Disney fantasy with plenty of eastern promise

Ten days before Monday's opening of Hong Kong Disneyland, Tam Wai Man was among more than 10,000 people who rode the city's new Disney Resort subway to the park for a look.

"I'll definitely come back," said Tam, 62.

"It's good to have Disneyland here in Hong Kong so I don't need to spend money going all the way to Japan."

Tam, 62, a retired chef, travelled from Guangdong province with his 7-year-old grandson.

Hong Kong officials say their US$3 billion ($4.26 billion) investment in attractions such as Main Street USA and Space Mountain will lure tourists and create 18,400 immediate jobs and another 17,400 by 2025. Hong Kong Financial Secretary Henry Tang said the park would generate HK$148 billion ($27 billion) in income over 40 years.

However, Tao Dong, chief Asia economist at Credit Suisse, thinks those projections are an exaggeration..

"This is perhaps the most-hyped story for Hong Kong this year," he said.

"There will be some positive to the Hong Kong economy. The problem is, to what extent? Are these things going to happen in five years, 10 years?"

The Hong Kong Government said this week it had found "areas for improvements and adjustments" at Disneyland after visitors attended the park during three weeks of invitation-only rehearsal days.

These included park capacity, queues and food and beverage facilities. The Hong Kong Government invested HK$3.25 billion in a 57 per cent stake in Disney's first new overseas theme park in 12 years. It spent another HK$13.6 billion on roads and other infrastructure and extended a HK$6.1 billion loan for the project.

California-based Disney invested HK$2.45 billion for its 43 per cent stake in Hong Kong Disneyland, about a 10th of the park's total cost.

Disney expects 5.6 million visitors to the park in its first year, with about a third of them coming from mainland China. That compares with 25 million last year at Disney's Tokyo resorts and 12.4 million in the year through September 30 at Disney's theme park outside Paris.

"Sales in China are going really well," said Don Robinson, Hong Kong Disneyland's managing director. "We're getting a lot of interest. We're very excited."

Disneyland's opening may help sustain a flood of Chinese tourist arrivals that began in 2003, when China's Government allowed residents of Shanghai, Beijing and Guangdong province - across the Hong Kong border - to travel to the city without joining tour groups. The relaxed visa rules now cover about 170 million people from 34 mainland cities.

Tourist arrivals surged 41 per cent to a record 21.8 million in 2004, fuelling an 8.2 per cent economic expansion, the fastest in four years. Growth in visits from mainland China cooled to 3.8 per cent in the first half of 2005 from 46 per cent for all of 2004.

Tourism's economic contribution is growing as the city's role as a trading hub faces competition from mainland cities such as Shanghai and Shenzhen.

"Tourism certainly is becoming more important to Hong Kong," said Ma Jun, an economist at Deutsche Bank, who forecasts that the park will add half a percentage point to the city's annual economic growth.

"Disneyland will boost the attractiveness of Hong Kong as a tourist destination."

The 126ha park, built on reclaimed land and nestled between tree-clad hills on Lantau Island in western Hong Kong, has two hotels with a combined 1000 rooms, rides such as the Space Mountain rollercoaster and daily fireworks displays.

When it reaches full capacity, the park will accommodate 10 million visitors a year. One-day tickets start at HK$295 for adults.

Market researcher ACNielsen found in a survey that about one-third of people in Beijing, Shanghai and Guangzhou, the capital of Guangdong province, were considering a visit to Disneyland or had decided to go.

- BLOOMBERG