Hong Kong Disneyland Case Study

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Michael N. Young and Donald Liu wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

Ivey Management Services prohibits any form of reproduction, storage or transmittal without its wr itten permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2007, Ivey Management Services

Version: (A) 2007-08-27

September 12, 2006, marked the one-year anniversary of the opening of Hong Kong Disneyland (HKD). Amid the hoopla and celebrations, media experts were reflecting on the high points and low points of HKD’s first year of operations, including several controversies that had generated some negative publicity. At a press conference and interview to discuss the first year of operations, Bill Ernest, HKD’s executive vice-president, acknowledged that the park had learnt a lot from its experiences and that the problems had made it stronger. Ernest also announced that HKD attendance for the year had been “well over” five million visitors. Still, this figure was short of the 5.6 million visitors that had earlier been projected by park officials. Ernest stated that the park was on sound financial footing but would not release the details.1 He also announced the appointment of two non-executive directors; Payson Cha Mou-sing, managing director of HKR International, and Philip Chen Nan-lok of Cathay Pacific would be joining the board of directors in a move calculated to counter charges of a lack of transparency. The criticisms were, in part, coming from members of the Hong Kong Legislative Council as HKD was 57 per cent owned by the Hong Kong Government, which had invested HK$23 billion.2

Since plans for the high-profile HKD project were first announced, there had been criticisms of a lack of transparency from Hong Kong government officials, the Consumer Council and members of the public. The dissatisfaction was reflected in a survey conducted by Hong Kong Polytechnic University in March 2006.3 Although 56 per cent of the 524 respondents believed the government’s HK$13.6 billion (about US$1.74 billion) investment to be of a “fair” value, 70 per cent of respondents had a negative impression of the public investment in HKD. This response was a considerably more pessimistic result than previous surveys. It was in the interests of HKD to turn this situation around. HKD was the third park that Disney had opened outside of the United States, following the Tokyo Disney Resort and Disneyland Resort Paris. The Tokyo Disney Resort was the most successful of all of the Disney 1

Linda Choy and Dennis Eng, “5 Million Visit Disney Park, Short of Target, ” South China Morning Post, electronic edition, September 5, 2006, available at http://scmp.com, accessed December 3, 2006 . 2

In 2006, the Hong Kong dollar was pegged to the U.S. dollar at approximately US$1 = HK $7.80. 3
May Chan, “Disneyland’s Image Has Soured Since Its Opening, ” South China Morning Post, p. CITY3.

Purchased by Junyi Wang (junyi@stanford.edu) on September 13, 2011 - 119 Quillen CT Apt 716 Stanford, CA 94305

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parks worldwide, and indeed one of the most successful theme parks in the world; the Disneyland Paris Resort was much less successful.4 Pundits had begun to wonder whether the outcome of HKD would more closely resemble that of its successful Far Eastern Japanese cousin or whether it would more closely resemble that of the...
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