Just an article in Hong Kong Disney from the HK Standard. Low attendance is hurting the park for further funding.
Disney facing finance poser
Thursday, May 10, 2007
Declining attendance numbers and guest spending at Hong Kong Disneyland are likely to leave Walt Disney Co unable to draw on a US$294 million (HK$2.29 billion) revolving credit facility, the company said. "Hong Kong Disneyland may require alternative sources of financing to meet its operating and development needs," Burbank, California-based Disney said in a filing with the US securities regulator.
"Hong Kong Disneyland is engaged in discussions with the Walt Disney Company and Hong Kong Disneyland's other shareholder regarding financing options aimed at advancing its long-term financial and development needs," a spokesperson for Hong Kong Disneyland said.
The Hong Kong government owns 57 percent of Hongkong International Theme Parks, which operates Hong Kong Disneyland in a joint venture with the US giant, which holds the remaining 43 percent interest.
"Our discussion does not involve seeking additional funds from the government," the spokesperson said.
Disney expects to make an additional investment as part of the new financing arrangement. Alternative financing arrangements would need to be completed before September 30, when the performance stipulations of the revolving credit facility will be measured.
"Although there is no assurance that acceptable financial arrangements can be obtained prior to September 30, 2007, management currently expects that Hong Kong Disneyland will be successful in developing financial arrangements necessary to meet
its financial and development needs," Disney said.Disney announced Wednesday that second-quarter profits jumped 27 percent on the success of road-trip movie Wild Hogs and growth at cable sports channel ESPN.
Second-quarter revenues from Disney's parks and resorts division climbed 9 percent to US$2.4 billion and segment operating income increased 19 percent to US$254 million.
Revenue increases from higher theme park attendance, guest spending, and hotel occupancy at Disneyland Resort Paris "were partially offset by lower guest spending and theme park attendance at Hong Kong Disneyland Resort," Disney said. Hong Kong Disneyland also saw a decline in operating income during the second quarter ended March 31.
"We're launching several marketing initiatives to boost attendance and address seasonality of the [Hong Kong] park," Disney senior executive vice president and chief financial officer Tom Staggs said in a conference call with analysts.
"We view Hong Kong Disneyland as a valuable asset in a rapidly growing market and we're confident in and committed to this project. We'll likely continue to invest in the park to help ensure its long-term success."
A spokesperson for Hong Kong Disneyland said the park recognizes that attendance and guest spending have fallen short of initial expectations, although "guest satisfaction continues to climb higher, reflecting continuous improvement in park operations and guest service."
Meanwhile, the Tourism Commission said the SAR government has no plans to use public funds to increase its investment in the Hong Kong Disneyland joint venture.