November 23, 2004
Build it and they will come
Hong Kong's newest white elephant will "soon" be open for business. Hong Kong Disneyland opens on September 12th next year. The good news is the park will be the cheapest Disney in the world...except on "special days". A better name would be "days when you are actually likely to go", such as weekends, public holidays, golden week holidays and all of July and August. On those days the price jumps 20%. Once inside gastronomic delights await, also at "special" prices. But this is a "soft opening" with only a few rides will be open. It is full price but the rest of the park is not due to open for another year or more.
The press release gushes:
The park has so far created 11,400 jobs during construction and another 18,000 are expected to be created in phases by opening day. The theme park is also forecast to inject HK$148 billion into Hong Kong's economy.That HK$148 billion is spread over 40 years and not discounted for the time value of money. Even at face value that's HK$3.7 billion a year. In return let me give you some other numbers about Disneyland HK:
Visitors expected in Year One: 5.5 millionThe park is 1% of the size of Florida's DisneyWorld, yet the cost difference is 22% (see graphic after the jump). Also note that to date Hong Kong has actually spent HK$22.5 billion on infrastructure and HK$3.25 billion for a majority stake in the park. In return Disney has an equity stake, land reclaimed, infrastructure and transport links (including a rail line) and a royalty arrangement that will provide a massive return on its investment. The Government is getting a nebulous "return" of HK$3.7 billion (without discounting) on its investment of HK$25 billion plus. That HK$3.7 billion no doubt includes tourist spending, Disney's revenue and the like. Let's be generous and say 1/3 of that HK$3.7 billion actually flows back to Government coffers via taxes on wages (HK has no sales tax). That leaves HK$1.23 billion per year, or a return of just under 5% per annum. Hong Kong's Government would have been better off investing in long term bonds, which have none of the risks and the same return. Asia Times had a good look at the numbers as well.
The sloppily drawn contract between Disney and Hong Kong does not even have a clause preventing Disney from opening other parks in China. Also not mentioned in the press release are the massive cost over-runs due to dioxin in the soil at the Penny Bay site (and more besides from FoE) and the pollution problem means the slight change in the orientation of the park will still not give any views for much of the year. Chalk it as a win for Disney shareholders and a massive loss for Hong Kong. What's worse is now we've got the West Kowloon boondoggle.
Hong Kong: home of astute investment, big Government, white elephants and wasted money. This makes HarbourFest look like child's play. Mike Rowse is getting hauled over the coals for that debacle. For Disneyland, you get this...
Mickey learns of the size of Henry Tang's (HK Financial Secretary) subsidy.
posted by Simon on 11.23.04 at 11:28 AM in the Hong Kong Disneyland
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Hong Kong Redux
Excerpt: The sloppily drawn contract between Disney and Hong Kong does not even have a clause preventing Disney from opening other parks in China. Also not mentioned in the press release are the massive cost over-runs due to dioxin in the
Weblog: The Disney Blog
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Excerpt: The following is a digest of highlights from the past month's Asia by Blog series over at simonworld.mu.nu. The round-up has four key areas of focus: China, Taiwan & Hong Kong (Politics, Economy & lifestyle, History sport & culture, Information), Korea...
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Oh Dear!! A large group of us live in Thailand and were planning to spend a fortnight in Hong Kong with the view of taking the children to HK Disneyland! You have put us off entirely, thank you! We were delighted to hear of the HK venture to open next September as the US is a long haul for us -posted by: Miss J Davison on 12.06.04 at 08:43 PM [permalink]