Price increase while advertising! Hong Kong Disneyland is competing for mainland customers, and after eight consecutive years of losses, it has begun to recover

Source of this article: Times Finance Author: Lin Xinlin

After years of losses, Hong Kong Disneyland finally showed signs of turning around.

Image source: Picture Worm Creative

On June 25, Hong Kong Disneyland announced its results for the 2023 fiscal year (October 2022-September 2023), which recorded park revenue of HK$5.7 billion, a year-on-year increase of 156%; Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 207% year-on-year to HK$924 million.

During the period, Hong Kong Disneyland recorded a net loss of HK$356 million, a year-on-year decrease of 83%.

Entering 2024, Hong Kong Disneyland has reversed its previous decline, and recorded its best quarterly revenue and net profit since the opening of the park in the first quarter.

The loss narrowed, and Hong Kong Disneyland received 6.4 million visitors a year

"We have entered a new era." Hong Kong Disneyland Chief Executive Officer Mok Wai Ting said in the financial report.

Mok Weiting's sentiment is not without reason. In 2005, the highly anticipated Hong Kong Disneyland opened, becoming the second Disney park in Asia after Tokyo Disney in Japan, and the smallest Disney park under Walt Disney.

But the good times didn't last long, and with the opening of Shanghai Disneyland in 2016, mainland tourists were diverted, and Hong Kong Disneyland began to lose money all year round. According to statistics, Hong Kong Disneyland recorded a cumulative loss of HK$8.113 billion in the 2015-2022 fiscal year. Among them, due to the impact of the new crown epidemic, Hong Kong Disneyland lost a total of HK $7.2 billion in the 2020-2022 fiscal year.

In FY2023, Hong Kong Disneyland's performance improved significantly, recording a net loss of HK$356 million, a year-on-year decrease of 83%.

Hong Kong Disneyland pointed out that in the past fiscal year, Hong Kong local attendance reached a record high, while the number of Mainland and overseas guests rebounded strongly compared to the pre-pandemic level, outpacing the overall recovery in visitor arrivals.

In FY2023, the total attendance of Hong Kong Disneyland was 6.4 million, an increase of 87%; The overall occupancy rate of official hotels increased by 23 percentage points to 47%. The growth momentum continued in the first quarter of 2024, with a particularly strong rebound in the number of mainland guests.

Mok attributed the improvement in Hong Kong Disneyland's performance to the launch of a number of new Disney unique performances, as well as the launch of the new "Frozen World" park at the end of last year, which has become a "crown card" to attract visitors to Hong Kong.

Previously, Hong Kong Disneyland has been criticized by the outside world for its small area and low innovation in equipment. In November 2023, after seven years in the making, Frozen World will open, the largest expansion of Hong Kong Disneyland in recent years and the world's first Frozen-themed park.

Lin Huanjie, president of the China Theme Park Research Institute, pointed out to Times Finance that the rebound in Hong Kong Disneyland's passenger flow is also closely related to the relaxation of entry control in Hong Kong in mid-2022 and the resumption of customs clearance in early 2023, which has brought about an increase in the number of mainland tourists and Southeast Asian tourists.

At the same time, the Hong Kong SAR Government has introduced a series of measures to enhance Hong Kong's tourism attractiveness and improve the convenience of mainland tourists, which has also indirectly stimulated the flow of visitors to Hong Kong Disneyland.

On March 6 this year, Xi'an and Qingdao were newly added as "Individual Travel Endorsement" cities for Hong Kong and Macao, and the number of "Individual Visit Visa" cities from the mainland to Hong Kong and Macao increased to 51. According to a set of data from Ctrip, one out of every eight mainland tourists who visit Hong Kong wants to visit "Gangdi".

"There are more people than you think." Consumers who have recently visited Hong Kong Disneyland told Times Finance that most of the park's attractions still need to queue up, with a time of 15-30 minutes for each event, while the Frozen Scenic Area is densely populated and must queue for 45-60 minutes.

However, the consumer believes that compared with Shanghai Disneyland, which often queues for more than 1 hour during the peak season, the queuing time of Hong Kong Disneyland is still relatively "friendly".

Compete with Shanghai Disneyland for customers and make its presence felt in the mainland market

In addition to the debut of the new park, the reason for the improvement in the performance of Hong Kong Disneyland is also due to the voluntary price adjustment.

Before the "Frozen World" park was put into operation, Hong Kong Disneyland had a round of price adjustments. In September 2023, Hong Kong Disneyland announced the ticket classification system and price adjustment, increasing the original "special day" and "specific peak day" adult tickets from HK$699 and HK$759 to HK$719 and HK$799 respectively, while adding a new fourth-class ticket price of HK$879.

This is almost the same as the "trick" of Shanghai Disneyland.

In May 2023, Shanghai Disneyland will implement the fourth price adjustment since the opening of the park, and tickets will be sold for up to 799 yuan; In September, the annual card sales resumed, and the price of many annual cards increased by more than 300 yuan. In December, Shanghai Disneyland's "Zootopia" theme park officially opened to the public.

However, it will not be easy for Hong Kong Disneyland to compete for mainland visitors.

Lin Huanjie pointed out that the influence of Shanghai Disneyland on Hong Kong Disneyland is long-term. Although the new Frozen-themed park has a drainage effect, it will tend to slow down after a certain amount of growth, and Shanghai Disneyland is still relatively attractive, and the cost of hotels, restaurants, and transportation is also more advantageous than Hong Kong. ”

Walt Disney is also adjusting its layout strategy in the Asian market, giving certain tilt and support to Hong Kong Disneyland to balance the profitability of disadvantaged projects.

Lin Huanjie pointed out that from the perspective of Hong Kong Disneyland's tour and performance projects in the past two years, it has maintained a certain difference with Shanghai and Tokyo Disneyland.

In addition, Hong Kong Disneyland has also taken a more active role in external promotion, "Hong Kong Disneyland advertisements can be seen at airports, high-speed railways and subways in the mainland, Indonesia and other Southeast Asian countries." Lin Huanjie said.

Hong Kong Disneyland mentioned in its financial report that Hong Kong Disneyland reopened its source markets in the past fiscal year, launched large-scale marketing and sales activities, and deepened its penetration rate in the international and mainland markets, so as to rekindle the willingness of overseas tourists to visit Hong Kong.

According to Times Finance, in June this year, Hong Kong Disneyland Resort opened its first exhibitions in Southwest China and Central China in Chongqing and Wuhan, introducing the two popular Disney IPs "Frozen" and "Duffy and Friends" to the local area. Earlier, Hong Kong Disneyland Resort and Taikoo Hui in Guangzhou jointly created the first "Duffy & Friends" exhibition in South China.

It is not difficult to see that Hong Kong Disneyland is speeding up its pace to compete for mainland visitors.

"The day when Hong Kong Disneyland will turn a profit is not far off." Lin Huanjie said. In his view, the current loss of Hong Kong Disneyland comes from some historical problems, including the high cost of land amortization of Hong Kong Disneyland; As well as due to factors such as the guarantee of employment population, the park has a large number of service people and high human resource costs, which makes the operating costs heavier.