Disney aims to break curse with latest overseas venture

All systems are go for the opening on Thursday of the $5.5bn (€4.8bn) Disney Shanghai Resort, the largest foreign investment ever from the world’s biggest theme-park operator and a career milestone for Disney chief executive Bob Iger.

If history is a guide, however, the opening could be as turbulent as the twists and turns on Big Thunder Mountain. Disney’s past international park efforts have been marked by cultural missteps and years of losses.

Shanghai represents a chance for the company to avoid those mistakes and earn a profit commensurate with the money it’s investing. Mr Iger said the new park’s size, commitment to technology and focus on local culture to distinguish it from prior efforts.

“It combines all the things we have learnt over the years from all the other parks we have operated,” he said.

Disney’s resorts division began taking steps overseas with Tokyo Disneyland in 1983. Construction of the first park there ran about 80% over budget.

However, the company was insulated. Card Walker, chief executive at the time, had endured kamikaze attacks on his aircraft carrier in the Second World War and was reluctant to invest directly in Japan.

So he signed a licensing deal with Oriental Land, which funded and owns what is now two parks in Japan. Oriental Land earned $692m last year on sales of $4.4bn. Disney collects a royalty that amounted to $366m in fiscal 2015, much of that profit.

Things have not gone so well at the company’s other international resorts. Euro Disney, the publicly traded owner of the two parks at Disneyland Paris, has been bailed out three times in three decades and hasn’t made a profit since 2001.

Hong Kong Disneyland, a 47%-owned venture with the local government, has been unprofitable for eight of its 11 years, including 2015.

Last year Hong Kong was hurt by a decline in mainland Chinese tourists last year and the resort lost $19m.

Disney has not shown a profit on its international theme park investments since 2004.

* Bloomberg


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