HONG KONG: The government will achieve breakeven on the initial equity and new equity for loan conversion for Hong Kong Disneyland by the year 2029/30 if the growth in tourism has not slowed down, according to the projection of the theme park.

The park's projection, presented in a government paper to the Legislative Council (LegCo), said that an operating income of HK$100 million will be achieved in 2014/15 after the park's expansion. The operating income will be increased to HK$4.4 billion in 2044/45.

The Hong Kong government and Walt Disney Company have reached an agreement to expand Hong Kong Disneyland. The government will not make additional capital injection into the expansion, but will have its stake diluted to 52 percent.

Disney will convert its HK$2.76 billion loan to the joint venture into equity. The government will convert its HK$5.89 billion loan to maintain its position as the majority shareholder.

The projection that the government will achieve breakeven by 2029/30 is on the assumption that tourism growth has not slowed down.

If growth has slowed down, breakeven will be achieved in around 2044/45. A deficit of HK$100 million in operating income is projected for 2014/15, and it will be increased to HK$900 million surplus in 2044/45.

The park will reach its capacity constraint at 11 million from year 2022 onwards under the assumption that tourism growth has not slowed down.

However, under a scenario worked out by the government which takes into account the impact of the global financial crisis, aging population, and challenges stemming from the potential Disneyland in Shanghai, the Hong Kong park will reach its full capacity from 2040 onwards.

Disney will invest HK$3.63 billion to make the park 23 percent larger than its current size, adding three new theme areas and more than 30 new attractions over five years.

About HK$1.26 billion out of the HK$3.63 billion will be spent on facilities, HK$865 million for shows, HK$755 million on rides, HK$550 million for design, HK$162 million for management costs, and HK$34 million for operational requirements.

The LegCo economic development panel will discuss the park's expansion today, and its finance committee will decide whether to vote for the plan afterwards.

China Daily

(HK Edition 07/10/2009 page1)