Disney’s Hong Kong Phooey

If family entertainment giant Disney(NYSE: DIS) really does man the turnstiles to the "the happiest place on Earth," it better get the word out in China. The theme park operator is unlikely to hit the 5.6 million guest mark that it had publicly set for the first year of attendance at its Hong Kong Disneyland attraction.

After a disappointing start that found the park suffering from unfavorable reviews when it was crowded and critical editorials when the park appeared barren, one had to assume that it wasn't going to be an easy debut.

Recent Disney park openings like Animal Kingdom in Florida, California Adventure in California, and Disneyland Paris in France also had their initial growing pains, but this one was a little different. With the Chinese government bankrolling all but $314 million of the $2.5 billion to $2.7 billion investment to open the park in exchange for a 57% stake, success in Hong Kong would have made Disney an easy sell in other booming, populous regions like India or mainland China.

With the local government on the line for so much of the tab, Hong Kong Disneyland falling just short of its target isn't going to endear Disney to the locals or the media.

At this point, some patience is probably in order. It wasn't until the fifth year of operating Disney's Animal Kingdom that the wildlife park generated its first uptick in attendance. Disneyland Paris may not be going gangbusters at the moment, but it's much further along than when it was battling cultural differences in the beginning. Disney gets it right. It just doesn't always get it right, right away.

It's not just Disney, now. Income Investor pick Cedar Fair (NYSE: FUN)has struggled for a couple of years with its Geauga Lake acquisition. Six Flags(NYSE: SIX) has had a rocky first year under new management but the seeds are in place for a promising turnaround come 2007. The attendance bar set at Hong Kong Disneyland wasn't much. Disney averages twice as much at its flagship domestic parks. Over the next few years, the park will add new attractions that will increase capacity while inspiring more turnstile clicks.

Hong Kong didn't invest so much in Disney for a quick payback. A little patience will go a long way to getting the job done here.  

Disney is a Stock Advisor recommendation. To see what other companies David and Tom Gardner have recommended to investors since 2002, click here for a 30-day free trial.

Longtime Fool contributor Rick Munarriz did go to both Hong Kong and mainland China once. He looks forward to seeing how things have changed in that time. He owns shares in Disney and units in Cedar Fair. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has adisclosure policy.

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Mr. DAPs

Mr. DAPs

Hi, I'm Mr. DAPs, the Founder, and Editor in Chief of DAPS MAGIC! I can be regularly found at Disneyland with my hat and bow tie taking pictures and simply enjoying the Happiest Place on Earth. I'm also the weekly host of GEEKS CORNER and your Disney reporter for DISNEY REPORTER on DAPS MAGIC's YouTube channel. I am also now honored to announced that I'm a Brand Ambassador with Her Universe! Find me on Twitter and Instagram. as I'd love to connect with you. Make sure and say hi!






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