The Jumbo Floating Restaurant capsized in the South China Sea on Sunday, less than a week after being towed away from Aberdeen Harbour in Hong Kong.
No crew members were injured in the accident.
In a statement on Monday night, its parent company, Aberdeen Restaurant Enterprises, said the vessel encountered stormy seas in waters near the disputed Xisha Islands on Saturday afternoon, causing it to partially sink.
Despite the efforts of the towing company responsible for the trip, it capsized a day later.
Aberdeen Restaurant Enterprises said it expected salvage work to be extremely difficult, since the water depth in the area, far south of Hainan Island, exceeds 1,000 metres.
It said it's saddened by the incident, adding that it is now getting further details from the towing company.
However, it noted that before the vessel left Hong Kong, it hired professionals to comprehensively examine the hull and install hoardings, and had obtained all necessary documents for the journey.
Once a popular tourist destination, the 46-year-old restaurant suspended operations in March 2020 after suffering years of losses.
It was donated to Ocean Park but the amusement park later said it could not find a third-party operator to run the restaurant.
The company had said the vessel would be sent away for maintenance and storage, but refused to reveal where the Jumbo was bound for.