Walt Disney’s (DIS) Hong Kong theme park posted its first net loss in four years in 2015 as Chinese visitor numbers slumped, a potential headache for the U.S. firm as it prepares to open its first mainland Chinese park in June.
The park posted a net loss of HK$148 million ($19 million) for the year, dropping into the red after three straight years of profits, Hong Kong’s Legislative Council Panel on Economic Development said in a report released on Monday.
Hong Kong has been hit hard by slowing economic growth in China, which has battered the number of big-spending Chinese tourists traveling to the city. Its retail sales saw their worst annual decline last year since 2002.
Hong Kong tourist arrivals fell 2.5% in 2015 to 59.32 million, the first decline since 2003 when the city lifted travel restrictions for some mainland Chinese. Mainland visitors account for about three quarters of visitors.
“The tourism industry of Hong Kong was greeted with great challenges due to external factors as well as overall market condition and sentiment,” the report, posted on China’s Tourism Commission website, said.
The Hong Kong Disney park saw revenues of HK$5.1 billion in 2015, a decrease of 6% against a year earlier, the report said, the first revenue drop for the park since 2009. Visitor numbers also fell nearly 10%, the first decline since at least 2008, driven by a steep drop in mainland guests.
“Lower visitation from mainland China and the region largely contributed to softer overall theme park attendance,” Disney said in a statement emailed to Reuters.
The opening of the larger Shanghai resort could dent the fortunes of the Hong Kong park further, the panel said in the report, adding the park was looking at how to stay competitive in light of “intensifying competition” and “the opening of the Shanghai Disney Resort in June this year.”
Disney’s $5.5 billion Shanghai resort, a joint venture between the U.S. entertainment giant and Chinese state-backed consortium Shanghai Shendi Group, is slated to open on June 16. It had previously been set to open in late 2015.