Hong Kong (CNN Business)Hong Kong’s political crisis is hitting the local Disneyland hard.
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.
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.