Disney Shanghai: Good for China, Bad for Hong Kong, BusinessWeek

[HongKongDisneyland]

Disney Shanghai: Good for China, Bad for Hong Kong
Posted by: Frederik Balfour on November 05

It’s been a crummy 24 hours for the Hong Kong tourism industry. The first piece of bad news: China has given the green light to Disney to build a theme park in Shanghai. The $3.5 billion Chinese facility will sprawl across about 1,000 acres which will dwarf Hong Kong Disneyland’s 296 acre lot. Mainland Chinese account for more than one third of the visitors to Hong Kong Disneyland, and once the Magic Kingdom sets up in the Middle Kingdom much of that business will get cannibalized. Hong Kong legislator Emily Lau, a long-time critic of Hong Kong Disneyland in which the government has invested billions, called the news a “devastating blow.”

Equally important perhaps is that Hong Kong’s air quality leads to unfavorable comparisons with its regional rival Singapore which has has long benefited from its reputation as the cleanest and safest metropolis in Southeast Asia. More recently the Singapore government has made a big push to improve the city’s tourism attractions by hosting the Formula One race and allowing casinos to open their doors next year. Another selling point for Singapore: a Universal Studios theme park is also set to open in early 2010. Though smaller than Hong Kong Disneyland, its proximity to Indonesia, Malaysia and Thailand will give it an advantage over Hong Kong.

But Shanghai is clearly the bigger threat to Hong Kong. Here’s what Parita Chitakasem, research manager at Euromonitor International in Singapore, who specializes in theme parks, had to say to me in an email. “Disneyland Shanghai will have two big features which will make it more attractive than its Hong Kong counterpart: although it is still early days, Disneyland in Shanghai will probably offer a much better experience for your money than Disneyland in Hong Kong – initial plans show that Shanghai’s Disneyland will be six times bigger compared to the current size of Hong Kong Disneyland, which is very small (only 16 attractions). Also, for visitors from mainland China, it will be much easier to travel to Disneyland in Shanghai, as there are no visa/cross border concerns to take care of.”

Source : BusinessWeek

[Coheteboy]

I feared this also. I think the planning of Hong Kong was so poor and inadequate that nobody will even plan to go to it now. They'll just save up for Shanghai.

[CaliforniaAdventurer]

No nostalgia for Michael Eisner's original Chinese park? The only park Michael Eisner ever set foot in.

[DarkSideoftheMouse]

This could potentially be great for us Disney fans. It's not as though Disney and the HK government would close the park due to low attendance and lose their entire investment before it makes a profit. All this will make them do is continue to expand the park and add unique attractions to draw more visitors.

[hkdlfan]

I always feared this. Disney is such a stupid company. WHY can they not improve their current parks all over the world especially HK rather than make another park?

[mclubber]

Originally Posted by hkdlfan

I always feared this. Disney is such a stupid company. WHY can they not improve their current parks all over the world especially HK rather than make another park?

Shanghai govt on the other hand, flooded Disney with hot money to build the park. Its such a shame that Disney didn't give much time for Hong Kong to develop before working on Shanghai. Look at Anaheim and Orlando. Anaheim opened in the 1950's it took at least 30 yrs later (late 1970's) Orlando's Disney World was built. In this case, HKDL has only been 5 yrs of operation and has not made profit already its time to build another park in China.

[CaliforniaAdventurer]

Will Shanghai be mad if they get approval from Beijing for a third Disney resort?

I know you guys will be mad. But it could happen!

[tasman]

This is a good thing.

Since Eisner left, Disney has been willing to invest more money in HKDL, but HK govt has prevented this because they themselves are unwilling to invest as much and they don't want Disney to increase its share of control in HKDL. The reluctance to invest more comes from the bad experience with Eisner-era Disney and with local politics - since refusing to invest more money in the park is popular with voters. This one reason why the more expensive arctic-themed area got replaced with the cheaper Toy Story Playland (the other being Ocean Park's own arctic-themed area and the government's stake in that competing park).

But now, HK govt knows that nothing short of full commitment on their part will make the resort a success.

[Dustysage]

Originally Posted by tasman

But now, HK govt knows that nothing short of full commitment on their part will make the resort a success.

I hope you are right. A good sign of that would be Disney canceling the Toy Story Land for something actually worth building.

[RandySavage]

As usual, the media is mistakenly fixated on acreage of the resort rather than number/type of attractions in the park. We still don't know if/how much bigger and more filled out SDL (the park) will be in relation to HKDL (the park). No one is paying to visit the unused acreage of either (yet).

We do know this:
1. Once the expansion is completed, HKDL will be a significantly better park than it is now - and that will pre-date the opening of SDL.

2. HKDL boasts the greater city around it. As a city, Shanghai is not on the same tier as Hong Kong, which is one of the one of very best cities on the planet (along with New York, London, Paris, Rome, Rio and handful of others). If you take away the theme parks, 9/10 first-timers would chose HK over Shanghai.

Like mentioned above, this could be a win-win if HKDL gets in the competive spirit and speeds up/expands their growth over the next 5 years.

[Dustysage]

Originally Posted by RandySavage

As usual, the media is mistakenly fixated on acreage of the resort rather than number/type of attractions in the park. We still don't know if/how much bigger and more filled out SDL (the park) will be in relation to HKDL (the park). No one is paying to visit the unused acreage of either (yet).

We do know this:
1. Once the expansion is completed, HKDL will be a significantly better park than it is now - and that will pre-date the opening of SDL.

2. HKDL boasts the greater city around it. As a city, Shanghai is not on the same tier as Hong Kong, which is one of the one of very best cities on the planet (along with New York, London, Paris, Rome, Rio and handful of others). If you take away the theme parks, 9/10 first-timers would chose HK over Shanghai.

Like mentioned above, this could be a win-win if HKDL gets in the competive spirit and speeds up/expands their growth over the next 5 years.

Great points Randy! There is certainly a reason for HKDL to be worried but there is no reason to believe that these parks can not co-exist. They will serve different markets and will likely be very different in design.

People forget that while technically Chinese, Hong Kong might as well be its own country. It isn't all that easy for mainland Chinese to get to Hong Kong, much less afford it. I really can't see Shanghai eating into Hong Kong Disneyland's business too much.

All the more reason why the HKDL expansion plan is so important. They need more rides and attractions. They still don't have their own Downtown Disney style shopping district. And I'd at least like to know they have aggressive plans for the 2nd park - something better thought out than Disneyland Paris' studios park.

[CaliforniaAdventurer]

Rethink Downtown Disney before it's too late. There's no reason to dedicate space to a mall, IMO an arcade of shops within a hotel would be more elegant and exciting.

[tasman]

Originally Posted by RandySavage

As2. HKDL boasts the greater city around it. As a city, Shanghai is not on the same tier as Hong Kong, which is one of the one of very best cities on the planet (along with New York, London, Paris, Rome, Rio and handful of others). If you take away the theme parks, 9/10 first-timers would chose HK over Shanghai.

I agree with most of what you say but the company is doing the right thing by having a long-term vision. Shanghai is destined to be China's top metropolis (just as it was a hundred years ago) - China's New York. Hong Kong is an incredible city and more developed today but the focal point for the coming century will be Shanghai. So Disney is right to focus there.

[RandySavage]

Originally Posted by Dustysage

And I'd at least like to know they have aggressive plans for the 2nd park - something better thought out than Disneyland Paris' studios park.

Someone correct me if I'm wrong, but I believe Euro Disney S.C.A. had contractual obligations to open a 2nd gate or they would forfeit certain rights under the original agreement with the French government. And so they built the second "theme park" as cheaply has they could. And it showed. I'm not sure ED S.C.A. would have gone forward with a 2nd gate as early as 2002 had it not been for this provision.

From what I remember, HKITP has similar provisions with the government and could lose control of the 2nd Gate landfill if they do not build another park before a certain date (with some time-extension if attendance at HKDL meets specified levels).

[CaliforniaAdventurer]

Paris' 2nd gate is a landfill, too.

A step up from a place that instills nostalgia for the parking lot.