Hong Kong’s political crisis is hitting the local Disneyland hard, CNN reported. Disney reported strong earnings on Thursday, but flagged mounting losses at its theme park in Hong Kong, where protests have gripped the city for months and walloped its tourism industry.
If the current trends continue, operating income at Hong Kong Disneyland could fall by $275 million in Disney’s current fiscal year, which ends in September 2020, the company’s chief financial officer Christine McCarthy said during an earnings call.
The local theme park was a drag on international business last quarter, when operating income at Hong Kong Disneyland fell $55 million, offsetting growth at parks in Paris and Shanghai. McCarthy warned profit could fall by $80 million in the current quarter.
As a whole, Disney’s parks unit — which it breaks out in its earnings report as parks, experiences and products — brought in $1.4 billion in operating income for the fourth quarter, a 17% increase over the same time last year.
Disney’s warning underscores the gloomy picture for Hong Kong’s economy. Official data released last week confirmed what many had feared: The city has plunged into recession, after months of protests have forced shops to close, paralyzed public transportation and scared off tourists, CNN noted.
Visitors to Hong Kong plummeted 37% in the third quarter, according to the city’s financial secretary. Hotels were on average only two-thirds full, a drop of 28% compared to the same period a year earlier. With no immediate resolution to the city’s political crisis in the cards, economists say Hong Kong’s first recession in a decade could extend into the new year.