Disney’s third fiscal quarter begins next week, and it’s about to wreak major changes on the operation of the Disneyland Resort. In this update we’ll fill you in on why Shanghai Disneyland is driving huge cutbacks here in the states, and how it will affect your visit this spring and possibly this summer as well.
Shanghai Disneyland is opening in about ten weeks, on June 16th, but it’s a park that is more than six months behind its original schedule and dramatically over budget. The local construction workers, contractors and many of the Chinese managerial staff Disney has been using to get the park built have all proven to have a very different work ethic than is found on big construction projects in Disney’s parks in America, Japan or France. The project has been struggling with endless delays and multiple facilities have had to be repeatedly fixed or rebuilt entirely due to the lack of attention to detail and unwillingness to follow WDI’s directions properly. Disney had publicly admitted last year that an additional $800 Million would be dedicated to the delayed project, but the extra costs associated with getting the park semi-ready to open by June have rocketed well beyond that number.
The result here at home is that Parks Chairman Bob Chapek and Disney CEO Bob Iger are now demanding that the rest of the Parks & Resorts division slash costs and reduce labor for the fiscal third quarter of April through June, in order to hide the impact Shanghai will have on Disney’s financial numbers it reports to Wall Street for this quarter.
Disneyland’s executive team is dutifully obeying the orders of their Burbank bosses, and the impacts have begun this week. Smaller attractions like the Redwood Creek Challenge Trail have begun closing several hours before park closing time, and the amount of time that even big attractions run at full capacity will be reduced. Rides like Casey Jr. and Storybook Land will reduce the number of trains and boats that are operating on even busy days, and the Red Car Trolley in DCA will drop to a one trolley operation instead of running both trolleys simultaneously. Many park stores will reduce the number of cashiers and stockers, and the Food & Beverage department is suddenly sourcing cheaper cuts of meat and cutting back on portions and extras, in addition to reducing bussers and cleaning staff.
Disneyland’s Entertainment department was asked to shave the most off its budget, and the result is that DCA will temporarily suspend its Pixar Play Parade for a month under the false narrative that it can’t operate during the Food & Wine Festival. Yesterday’s performance was the last Pixar Play Parade until early May. DCA simultaneously offered daily parades and the Food & Wine Festival during the last decade when the culinary event was much bigger, and it could easily do the same now with the scaled back offerings for the relaunched Food & Wine event.
But cancelling DCA’s parade was a way to save a bucket of cash for the Burbank bosses so that they could at least continue with the lavish 60th entertainment offerings each night over at Disneyland. The Mad T Party also ends tomorrow without a replacement, and TDA no longer has the money to mount a quick replacement offering. This has forced all the performers in DCA’s parade to scramble for outside work and new jobs since their jobs and paychecks have been put on hold for a month. These cuts come even with all the extra-cost upcharges and questionable VIP packages that the smaller Food & Wine event have, every extra dime must be sent to Burbank to pad the bottom line to make Shanghai look good.
But the biggest cutback of all will begin this Sunday. That’s when both parks will shave one to two hours off their usual operating day for this time of year. Beginning next week DCA will begin closing at 9:00 pm on every Friday, Saturday and Sunday through at least May, when it would normally close at 10:00 pm. And Disneyland will now close at 11:00 pm on Fridays and Sundays, saving the usual Midnight closings for only the busiest Saturdays this spring. The labor cutbacks at attractions and the cost cutting at stores and restaurants will continue even with these reduced park hours, for a one-two punch of sweeping labor cuts and reduced park hours.
Anaheim’s Cast Members are now seeing these changes show up on their schedules posted through early April, and have taken their angry commentary to Social Media with the hashtag #ThanksShanghai since it’s widely acknowledged that these are all cutbacks driven by the need to paper over the huge expenses being racked up by the troubled Shanghai property.
The MK bag check line is around 20 minutes right now because minimal staffing #ThanksShanghai
The reduced park operating hours will really put the squeeze on the parks, especially on Friday evenings and the warm spring weekends ahead. And yet DCA will be launching several big new offerings late this spring that will drive heavy AP attendance, right in the middle of all the cutbacks. The first is the new Frozen stage show that debuts Memorial Day weekend. The show will offer Fastpass, and demand is expected to be very strong for the first new show in the Hyperion Theatre in 13 years. But the Hyperion Theatre is getting in on the act to help Shanghai by allowing candy and soft drink sales for the first time inside the theater, with new cup holders being grafted onto the existing seats. TDA is looking for anything that can generate extra revenue to help the bottom line to assist in hiding the money pit in Shanghai.
Then on June 17th the new Soarin’ movie debuts in DCA, one day after it opens in Shanghai. The third fiscal quarter goes through June however, so the slashed labor and reduced offerings will still be in effect in Anaheim during the height of Summer crowds. If Shanghai opens to big attendance and glowing press, the Anaheim parks will be allowed to reinstate the slashed labor, operate the attractions at full capacity, and return to normal summertime operating hours with daily Midnight closings. Yesterday’s news that opening day tickets for June 16th sold out within hours are good sign, at least for the first few weeks. But if Shanghai opens in June to negative press that picks up on how many rides still aren’t ready to open and how many buildings and facilities are still obviously unfinished, which may cause Chinese visitors to delay their first visit, then Burbank would demand that the American parks continue their cutbacks through the end of the fiscal year in September.
Disney has always planned for and expected additional expenses when a new property opens, especially during the fiscal quarter in which it opens. And those expenses are dutifully noted in the quarterly report to Wall Street bankers and investors. But this is something entirely different and unprecedented, where all the other parks (except the Tokyo parks, which are owned by the Oriental Land Company) are cutting back and slashing hours regardless of how busy they are and how strong their own business is. Disney’s Shanghai property is majority owned either outright or via state-owned companies by the Chinese Communist Party, while Disney owns a minority share of the park, and it’s important for Bob Iger’s legacy that the Chinese Politburo is pleased with the opening and performance of the Shanghai park. And to ensure his legacy, Bob is willing to make the visitors to his American and French parks pay for all of Shanghai’s pre-opening failures and mistakes.
This current situation is simply a mess. If the grand opening goes well in Shanghai, the mess will only last from April through June, and Disneyland’s hours and daily operation will return to normal this Independence Day (ironically enough). But if Shanghai struggles out of the gate, or worse and does a DCA-like faceplant upon opening, then the cuts in Anaheim could get deeper and last longer than anyone in Burbank had planned. The American and French parks would be expected to prop up the Shanghai property for as long as it needs to find its footing. #ThanksShanghai
Should Disneyland be forced to pay for Shanghai overruns? Will the new attractions and shows at DCA be enough to counteract reduced offerings for you and your family? We look forward to your thoughts below.
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