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Business trends

Hong Kong Disneyland reports losses doubled in 2017

Efforts to lure Muslims help, but red ink hits $44.1m for third year of loss

An art installation is displayed at Hong Kong Disneyland.   © Reuters

HONG KONG -- Hong Kong Disneyland Resort reported on Tuesday that its losses more than doubled to HK$345 million ($44.1 million) for fiscal 2017 ended in September, dragging the resort further into the red for the third straight year.

During fiscal 2017, the resort launched new projects and expanded the park by adding feature attractions related to the "Iron Man" franchise and opening Disney Explores Lodge, a new hotel with 750 rooms. Managing Director Samuel Lau at a press conference Tuesday blamed the increased depreciation from the new attractions for most of losses, which expanded from the previous year's HK$171 million.

The Lantau Island resort has posted losses for nine of the 12 years since it opened -- only recording profits during Hong Kong's tourism boom from 2012 to 2014.

The world's smallest Disneyland also suffered as more typhoons than usual hit the city, which weighed on visitor numbers because of the resulting park closures during the peak season in summer, according to the company.

Hong Kong Disneyland Managing Director Samuel Lau Wing-kee announces 2017 earnings on Feb. 20 in Hong Kong. (Photo by Mariko Tai)

Despite the bad weather, the resort saw an 8% rise in revenues at HK$5.1 billion as it welcomed more visitors from across Asia. Revenue hit the second highest level since park opened in 2005.

The resort saw a total of 6.2 million visitors during the year, up 3% from the previous year. Among visitors, locals accounted for 41%, an increase from 39%. In addition, growing numbers of international visitors, especially from Asian countries including South Korea, Japan, Malaysia and the Philippines, supported the revenue expansion.

A rise in visitors from its key Southeast Asian market was boosted by the resort's strategy to lure Muslims living in countries such as Indonesia and Malaysia. In the past two years, the park has offered prayer rooms, prayer mats and compasses to serve Muslim visitors. These are in addition to partnering with local travel  agencies and adding Halal certified foods to menus at restaurants at the park.

"We have been very deliberately telling them that we are very Muslim-friendly," said Lau, adding that these efforts caused visitors from Indonesia and Malaysia to jump by double digits in 2017.

The park also enjoyed record high per capita spending -- although it did not disclose a figure -- with a 4% rise from a year ago. Merchandise sales of the Disney bear Duffy and his rabbit friend StellaLou contributed to the rise, as fans in Hong Kong and from Japan and Taiwan bought more goods, the company said.

Meanwhile, growth in visitors from mainland China remained flat, accounting for 34% of all visitors compared to 36% a year before. This came amid stiff competition due to the resort's much larger counterpart in Shanghai, which opened as the first Disney resort on the mainland in June 2016.

Hong Kong Disneyland is co-owned by Disney and the government of Hong Kong.

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