Legacy Content

Pardon Our Dust: Future Parks
Page 1 of 1

by LP Columnist
March 23, 2007
With Hong Kong Disneyland's opening well into the past, a look what the prospects are for future theme park expansion around the world.

Pardon Our Dust

Eighteen months ago the Walt Disney Company opened its first theme park resort in Asia with Hong Kong Disneyland. This destination was to be a beach-head for future theme park development in the region that would ensue with great pace. However we are almost through the first quarter of 2007 and still no news on future deals in Asia beyond the 2008 addition of it’s a small world at the Company’s Lantau Island outpost. So what has gone wrong?

In short: nothing. The Company is treading carefully in a market where it anticipates that approximately 80% of its future growth will come from. Last year the buzz surrounded three cities that each shared the same first letter: Singapore, Shanghai and Seoul. The proposals for Singapore and Seoul were remarkably similar. A brand new compact theme park called Disney’s World of Adventures (one of its many gyrations). Singapore’s government, sensing that other cities in the region were attempting to establish themselves as tourist destinations, pushed hard for Disney to commit early to the proposed theme park but the Company was reluctant to sign the agreement due to skepticism about the ability of the city to attract intra-continental traffic on the same scale as either Hong Kong or Shanghai. Faced with a potential partner that was dragging its heels the government encouraged the principality’s dominant leisure and hospitality firm Genting to skip ahead of Disney and reach a licensing agreement to build and operate a Universal Studios complex on the Sentosa Island development tract. That was finally announced last April. Government officials had told Disney that the city could support two competing theme park complexes. Disney vehemently disagreed and walked away from negotiations. The government has attempted to reach out again to the Company but it now looks unlikely that Singapore will host the twelfth Disney theme park.

The problem was that the Company diverted its limited resources behind the Singapore proposal which meant that negotiations with other regional city councils such as Shanghai floundered. Shanghai Disneyland had initially been the front runner for the next resort destination as the city had already ear-marked a parcel of land on the outskirts of the rapidly expanding second city of China (although the Company did not share the same enthusiasm for the site as the city counselors). The sticking point was the ability of the Company to leverage off of China’s desire to develop a tourism destination in Shanghai with its other synergistic needs such as access to distributions of its movies, consumer products and traditional media like television and satellite stations. The Chinese government just aren’t that keen to open up the country’s distribution channels any time soon either. So the question becomes: does the Company hold out until the government satisfies all of its demands or does it act quickly to get a foothold on the mainland? Many executives within the Company are beginning to shift their positions to the latter prospect. Parks & Resorts needs to continue to meet growth expectations from the Street and that is highly unlikely with its existing product portfolio (although both Disneyland Paris and Tokyo Disneyland are celebrating major milestones in the next year which will increase attendance and guest spend prospects with the former celebrating fifteen years of operation next month and the Tokyo outpost approaching the quarter-century milestone next April). Internally the Company wants to resolve the Shanghai Problem by the fall one way or another.

So where exactly are Walt Disney Parks & Resorts currently focusing their resources? Two key words: real estate. The Disney Development Company (headed up by Don Goodman as part of his responsibilities as President of Walt Disney Imagineering) is looking at assisting other cities in establishing non-theme park destinations. The current forerunner is Sydney, Australia. The most populous city on the island is home to just four million residents and although it remains a big tourist draw (especially from the United Kingdom and Japan) Sydney wants to position itself as being the family resort destination in Australia (as opposed to the more adult-orientated offerings that the city is currently famous for such as the Mardi Gras) and Disney are hoping to be the chosen partner. The country is home to a voracious Disney enthusiast population (as demonstrated by the hordes of Aussies that visit Hong Kong Disneyland Resort, Tokyo Disney Resort and Disneyland Resort on the main trunk air routes in South-east Asia and to the West Coast) and the Company has been developing a gigantic water park concept (complete with Disney-themed lodgings) for the city that could be the first of the “second-tier? resort developments in the world. The Company has finally realized that the risk and reward of constructing multi-billion dollar resorts is not the path to decent operating margins and profitability. The true route to market is in smaller developments that have lower building and operational costs and require significantly smaller attendance targets with which to be both cash-generative and profitable.

Which also brings us to the resort entertainment products that the Company is currently pitching to real estate partners and city councils around the world. Walt Disney Parks & Resorts Chairman Jay Rasulo cut his managerial teeth on the failed Club Disney and DisneyQuest projects when he was at the now-defunct Disney Regional Entertainment division (which eventually became just the ESPN Zone product) and he is convinced that there is a huge market for Parks & Resorts outside the berm. The Company is world-renowned for its architectural prowess and ability to create themed environments and Jay’s management team are touting this as the future for Parks & Resorts. Walt Disney Imagineering has mocked up a concept called Showboat that was to house several productions from Anne Hamburger’s Disney Creative Entertainment. At present there is no partner for the project but there is belief within the Company that one will be found eventually. In addition architectural guru Wing Chao’s team have designed a Victorian-inspired palace (think Crystal Palace on steroids) that would house live Disney entertainment, attractions and retail and dining opportunities all under one roof. Sort of like a Downtown Disney for a real downtown environment.

The Disney Vacation Club (given a more prominent role within Parks & Resorts with the recognition of the division’s first President in Jim Lewis as previously the division did not require a cast member higher than a Senior Vice-President) is also looking at real estate deals both inside and outside the existing resorts. DVC wants a Disneyland Resort hotel but is experiencing significant push-back from Team Disney Anaheim that (rightly) believes the resort’s precious land is better allocated to boutique five-star hotels (which is their preferred route to future development). Disneyland Resort President Ed Grier is backing a project instigated by his predecessor Matt Ouimet to add a new deluxe hotel to Disneyland Resort property but ultimately the decision will rest with Jay in Burbank. Either way there will be future DVC movements with the distinct possibility of DVC-branded lodgings in cities across North America either owned and operated by Disney or under license.

So all that doesn’t bode well for a twelfth theme park any time soon. Neither Walt Disney World Resort or Disneyland Resort are seriously contemplating an additional park any time soon (despite the latter’s stance on the matter in its current negotiations with the Anaheim City Council over housing projects in the area) but there is one party that is looking to add to its theme park portfolio: Oriental Land Company, the owners and licensee of the Tokyo Disney Resort. Faced with declining numbers from its ageing target audience OLC is looking to develop a third Japanese Disney park but this time outside the existing resort in Tokyo Bay. OLC own parcels of land throughout the country and have already been conducting surveys (both construction- and guest-orientated) on one such tract in southern Honshu. That is currently more likely than any of the other theme park projects currently being discussed.

To the outside world this may look like a quiet period of the theme park division of the Company. But trying telling that to the cast members that call Parks & Resorts home. The front-line cast members are dealing with across-the-board increases in park attendance and management continue to build upon their international expansion desires. 2007 will be a pivotal year for the division. Jay needs to deliver on the aggressive internal growth targets laid down by Corporate otherwise there may just be a vacancy in the near future at 500 S. Buena Vista for a theme park honcho.

Discuss It

-- Article by LP Columnist

Ken Pellman is a Public Information Officer, freelance writer, and media critic who contributes to The Disney Blog. He is a Disney shareholder and was a Disneyland cast member for over 15 years. He lives with his wife and their baby (currently in utero), and a dog who thinks she is the baby. Ken can be reached directly at Kenversations[at]flash[dot]net.

The views, opinions and comments of Ken Pellman, and all of our columnists and reviewers, are not necessarily those of LaughingPlace.com or any of its employees or advertisers. All speculation and rumors about the future of the Walt Disney Company are just that - speculation and rumors - and should be treated as such.

-- Posted March 23, 2007