Disneyland is likely to proceed with a planned expansion to its Hong Kong theme park according to John Tsang Chun-wah, financial secretary of the Hong Kong Special Administrative Region (SAR). Tsang indicated that negotiations between the SAR government and Disney had made "major progress".

Hong Kong's Disneyland has been suffering from a series of problems including poor visitor numbers, overcrowding during holidays and prices that are high compared to competitors. The "world's smallest Disneyland" hopes an expansion will help it shake off a lack-luster reputation.

A spokesperson for Disney said the 12 hectare expansion will cost HK$3 billion (US$387.08 million) and will eventually deliver three new theme zones.

But according to some reports in the Hong Kong media, Disney headquarters will invest HK$7 billion (of which 3 billion will be used to repay commercial loans, 4 billion to finance the expansion itself), while the SAR government will contribute HK$6.1 billion to the joint venture. The SAR government will retain a 51 stake in the venture and 3,000 new jobs will be created.

Ocean Park in Hong Kong is currently Disney's major competitor but Happy Valley currently under construction in Shanghai may turn out to be an even more serious threat because of its favorable location. One third of Hong Kong Disneyland's visitors come from the mainland, many from the Yangtze Delta.

Most travel agencies say that if Hong Kong Disneyland does nothing, it will continue to lose market share. Some agencies see the expansion project as the last chance for the troubled theme park.

For more information, please consult the Chinese coverage at:

http://www.china-cbn.com/s/n/000004/20090505/000000114458.shtml

(China.org.cn by Maverick Chen, May 5, 2009)