Hong Kong Disneyland expansion plans unveiled

The Government and the Walt Disney Company have reached an agreement on the expansion of Hong Kong Disneyland, boosting the number of theme areas from four to seven and creating more than 3,000 jobs, Chief Executive Donald Tsang says.


The new attractions will come on stream in phases in the next five years.The Walt Disney Company will contribute the necessary new capital of about $3.5 billion as equity for the expansion.

It will also enhance the transparency of the park's operation.

Hong Kong Disneyland is a major tourism infrastructure for Hong Kong, Mr Tsang said, noting its expansion will bring significant benefits to the tourism industry and the overall economy.

"While we have done much about the six priority industries in the past few months, we have not for a single moment lost sight of our traditional pillar industries," Mr Tsang said.

"The Disneyland expansion project, and the signing of the supplementary Memorandum of Understanding between the People's Bank of China and Hong Kong Monetary Authority yesterday, demonstrate the Government's full commitment to promoting our pillar industries, including financial services and tourism. I'm sure this will help Hong Kong move towards a knowledge-based economy."

Project details

Secretary for Commerce & Economic Development Rita Lau outlined the details in a press briefing, and noted that she would like to see the park expand quickly.

"With the support of the Legislative Council's finance committee, we can start construction as soon as possible, within this year," she said.


The three new themed areas are "Grizzly Trail", "Mystic Point" and "Toy Story Land". They will feature 30 new attractions - including thrill rides - bringing the total to over 100. This will enhance Hong Kong Disneyland's appeal, Ms Lau said, and be beneficial for the long-term development of the tourism industry.

Grizzy Trail and Mystic Point will be exclusive among Disney theme parks worldwide, and Toy Story Land will be exclusive within the Asian region, for five years from their opening.

The expansion be done in phases over five years. When finished, it will enlarge the existing theme park's area by 23%.


Economic benefits

The project is estimated to cost $3.63 billion, and will bring about 3,700 jobs in terms of man years in the construction sector from 2009 to 2014, and create 600 full-time jobs on its completion.


Over a 40-year operation period, the expanded theme park is expected to provide total net economic benefits of $64.7 billion to $117.3 billion.

Mrs Lau stressed the Government will not inject any new money into the park. The Walt Disney Company, however, will contribute $3.5 billion towards the expansion's construction cost and will convert the outstanding balance of its loan to the joint-venture company Hong Kong International Theme Parks to equity, roughly $2.7 billion. This $6.2 billion capital injection will also sustain the park's operation throughout the construction process.

"This demonstrates the confidence the Walt Disney Company has in the park's future," she said.

The Government will also convert a substantial part of its loan to the joint-venture company into equity, retaining a balance of at least $1 billion. After this capital re-alignment, the Government will continue to be a majority shareholder in the joint-venture company, with about 52% of shares.

Greater transparency

This will allow the Government to continue to monitor the park's operation. The formula for calculating the management fee will be revised to link it to the park's performance. To maintain liquidity, especially in adverse times, the joint-venture may defer payments of royalties, and interest and principal of the Government loans.

Describing the negotiating process that led to the agreement as "challenging", Mrs Lau said that upon the Government's "firm request", annual park attendance and key financial performance indicators will be disclosed on an annual basis beginning from 2008-09.

"This agreement is in Hong Kong's overall interest, and is a catalyst for the park's long-term development," Mrs Lau said.