Walt Disney Co. (NYSE: DIS) has a lot going for it, even if there has been a continued cloud over ESPN and cord-cutters. One area that is huge for Disney is of course its global chain of theme parks. When Americans think of Disney theme parks, they probably think of Disneyland in California and Disney World in Florida. It turns out that the coming opening of Disney’s theme park in Shanghai eventually could trump these properties in annual attendance.
Disney itself owns the whole show for most of its American properties, but it owns interests in foreign operations. The most recent data showed that Disney’s domestic operations were stronger for earnings than its international parks. Is it possible that the Hong Kong Disneyland Resort and the resorts in America could ultimately be trumped by the coming Shanghai Disney Resort?
In a recent report, the firm Drexel Hamilton said that the coming Shanghai resort could attract as many as 59 million visitors. It also projected that Shanghai could generate from $70 million to $450 million in annual earnings. Before thinking that Shanghai will take over the Disney empire, note that the report projected a range of as low as about 20 million visitors and that 59 million was the high end of the expected range.
Disney’s parks in Orlando had more than 51 million annual visitors in 2015. Roughly 16.7 million people visited Disneyland in 2014.
Disney’s 2015 annual report described the Shanghai Disney resort as located in the Pudong district of Shanghai, on approximately 1,000 acres. They said that it initially will include the Shanghai Disneyland theme park, two themed hotels with a total of 1,220 rooms, huge retail and dining and entertainment complexes and an outdoor recreational area. A management company, with Disney having a 70% interest, will be entitled to receive management fees based on operating performance of the resort, and Disney is also entitled to royalties based on resort revenues.
Bob Iger, Disney’s chairman and CEO said in the latest annual report:
This spring we’re bringing that dream to Mainland China with the grand opening of our spectacular new Shanghai Disney Resort. This authentically Disney, distinctly Chinese destination is one of the most extraordinarily creative and innovative projects in the history of our company, which makes it the perfect way to introduce the people of China to everything Disney is today and build our future together.
This resort is personally very special to me, since I’ve been involved from the earliest days of planning. We’ve spent the better part of 20 years working to bring this grand vision to life, to create a one-of-a kind world-class experience to inspire joy and wonder in the hearts of all who enter. Now that construction is almost complete and all the major structures and landmarks are in place, the reality is even better than we could have ever imagined. We can’t wait to show it to the world and share it with the people of China for generations to come.
Disney’s latest report also showed that it manages and has effective ownership interests of 81% in Disneyland Paris, 47% in Hong Kong Disneyland Resort and 43% in Shanghai Disney Resort. It also licenses its intellectual property to a third party for the operations of the Tokyo Disney Resort in Japan.