The HK Standard looks at the status of Hong Kong Disneyland. Looks like there is some worry that the park won’t be able to meet the numbers required to pay down its debt. This is not as big a problem as Euro Disney is experiencing, the debt load is much lower due to Disney deciding to build this park on the cheap (similar to California Adventure).
Disney had a tough decision, pay for and build a majestic park on the scale of Tokyo Disneyland or Disneyland Paris and hope that the audience materializes OR build a smaller scale park with fewer attractions and hotels and hope that the bad word of mouth this would generate would not kill the park. That’s simplifying it a bit (you also have to throw in the general unfamiliarity of Mainland China with Disney style vacations and characters).
It looks like were bitten by the bad word of mouth problem. The silver lining is that Disney made 4 times as much cash in 1Q2007 than would be required to pay off the HKDL debt.
I think the lesson learned is, it sometimes takes a lot more money to do it right the first time. But at least you know you’ve done it right and word of mouth won’t be an issue. If your venture fails it won’t be because you didn’t try.
As a former cast member of Hong Kong Disneyland I am not at all surprised at the negative business results in covering the faces because I saw firsthand the seeds of failure being planted prior to the opening of the theme park. It had applied a US theme park experience into a totally alien environment and had made assumptions about attendance that were more ego driven than any practical information that were available. The crux of the problem was that day had employed very experienced and capable executives who were familiar with the region but did not listen enough to dare recommendations and intuition.
Case in point, the US executives expected attendance to be a complete “blow out”, i.e. too many people and not enough capacity. They therefore decided to implement a date-specific ticket, which means when you buy a ticket for January 3, 2006, the ticket is only valid on that day and that they only (just like a concert ticket). This would be the first time that this is implemented in any of the Disney theme parks in the world and the US executives felt that consume is would accept this given that huge desire to want to visit. They also implemented a different price for weekdays and weekends, another first!
But the biggest mistake that they made was to try to exclude the travel trade in the region and restricting commissions to a meager amount. The procedure is that had been put in place by finance made doing business with Disney a huge nightmare for travel agents. Bank guarantees of over US $1 million were often required to work with us. Disney believed that there would be so much consume of the month that they would not mind coming the right to us for business as opposed to going through a travel agent. In other words, US Disney executives wanted to change the way people bought vacations in this region – such was their arrogance that they actually believed in this!
The small size of HK Disneyland with only 15 attractions and one e-ticket ride (Space Mountain) is the main put off for guests that have visited and this word of mouth has spread like wildfire throughout the region resulting in more people deleting their visit until the park has significantly expanded itself which will be at these five years from now.
To make matters even worse, their SVP marketing left in April 2006 and his replacement will not be on board until 11 months later! Local newspaper South China Morning Post reported that several attempts to recruit a local executive to fill the marketing role had failed as many qualified candidates shunned Disney. In the end they had to bring out of 15-year Disney veteran from Walt Disney World.
I can’t belive Disney would try to rip us off like this (WOW) what a scalled down park. I had booked a hotel for me and my family to visit Hong Kong mainly so the Kid can experiance Disney Land. (no way now) we are shortening our hotel stay in Hong Kong and now Ocean park will be the main attraction with plenty of E-ticket rides and fun. Additionally I will avoid investing in DisneyLand stock until they get it together (who ever made the decision and those that thought it was a great idea hopefully have all been fired).
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