$275 Million Could Be Wiped Off Its Theme Park Profit Due To Hong Kong Protests: Disney

The world famous Disneyland in Hong Kong is being hit hard because of the political unrest and sometimes violent protests ongoing for almost five months now demanding more democratic rights from China.

Despite reporting strong earnings for the latest quarter, Disney also pointed out to the increasing losses that the company is making for its theme park in Hong Kong because of ongoing political protests there for months now that has severely affected the tourism industry and thereby the visits of tourists to the theme park.

Disney’s chief financial officer Christine McCarthy said during an earnings call that for the current fiscal year, the operating income at Hong Kong Disneyland could fall by $275 million if the current trends of protests and reduction in tourists remain unchanged.

For the overall global business of the company in the last quarter, its earnings and performance was affected by the performance of the local theme park too as the company reported a fall of $55 million in operating income at Hong Kong Disneyland which essentially pared back the gains that the company had made at similar theme parks in Paris and Shanghai. For the current quarter, profit could fall by $80 million, McCarthy warned.

A 17 per cent year on year increase was reported by for the fourth quarter in operating income of the parks unit of Disney as a whole – a business segment that the company refers to as parks, experiences and products in its earnings report.

The shabby picture of the economy of Hong Kong is reflected strongly in the profit drop warning issue by Disney for the Hong Kong theme park in the city. The dismal performance of the Hong Kong economy became evident in the official data that was released last week which showed that a technical recession had set in the city following months of continued protests that had forced shops to down their shutters, scared off tourists and paralyzed the public transportation system there.

According to the data issued by the financial secretary of Hong Kong, there was a 37 per cent drop in the third quarter in the number of tourists visiting the city. As a consequence the hotels of the city were only two-thirds full during the quarter which was a 28 per cent drop compared ot the number in the same quarter a year earlier.

Currently the political situation in Hong Kong is such that analysts see very little chance of any immediate solution to the protests and unrest because China has issued very strict statements against the protests. As a consequence economists say it is possible that the first recession in a decade in Hong Kong could go on well into the new year.

(Adapted from CNN.com)

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