Hong Kong Disneyland: Double-Digit Growth In May Chinese Visitors
June 26, 2007
HONG KONG -(Dow Jones)- Hong Kong Disneyland said Tuesday it recorded double- digit growth in mainland Chinese visitors last month, but it was unclear if it can boost business enough to keep banks happy with current lending arrangements.
"The next few months are key for us...This is the biggest quarter where roughly 50% of our business is done," Managing Director Bill Ernest told reporters. "We are expecting solid performance all summer."
Hong Kong Disneyland, owned 43% by Walt Disney Co. (DIS) and 57% by Hong Kong's government, declined to say how many visitors it has attracted, though executives said mainland Chinese account for 30% to 50% of the total.
The park has twice missed performance targets set by its lenders and it acknowledged in May the banks could withhold future funding if it fails to meet those targets, which are linked to a US$294 million commercial loan and a line of credit that hasn't been used.
"Hong Kong Disneyland may require alternative sources of financing to meet its operating and development needs," Disney said at the time.
In 2006, the park failed to meet its first-year target of welcoming 5.6 million visitors.
Ernest said Tuesday the park is in discussions with Walt Disney Co. regarding refinancing loans for future expansion projects. He said the park won't seek additional financing from the Hong Kong government.
Hong Kong invested US$417 million to construct the park, on top of US$1.74 billion it spent on infrastructure, which included land reclamation. Disney paid US$314 million for its smaller stake in the venture.
The park is trying to meet the lenders' targets by Sept. 30, the end of its fiscal year. While officials have acknowledged the importance of the targets, they haven't revealed them.
The park's plans for luring more business include new attractions - though few details have been provided - and incentives to boost visitor numbers such as annual passes targeting Hong Kong residents.
"We have a...plan to build the park out...you will see more attractions and entertainment, and that will be our future strategy
," said Ernest.
Of new attractions that have been announced, just one - the "It's a Small World
" ride - involves infrastructure construction and development.