The political crisis in Hong Kong is hitting the local Disneyland hard.
Disney (DIS) reported strong earnings on Thursday but made clear the mounting losses at its theme park in Hong Kong. It is there that protests have gripped the city for months and had a massive drag on its tourism industry.
If the current trends continue, operating income at Hong Kong Disneyland could fall by $275 million in Disney’s current fiscal year, according to the company’s chief financial officer Christine McCarthy.
The local theme park was a drag on international business last quarter. Operating income at Hong Kong Disneyland fell $55 million, offsetting growth at parks in both Paris and Shanghai. McCarthy warned profit could fall by $80 million in the current quarter.
As a whole, Disney’s parks unit — which it breaks out in its earnings report as parks, experiences and products — brought in $1.4 billion in operating income for the fourth quarter. That is a 17% increase over the same time last year.
Disney’s warning puts a spotlight on the dark picture for Hong Kong’s economy. Official data released last week confirmed what many had feared: The city has plunged into recession. This is after months of protests have forced shops to close, paralyzed public transportation and scared off tourists.
Visitors to Hong Kong fell by 37% in the third quarter, according to the city’s financial secretary. Hotels were on average only two-thirds full, a drop of 28% compared to the same period a year earlier.
There is no immediate resolution to the city’s political crisis, and economists say Hong Kong’s first recession in a decade could extend into the new year.
How soon do you think the crisis in Hong Kong will end? Do you think the Hong Kong theme park will impact the global strength of the Disney unit? We look forward to seeing your thoughts on this issue. Please leave your comments in the section below this article.