Adding muscle to Hong Kong Disneyland
A $100-million Iron Man-themed thrill ride and shopping area will be added at the struggling theme park.
The New York Times
HONG KONG — Iron Man has proved his might at the Chinese box office. Now Disney is betting that the Marvel superhero has enough muscle to complete a turnaround at its underperforming theme park here — a task of crucial importance as the company hurtles toward the opening of a megaresort in Shanghai.
An Iron Man-themed thrill ride, photo pavilion and shopping area will open at Hong Kong Disneyland in late 2016, said Thomas O. Staggs, Disney’s theme park chairman. The Iron Man Experience, which analysts say will cost at least $100 million, will be Disney’s first ride based on Marvel. Disney bought the comic book company for about $4 billion in 2009.
At its core, the expansion is about shoring up a resort that Disney is counting on to act as an engine in Southeast China for its broader portfolio of merchandise and movies. Hong Kong Disneyland, criticized for its small size and locked in heated competition with nearby Ocean Park, has lost hundreds of millions of dollars since opening in 2005 because of smaller-than-expected attendance.
Hong Kong Disneyland reported its first profit — a slim $14 million — for its last fiscal year, a signal that turnaround efforts, including a torrent of new rides and retooled marketing campaigns, are working. But the park remains a work in progress, and Disney needs to prove, to itself and others, that it can find the right success formula for Hong Kong Disneyland as a prelude to the much bigger undertaking in Shanghai.
An exclusive Iron Man offering could greatly increase Hong Kong Disneyland’s fortunes. “Iron Man 3” took in $121.2 million in China this year. The related “Avengers” movie took in $84.1 million.
“It’s important for us to have a story for our Hong Kong guests, a little bit of bragging rights that they have something that nobody else has,” said Bill Ernest, the president of Disney’s theme parks in Asia.
The decision to deploy one of its mightiest assets at Hong Kong Disneyland reflects the delicate balancing act that Disney faces as it prepares to open the Shanghai resort in 2015. To achieve its growth goals in China, Disney needs both beachheads to thrive. Disney must also fend off competition in the booming Chinese theme park market, including an $8.2 billion movie-themed resort and real estate development announced late last month for the seaside city of Qingdao.
Disney insists that its two Chinese parks will draw from different population bases, much like its resorts in Florida and California do. “We are confident that Hong Kong Disneyland and Shanghai Disneyland will complement and reinforce each other,” Staggs said in an email.
Some economists here agree. But Disney at the very least faces a very local challenge: Hong Kong leaders, already feeling a bit insecure about the ascension of Shanghai as a financial capital, do not want their Disneyland to be viewed as less than successful and are counting on it to help fuel tourism growth to the city. The Hong Kong government owns 52.44 percent of Hong Kong Disneyland, with Disney controlling the balance.
Disney has 11 major parks worldwide that recorded 126.5 million visitors last year and delivered profit of $1.9 billion.
Disney gave few details about the planned Iron Man ride, saying only that it will allow guests to take flight with the superhero as he fights alien invaders across the streets and skyline of Hong Kong — a tease that will surely make Marvel’s rabid fan base salivate. Even without specifics, the announcement will also help to end what has long been Hong Kong Disneyland’s biggest question: Is it big enough?
After building a theme park complex outside Paris in the early 1990s that was much bigger than demand ultimately warranted (and is still causing the company headaches), Disney pursued the opposite strategy with Hong Kong, where plans called for growth in phases. “We wanted to get our bearings when it came to our Asian consumers,” Ernest said, noting that Chinese children have not traditionally grown up with Mickey Mouse and his cartoon cohorts.
But the park’s small size annoyed many local guests, who wanted more rides to go with the extravagant landscaping.
Opening-year attendance missed projections, and the number of visitors dropped by more than 20 percent the following year, to about 4 million people. (To compare, the older Disneyland Paris now attracts 11.2 million visitors annually.) The Hong Kong park did not offer enough attractions to draw the expected interest from China’s adjacent Guangdong province in particular, economists say. About 106 million people live in Guangdong.
In terms of attendance, “we could easily triple it or quadruple it,” said Nicholas Kwan, the research director at the Hong Kong Trade Development Council, an advisory group originally created by the government that now works closely with local chambers of commerce.