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Deal to expand HK Disneyland
By Jeremiah Marquez |
July 1, 2009, Wednesday
|
Print Edition
Print Edition
THE Walt Disney Co and Hong Kong have reached a deal to expand the city's Disneyland at a cost of about US$465 million in hopes of boosting the theme park's fortunes, officials announced yesterday.
The deal will see the American entertainment giant invest new capital - HK$3.5 billion (US$450 million) - to pay construction and operation costs during the building phases.
In the works for two years, the expansion plan is part of an effort to turn around a park criticized for failing to meet attendance targets, being too small and lacking high-profile rides. Hong Kong is also under pressure to increase the theme park's appeal to compete with a proposed Disneyland in Shanghai, which could open in the coming years, and would siphon off Chinese mainland tourists.
"The expansion will be a catalyst to the park's long-term development and bring benefits to not just the local tourism industry but also the entire economy," said Rita Lau, Hong Kong's commerce and economic development secretary.
The park is a joint venture between Walt Disney and the Hong Kong government. The expansion will add three new theme areas as well as 30 new attractions, enlarging the park's size by nearly a quarter over the next five years.
Beyond the new investment, Burbank, California-based Disney will convert into equity about US$350 million in loans to the venture and maintain a credit facility of about US$40 million.
"Disney is making a substantial investment in this important project," Leslie Goodman, a Disney vice president, said in a statement.
Hong Kong, which shouldered much of the US$3.5 billion original construction cost, will not add any new capital. But the city will convert a large portion of its loan to the park into equity. In all, Hong Kong's total stake is expected to decline from about 57 percent to 52 percent.
The park opened in 2005 to great fanfare, only to miss its targets for attendance in the first two years. However, traffic in its third year grew by 8 percent, according to figures provided by the Hong Kong government.
Sustaining that growth could prove all the more difficult with the allure of a Shanghai Disneyland.
The deal will see the American entertainment giant invest new capital - HK$3.5 billion (US$450 million) - to pay construction and operation costs during the building phases.
In the works for two years, the expansion plan is part of an effort to turn around a park criticized for failing to meet attendance targets, being too small and lacking high-profile rides. Hong Kong is also under pressure to increase the theme park's appeal to compete with a proposed Disneyland in Shanghai, which could open in the coming years, and would siphon off Chinese mainland tourists.
"The expansion will be a catalyst to the park's long-term development and bring benefits to not just the local tourism industry but also the entire economy," said Rita Lau, Hong Kong's commerce and economic development secretary.
The park is a joint venture between Walt Disney and the Hong Kong government. The expansion will add three new theme areas as well as 30 new attractions, enlarging the park's size by nearly a quarter over the next five years.
Beyond the new investment, Burbank, California-based Disney will convert into equity about US$350 million in loans to the venture and maintain a credit facility of about US$40 million.
"Disney is making a substantial investment in this important project," Leslie Goodman, a Disney vice president, said in a statement.
Hong Kong, which shouldered much of the US$3.5 billion original construction cost, will not add any new capital. But the city will convert a large portion of its loan to the park into equity. In all, Hong Kong's total stake is expected to decline from about 57 percent to 52 percent.
The park opened in 2005 to great fanfare, only to miss its targets for attendance in the first two years. However, traffic in its third year grew by 8 percent, according to figures provided by the Hong Kong government.
Sustaining that growth could prove all the more difficult with the allure of a Shanghai Disneyland.
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