Hong Kong Disneyland Resort aims to reduce cost after 7 years of losing money

Hong Kong Disneyland Resort (HKDL) is reportedly looking for ways to reduce its costs after losing money for seven consecutive years, while its management is looking forward to receiving inbound travellers as the park has developed new attractions in recent years. According to multiple reports including the South China Morning Post and the Hong Kong Economic Times, at a Legislative Council panel meeting, lawmaker Michael Tien questioned the Hong Kong government whether the company could charge the government lower royalty fees if Hong Kong Disneyland continued to record losses.

In its latest announcement, HKDL said its net loss for the financial year of 2021 narrowed to HK2.4 billion (US$306.55 million), representing a 12% improvement compared to the previous financial year. HKDL said that its earnings before interest, taxes, depreciation and amortisation (EBITDA) for the year under review improved by 34% to negative HK$970 million (US$123.9 million). Although its net loss narrowed to HK$2.4 billion, the second-highest in the history of HKDL, the resort has lost money since 2015. In 2020, HKDL lost HK$2.6 billion (US$332 million), the highest figure since the opening of HKDL in 2005.

Tien also said the park's depreciation and amortisation concerned him, asking the government to discuss with Disney about royalty fees. SCMP said Disney parks outside the US are charged about up to 5 to 10% of revenue for royalties for access and use of the company's intellectual property for resort development and operations.

In response to Tien's question, secretary for commerce and economic development Edward Yau said the government held discussions with Disney and made changes to contract clauses including adjusting management fees. Yau said adjusting royalty payments was not the easiest way as intellectual property assets, including cartoon characters and storylines were important to the company.

In the same meeting, Hong Kong Disneyland Resort managing director Michael Moriarty said he hopes the park can reopen from 21 April, as the government will begin relaxing the pandemic control measures. As Hong Kong has been implementing stringent travel restrictions at the moment over the past two years, HKDL said it relied on local tourists to sustain its business. The resort’s local attendance grew by 117% year-on-year, while the annual pass membership base expanded by 55% year-on-year, both at record highs. Local young adult attendance also hit a record high and the number of student annual pass membership increased by 132% year on year.

The brand has in recent years actively tried to lure in consumers. Last year Hong Kong Disneyland Resort celebrated its 15th anniversary with a series of events to surprise customers, as well as a collaboration with three artists to promote its new theme song.  It rolled out the live outdoor musical party “Follow Your Dreams” staged at the Castle of Magical Dreams, offering uplifting and inspiring messages to encourage guests to pursue their dreams. While Mickey Mouse and other characters from Disney guided audiences through a magical musical journey, the show also featured state-of-the-art new visual effects guaranteed to leave a lasting impression.

It also partnered Chow Tai Fook Jewellery Group to open a shop inside Hong Kong Disneyland's newest addition, the Castle of Magical Dreams. The world's first jewellery shop inside a Disney castle, it has been selected as the official Royal Jeweller for the Magic Kingdom, celebrating the memorabilia and fine pieces worthy of the princesses and queens of Disney legend. 

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