Hong Kong Disneyland 2nd Year Visitors Down Sharply To Over 4 Million

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Hong Kong Disneyland 2nd Year Visitors Down Sharply To Over 4 Million

December 17, 2007: 09:28 PM EST

HONG KONG -(Dow Jones)- Attendance numbers at Hong Kong Disneyland fell sharply to "more than 4 million," in the 12 months to September, from 5.2 million the previous year, the government said in a submission to the legislature Monday.

The Commerce and Economic Development Bureau didn't give an exact figure for the number of visitors in the document, but said it was dissatisfied with the park's performance in its second year of operation. However, it noted the decline was comparable to the experience of theme parks elsewhere.

"We have urged the management company to continue to improve operational efficiency and devise cost-effective marketing strategies," the Commerce and Economic Development Bureau said.

Hong Kong Disneyland, of which the city's government owns 57% and Walt Disney 43%, has suffered widening losses this year on a fall in attendance and spending by visitors. The park opened in September 2005.

Disney hasn't provided specific financial results for the Hong Kong park, but has said its loss has increased this year.

The loss-making theme park had until now declined to provide data for its second year of operation, though a downturn in patronage was widely expected.

The park missed its first-year target of 5.6 million visitors by a margin of 400,000 in 2006.

Critics have said the Hong Kong park lacks an adequate number of attractions to draw in visitors. Hong Kong Disneyland is the smallest of Disney's theme parks located in the U.S., Japan and France.

In its filing, the government said the park plans to introduce four "smaller- scale" attractions in 2008 in a bid to increase the number of activities for visitors.

Disney last month agreed to waive management fees to support the unprofitable park for two years, and will also defer charging royalties over the same period.

The company said it expects to make additional investments in the park, and is in discussions with the Hong Kong government regarding financing arrangements.

The Hong Kong government said last month it is considering injecting funds into the park, a reversal of its previous stance. The government been under intense pressure from lawmakers who say it has invested too much on a commercial project that hasn't performed to expectations.

It invested US$417 million to build the park, on top of the US$1.74 billion it spent on infrastructure, which included land reclamation. Disney paid US$314 million for its smaller stake in the venture.

Hong Kong Disneyland currently has only one major attraction - the "It's a Small World" ride - in the pipeline. It is scheduled to open in April.