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As Walt Disney Co. readies to open its first Disneyland resort in mainland China by mid-year, its decade-old theme park in Hong Kong has tumbled back into a loss, portending challenges ahead amid the country’s slowing economic growth.
Hong Kong Disneyland recorded a loss of HK$148 million ($19 million) in the year ending early October 2015, the first loss in four years after fewer Chinese tourists visited the city. The resort suffered seven years of losses since its 2005 opening, before turning its first profit in 2012.
The former British colony has already seen retail sales slump as fewer mainland Chinese tourists visit, hurt by a combination of China’s slowdown, political unrest, and a weak yuan relative to the Hong Kong dollar that has dulled the city’s attractiveness. With Disney’s Shanghai park set to open June 16, more Chinese could be lured away.
Mainland Chinese customers helped boost Hong Kong Disneyland to a record profit of HK$322 million in fiscal year 2014. Last year, they formed the biggest group of visitors to Hong Kong Disneyland accounting for 41 percent, the resort said in a statement Monday, followed by locals at 39 percent and international customers at 20 percent.
It’ll be contending with a sister resort in Shanghai that’s three times larger in size, and with ticket prices that are 20 percent cheaper. Disney Chief Executive Officer Robert Iger has called the Shanghai resort the Burbank, California-based company’s greatest opportunity since Walt Disney himself bought land in Central Florida in the 1960s.
In response, the Hong Kong park has pledged more investments, including a new themed area based on the hero character Iron Man to be opened later this year as well as a new resort hotel, a 750-room Disney Explorers Lodge. A ride based on Hollywood blockbuster “Star Wars: The Force Awakens” will also be introduced this year, Disney said.
Hong Kong Disneyland is a joint venture with the city’s government owning 53 percent and Disney with 47 percent. Disney’s Chinese partner, state-owned Shanghai Shendi Group, will own 57 percent of its new resort in mainland China.
Revenue at the Hong Kong resort fell 6.4 percent to HK$5.1 billion, while annual attendance slipped 9.3 percent to 6.8 million, it said.
–With assistance from Stephanie Wong.
This article was written by Daniela Wei from Bloomberg and was legally licensed through the NewsCred publisher network.