Walt Disney Co. will pay HK$3.5 billion (US$452 million) to add rides like "Toy Story Land" and "Grizzly Trail" at its Hong Kong theme park and raise its stake in the project, said its partner, the city's government.
Three new themed areas will be built over five years, said Hong Kong Chief Executive Donald Tsang, at a press conference Tuesday. The government said it won't invest money in the expansion and that Disney's investment will cut Hong Kong's stake in the project to 52 percent from 57 percent. Disney, the second-biggest US media company, runs five parks worldwide.
"The existing park is so small, we hope the expansion starts as early as possible," said Joseph Tung, executive director of the Travel Industry Council. "Adding exclusive rides will enhance the park's attractiveness."
The agreement ends two years of talks between the two shareholders that were marked by tension over attendance, job creation and investment. The Hong Kong park, which opened in September 2005, was the company's first foray in China aimed at positioning itself for the mainland market.
The expansion will "benefit both parties," said Leslie Goodman, a Disney Parks executive vice president, in an e-mailed statement. "Disney is making a substantial investment in this important project."
Park attendance has fallen short of target from the outset. To date, 14 million people have visited the park, averaging between 4.5 million and 4.6 million a year, said Helen Chan, a government economist. That compares with the city's initial target of between 4.2 million and 5.6 million a year, she said.
The park's performance has drawn the ire of Hong Kong lawmakers like Emily Lau, who called for a stop to more government spending on the project after a 23 percent drop in attendance during the park's second year of operation. In an interview Tuesday, Lau said Hong Kong is "throwing away good money investing" in the park.
"These new attractions might be what the park needs to draw more visitors," said James Lu, executive director of the Hong Kong Hotels Association. "It's about time they expanded."
This development plan will boost the size of the Hong Kong park by 23 percent, the government said.
A few months ago, Disney signed a framework agreement to build a park in Shanghai which is pending approval by China's central government, said Robert Iger, Disney's President and Chief Executive Officer, on a May 5 earnings conference call. No schedule was mentioned for Shanghai.