Disney halts Hong Kong expansion
Walt Disney is delaying the expansion of its Hong Kong Disneyland after failing to agree financing with the city’s government.
The second phase of expansion to the world smallest Disneyland resort has been mired by the global downturn, which has resulted in visitors number to the resort failing to hit projections.Disney said it was axing about 30 Hong Kong-based employees that were planning the expansion. Some jobs might also go at Disney’s home-turf of Burbank, California.
“The uncertainty of the outcome requires us to immediately suspend all creative and design work on the project,” the US firm said in a statement. “Despite this setback, The Walt Disney remains confident and committed to the long-term success of Hong Kong Disneyland.”
According to Reuters, Disney could eventually strike a deal with the city for the expansion. Disney has also signed an agreement with the local government in Shanghai to start a project.
The Hong Kong government expressed “grave concern” about the decision. It said in a statement: “We consider that (Disney’s) laying off of Walt Disney Imagineers who have been working on the design of Hong Kong Disneyland’s expansion will not be conducive to the discussions and are puzzled by the company’s decision.”
Opened in 2005, Hong Kong Disneyland has been criticised for being far too small. An expansion could cost as much as HK$3bn ($387m). In December, the Sing Tao Daily newspaper reported that Disney may give the government a greater share in the project in repayment of a cash loan of nearly $800m that the city had extended previously to the theme park.
Disney has borrowed more than $1bn for the project, including HK$6.1bn it owed the city’s government, due to be repaid over 25 years.
In 2008, the theme park was forced to amend loan agreements after it failed to meet performance targets.