would be a difficult year. In April, HKDL said it would axe up to 100 employees.

Hong Kong tourism insiders urged the city’s government, which now holds 52% of the park in a joint venture with Disney, to speed up discussions on development of a second phase.

“Hong Kong Disneyland is too small. The Hong Kong government should explore with Disney headquarters on the expansion and start to work on the development of phase two,” said Hong Kong tourism lawmaker Yiu Si-wing.

A “Marvel Iron Man Experience” is expected to open at the Hong Kong park toward the end of this year and the “Explorer’s Lodge” is scheduled to open in 2017.

But the newly opened Shanghai Disney Resort, which has already welcomed its millionth visitor, occupies 390 hectares. The park and resort are approximately three times bigger than the Hong Kong park alone, which is the world’s smallest.

The proportion of visitors to HKDL from mainland China dropped to 41%. And Yiu suggests that the impact of the Shanghai opening may in fact have been positive for HKDL, which can now concentrate on promoting in southern China provinces “These parts of China have 200 million to 300 million population,” Yiu said.

Regional travel may also be a boon for HKDL, and this is where Joseph Tung, executive director of the Travel Industry Council of Hong Kong, says HKDL should focus its efforts.

“Shanghai Disneyland will mainly attract tourists from eastern China. But Hong Kong is still attractive to international tourists,” Tung said. In contrast to the stagnating number of mainland visitors to Hong Kong, the number of visitors to the territory from places including the U.S., and The Philippines rose between 2% and 11%. “India is also a new potential market for Hong Kong,” said Yiu.

But people who travel to a city not only because it has Disneyland or not, said Tung. He said the key was to make the city overall an attractive place.

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