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Magic Kingdom to get outpost in Hong Kong

By Susan Thorne

An island in Hong Kong Harbor will be home to the world's fifth Disneyland theme park, scheduled to open in 2005.

In November, the Walt Disney Co. announced an agreement with the government of Hong Kong for a joint venture to develop Hong Kong Disneyland on a waterfront site on Lantau Island, west of the urban area of Hong Kong. The initial phase of the project will include a Disney- branded theme park, two to three themed resort hotels, dining facilities and an entertainment center, and, is expected to attract 5.2 million visitors in its first year.

Disney had been exploring possibilities for a theme park in Asia for some time, according to Judson Green, chairman of Walt Disney Attractions, the theme park and resort segment of the Walt Disney Co., Burbank, Calif.

Tourism trends were a big deciding factor, he said. "That part of the world is clearly increasing in standing as a major tourism destination. The World Travel Organization recently did a survey of the most frequent destinations of international travelers and found that China will vault to No. 1 in the next 10 to 20 years, while Hong Kong will be No. 5," Green said.

Disney's expansion strategy was a good fit with the desire of Hong Kong, population 6.8 million, to enhance its tourist traffic, he said.

"Our two strategies converged. We began discussing in August 1998 and reached an agreement on Nov. 1, 1999."

The Disney team drove a hard bargain, winning 43% of shares in the venture to the government's 57%, according to Nicholas Brooke, chairman of Brooke International, a Hong Kong-based property consulting firm.

"Disney are very good negotiators," he said. "Hong Kong had played its cards early, saying in a government policy address and budget that it wanted such a project, so Disney knew it was in a strong position.

"Disney was also known to be considering Shanghai, and they played off that idea very cleverly, leaving the impression that they could always go to Shanghai if things didn't work out with Hong Kong."

The final agreement was particularly attractive to Disney because of the significant investment in the project by the government of Hong Kong, which will contribute HK$22.45 billion ($2.88 billion) toward the theme park's realization. That contribution will come mainly in the form of a site on Lantau Island, the expense of land reclamation and infrastructure.

Efficient transportation linkages by highway and rail to the rest of Hong Kong were an important condition of the project's going ahead, Green said. Lantau Island is also the site of Chek Lap Kok Airport, a primary international entry point.

The park will be solidly based on the classic Disney-branded approach: It will have Disney characters; separate areas with names that include Frontierland and Tomorrowland; a castle and a mix of rides and shows from Disney parks around the world; and restaurants and entertainment retail. A second, larger development phase has been talked about that would include another theme park, three to four hotels and more entertainment/food service offerings. No opening dates for this phase have been set.

Only certain concessions will be made to the park's Asian setting, mainly in the retail, dining and entertainment sector, according to Green. But the Disney theme will remain largely untouched. The company's experience in Tokyo — its most successful park — shows that the classic Disney concept is well received among Asians, and the company doesn't want to dilute its brand identity in Hong Kong.

"People have certain expectations when they come to a Disney park," he said. "The four most successful theme parks in the world are Disney branded — our parks in Tokyo and France plus Disneyland California and Disney World Florida."

Hong Kong, for its part, is counting on the Disney name to boost tourist visits significantly.

"Disneyland will put Hong Kong firmly on the world map as a destination for families," said Peter L. Randall, a spokesman for the Hong Kong Tourism Authority (HKTA). "As a brand, Disney is a stamp of approval and signifies a safe environment. Overall, Disney will add a new dimension to the diversified attractions of Hong Kong."

Officials also hope it will help reverse the former British colony's slump in tourism. Visits by tourists dropped following the handover to China in 1996, HKTA data reveal, from a peak of 11.7 million arrivals that year to 10.4 million in 1997 and 9.6 million in 1998.

But things are already improving on the tourism front. There were 10.7 million tourists last year, the second-highest figure of all time, and for 2000, HKTA projects 11.4 million visits.

HKTA estimates that Disneyland can boost that number by around 1.4 million visitors in its first year and 2.9 million each year after 15 years of operation. Total park attendance is expected to hit 5.2 million visitors in the first year, 3.4 million of whom will come from outside Hong Kong, mainly from Taiwan, mainland China and Southeast Asia. After 15 years, projections show 10 million attendees annually, 7.3 million of them incoming tourists. HKTA predicts Disneyland will bring $148 billion and 36,000 jobs into the economy over a 40-year period.

Brooke argues that a major new tourist draw is needed. "Tourism is bouncing back," he observed, "but if we are to be seen as a major tourist destination in a more competitive travel environment, we need a whole range of flavors and attractions. Hong Kong doesn't have anything of a cosmopolitan or international nature like this [Disneyland]."

But even Disneyland's effectiveness will be limited, Brooke said. What it needs is a clustering of attractions like those which surround Disney World in Florida.

"I fear that Disneyland by itself may not be enough to bring people all the way into Hong Kong. But there is talk of adding a Universal Studios, a casino and perhaps Hong Kong's third horse race course," he said. "With additions like those, the whole area will begin to have critical mass, and it can become a full destination in its own right."

Not everyone is thrilled by the prospect of a Disneyland. Hong Kong's press has quoted some residents expressing misgivings about an impending invasion of American culture. But Brooke feels that such cultural resentment is limited.

"Hong Kong is very cosmopolitan," he said. "It [the Disney theme park] fits in quite well."