Before the "Mickey Kingdom" was established in Hong Kong, the city was already in high spirits in anticipation of the opening of the theme park. Traces of the famous "mouse" were everywhere. The market has high expectations for this Utopia. However, are the business opportunities unleashed by the opening of Hong Kong Disneyland a reality or just an illusion?

Increase in Tourist Numbers and New Jobs
Disney predicts that in its first year of operations, Hong Kong Disneyland will attract 5.6 million visitors and that that number will gradually increase to 10 million per year. The opening of the park has created 18,400 jobs, and this will increase to 35,800 within twenty years. In the next 10 years, the park will bring in about HK$48 billion in net income to Hong Kong, it is estimated. Disneyland has painted a very rosy picture, but the Hong Kong Government has had to pay HK$23 billion from the public treasury in advance to buy an "admissions ticket". This means that each Hong Kong resident has had to pay an average of HK$3,500. Is the "happiness" that they get in return the same as what they initially imagined? Unfortunately, the answer is "no". Even Li Ka-shing, the chairman of Cheung Kong Holdings Ltd and Hutchison Whampao Ltd. spelled out the fallacy of the argument in favor of Disneyland. He stated rather frankly that he was doubtful that Disneyland could help lift the retail industry in Hong Kong. Li said, "A good that originally costs HK$100 can't possibly be sold for HK$150 simply because Disneyland has entered Hong Kong."
Rather, the shares of companies involved in the retail trade in Hong Kong have soared on the expectation that Disneyland will help boost their profits. Market analysts feel that the park has inspired unrealistic expectations and are therefore advising investors to sell their retail shares. Value Partners believes that retail stocks had already been oversold, thus they have recently been bought in the market. Ben Kwong, associate director at KGI Asia Ltd., believes that Disneyland and the "individual travel scheme" will be different in terms of their economic impact on the retail sector. He says that the rise in rents has already eaten into the profit margins of retailers, thus he believes that the market has overestimated the actual benefits that Disneyland could bring to the hotel and tourism industry in Hong Kong.

Retail Sector is Hit Instead
"There will be some stimulation in the retail sector; however, in the long run, the contribution of Disney will not be very significant. On the contrary, Disneyland fever has already spurred rental growth. That is why the number of vacant shops has recently gone up," says Kwan Pak Hoo Bankee, chairman of the Hong Kong Retail Management Association. Retailers will likely suffer from the negative effect of Disneyland before they see any benefits.
Raymond So Wai Man, an associate professor in the department of finance at the Hong Kong Chinese University suggests that Hong Kong could undoubtedly enhance its international image by having the first Disneyland in China, but believes that the overall benefits are limited. In his opinion, although the park can create thousands of jobs, most of the positions require low qualifications and are labor intensive. They will not have a significant influence on internal consumption and the property market. On the other hand, Disneyland will intensify the competition in the retail sector. So says that the real beneficiaries are logistics companies and transport companies shipping goods and bringing visitors to Disneyland from the Mainland.
In contrast, government officials are more optimistic. A spokesperson for the Hong Kong Tourism Board stated that Disneyland will help attract tourists and families from far away and strengthen Hong Kong's position as a family tourism destination. The park will also attract international organizations and give them reason to extend their stays in Hong Kong, hence further encouraging consumption. A spokesperson estimated that among the expected 5.6 million visitors in the first year after Disneyland's opening, 1.4 million of the visitors will visit other parts of Hong Kong. Disneyland will boost Hong Kong's tourism.

Housing Price Has Been Stirred Up
Undoubtedly, the property market and hotels have outshined other sectors. The Land Registry recorded in recent months a 20 per cent rise in the price per square foot of private residential houses in Shum Tseng and Tung Chung. The price per square foot for Park Island, the large-scale residential project in Ma Wan, went up from HK$3,221 in early 2005 to HK$3,660 this month-a 14 per cent increase. Some predict that property prices for flats near Hong Kong Disneyland will experience a 10 per cent rise.
In the meantime, the entry of international brands has also driven up the price of retail property. The shop department of Midland Realty forecasts that rents for first level commercial stores will probably go up by 35-40 per cent and that the price of second-tier and third-tier locations will rise 20-50 per cent.
Before the inauguration of Hong Kong Disneyland, Hong Kong's economy enjoyed rapid growth. GDP growth in the second quarter was 6.8%. Some analysts attributed the economic growth in the second quarter to the "Disneyland effect", while others attributed it simply to general economic improvement.

Economic Impact Under Observation
However, Tao Dong, chief Asia economist at Credit Suisse First Boston in Hong Kong, questions whether the rise in property prices is justified. He predicts that the increase in property prices will not be steep and that the salary of Hong Kong people will only rise by 2-3 per cent.
Some analysts also express worry that Disneyland will make inflation more severe.
Before translating its hype into reality, Disneyland is losing its battle for publicity. The opening of Disneyland was plagued with negative news (including a ?§uniform row?¨ in which two government hygiene inspectors were ordered to take off their caps and uniform epaulettes before being allowed into Disneyland to investigate a food poisoning case) and criticism from visitors about the park being the smallest Disney in the world. Pressure is growing on the government to further privatize the Disneyland by listing the joint venture. The hype is over. Disneyland has a long way to go to match the inflated expectations.

by Tinny Cheng in Hong Kong