Hong Kong Disneyland posts loss

Theme park loses more than $169 mil in 2009

HONG KONG -- Disney's troubled Hong Kong Disneyland theme park made a net loss of HK$1.315 billion ($169.4 million) last year while attracting 4.6 million visitors, in its first major admission of its financial performance since its opening in 2005.

During the four years of its operation, the theme park received 19 million visitors. In 2009, the number of visitors increased to 4.6 million from 4.5 million in 2008, but occupancy of the two hotels on park premises dropped to 70% in 2009 from 78% in 2008.  Revenue also fell HK$27 million, to HK$2.541 billion in 2009 from HK$2.568 billion the previous year, according to the Hong Kong Disneyland business review.
 
Although the company has not disclosed financial details of its first two years of operation, it noted a 2% year-on-year in attendance growth and double-digit growth for the first six months in fiscal 2009, until the first H1N1 influenza case was confirmed. 

Local Hong Kong visitors accounted for 41% of the total attendance, while 36% traveled from China and 23% were international visitors.
 
The Walt Disney Company entered into an expansion plan and capital realignment agreement with the Hong Kong government in fall 2009 under their joint venture Hong Kong International Theme Parks Ltd. 

The plan was targeted to be completed in 2014, and stipulated that the Walt Disney Company convert its HK$2.765 billion loan and revolving credit facility for the theme park into ordinary shares and put in an extra capital of HK$311 million during 2009. 

The Hong Kong government was also required to convert an additional amount of its loan into ordinary shares equal to the Walt Disney Company contributions. The government has since 1999 provided HK$3.25 billion as equity and HK$5.62 billion as a loan to the joint venture, and has spent HK$10.6 billion on reclamation fees and land acquisition.
 
Secretary for commerce and economic development Rita Lau defended the revenue-draining venture as a “long-term investment” that “forms part of the tourism infrastructure of Hong Kong,” but stressed the importance for the management to “to control costs to improve the company's efficiency and operation with a view to boosting its performance."

-- James Pomfret of Reuters contributed to this article.
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