HONG KONG (Reuters) - Walt Disney Co (N:DIS) will lose its option to buy a plot of land next to its Hong Kong theme park that was to allow for future expansion after the city's government said on Wednesday it would not extend the option due to current economic conditions.
The announcement comes as the Chinese-ruled hub tries to bolster its flagging economy and badly hit tourism sector, which was impacted heavily by anti-government protests last year and more recently, the coronavirus.
Hong Kong's Disneyland resort is owned by a joint venture, Hong Kong International Theme Parks Ltd (HKITP), of which the local government owns 53% and Walt Disney Co holds the rest. It has been closed for +months this year.
The government said it was prudent to focus on the development and expansion of the existing resort in the coming few years rather than a geographic expansion, according to a statement on its website.
"HKITP's strategic direction is to focus on the ongoing multi-expansion plan featuring a series of new attractions that will continue to position Hong Kong Disneyland as a premier tourism destination in the region," a spokesman for the city's Commerce and Economic Development Bureau said.
The option to buy the land, which is nearby the city's international airport, was agreed 20 years ago and expires on Thursday.
A Walt Disney Company representative said that the company would continue investing but was "extremely disappointed with the Hong Kong government’s decision not to extend the phase 2 land expansion option."
The land earmarked for Disney has been unused for years and activists had advocated that public housing be built on it. As the city experienced a renewed rise in coronavirus infections, authorities set up a temporary quarantine centre.
Disney said on Tuesday it would open its Hong Kong park on Sept. 25 to a reduced number of visitors and limited days, with enhanced health measures.
It had closed again in mid-July for a second time.
The Asian financial hub has relaxed its coronavirus restrictions, including reopening theme parks, after the testing of nearly two million people in a programme organised by the Chinese government found 42 cases.
Gatherings remain capped at 4 people and all guests inside the park must wear masks.