Disney's Iger says Shanghai theme park close to breaking even

Shanghai resort greeted 11 mn visitors in first year; potential for Disney to build a 2nd China park

Walt Disney’s ambitious $5.5 billion Shanghai theme park is close to breaking even after its first full year of operations — a mark none of its resorts have been able to hit in the last 30 years, said Chief Executive Officer Bob Iger.

“That’s an extraordinary achievement. I’m not sure we’ve ever done that,” said Iger in an interview with Bloomberg Television’s Tom Mackenzie on Friday as the Shanghai Disney Resort celebrated its first anniversary. “After the first year, I’m pleased to say that prospects are really strong for continued success and continued growth.”

The park logged more than 11 million visitors earlier this week, Iger said. The Shanghai development, Disney’s first in mainland China and its largest foreign investment, throws the Burbank, California-based giant into the race to dominate the country’s $204 billion media and entertainment industry.
 

In China, there’s potential for Disney to build a second park in the long run, Iger said, adding it would focus on the Shanghai resort first. A Toy Story themed land opening is planned for next year.

“Before we really look to the horizon geographically, we will focus on expanding this park,” Iger said. “Might we build in another city over time? Yes. There’s a great likelihood that we will. But it’s way too early.”

Half the resort’s visitors are from Shanghai and adjacent areas, with the remainder coming from other Chinese cities, Iger said. Park attendance is higher than expected, with “extremely high” occupancy rates at its hotel. The food and beverage business, as well as merchandising, has faced some challenges, he said.

The resort’s attendance for the 12 months after its opening puts it in the top seven of theme parks worldwide, ahead of Disney’s Hong Kong and Paris parks but behind its most popular parks in Florida, California and Japan.

Tokyo Disneyland logged 16.5 million visitors last year, while the company’s most popular park, Magic Kingdom in Florida boasted more than 20 million visitors, according to data from the Themed Entertainment Association and consulting firm Aecom. It is also China’s most-visited park, ahead of rival Chimelong Ocean Kingdom in Hengqin, which saw 7.5 million visitors in 2016, according to the data.

Disney’s international parks, with the exception of the Tokyo resorts, which it does not own or operate, have struggled with attendance. The Hong Kong park clocked 6.1 million visitors in fiscal 2016, a 11 per cent decline from a year earlier, and it reported a second consecutive year of net loss. Disney said this week that it would delist Euro Disney S.C.A after 27 years as an independent company. Still, profit for its parks and resorts segment grew 9 percent to $3.3 billion for fiscal 2016.

Iger said the company’s priorities in China are its theme park and expanding the footprint of its movie business in China. “The movie market is important. This is second largest market in the world,” he said.

Iger said that an online-only version of the company’s sports offerings will be introduced toward the end of this year. Disney’s largest business, TV programming, last month reported lower-than-expected sales revenue and slipping profits as more viewers watch video online while sports leagues keep demanding more money. Ratings and subscribers have dropped for its ESPN and ABC networks.