Disney’s domestic theme parks are going strong according to their latest financial reports, but the international parks, not so much. There are now wide reports that overseas struggles are causing the domestic parks to trim their budgets to make up for the overseas losses.
Disneyland Paris is in the middle of a multi-year program to spruce up the parks and hotels in the hopes that it will attract more guests. However, continued economic woes throughout Europe is putting a damper on family’s travel budgets and that’s not much Disney can do about that.
Hong Kong Disneyland opened in 2005 and it too struggled to identify a market. But it seemed like it was on the right path after posting a profit the last four years. This year, however, was a loss. With Hong Kong in the middle of political unrest over mainland China attempting to gain more control and a general slowdown in the mainland Chinese economy there are factors outside of Disney’s control here too. There had been rumors of Disney finally announcing a second park for HKDL (there are some contract obligations with Hong Kong government who owns half the park), but for now that might be throwing good money after bad.
Finally, we’re just a few months before Disney is set to open Shanghai Disneyland and there are big questions if they’ll be able to open the park on time. If they do, it will likely be a phased opening with new attractions and areas coming online over time. Other rumors say that Disney seriously underestimated the cost to build in Shanghai where bribery to get things done and nepotism in the government is a way of life. Additionally, with over 200 million potential customers within 3-5 hours of travel time the park shouldn’t lack for visitors, but those visitors still need to have disposable income and if the economy in China continues to struggle, that might impact future earnings for the park too.
As a bonus, consider as well that ESPN is on the verge of major money problems if it can’t stop the loss of subscribers to cord cutters. Turns out when people drop their cable subscriptions one of the things about half of them don’t miss at all is ESPN (and other sports networks). I trust that Disney’s smart minds can figure out something here, but until then, ESPN won’t be as big a money engine as it has been in the past.
All this means that Disney is going to have to rely on its historic twin money engines – the studios and the theme parks. In the past when this happened, Disney would cut back on labor hours it spends in the park. This means less entertainment, fewer meet and greets (EPCOT is going to be hit hard, I hear), and generally longer lines at cash registers and the like. It might also mean the cut back on future projects like Star Wars Land and Toy Story Land. Not good timing if you ask me.
That’s the nature of being a part of a mega-company like The Walt Disney Company. Will these cutbacks affect your Disney fun?
Disappointing, if true, butunderstandable; Disney can’t just shutter their European and Asian parks. That said, it would be a mistake to skimp on the Star Wars and Toy Story expansions; those are going to pay handsome dividends, especially Star Wars land, which, if done right could make my bi-annual visits to Florida and California an annual thing.
As for affecting the experience in the parks, its always a balancing act. Disney’s reputation relies on World-Class Customer service, so they can’t cut too much or they put it at risk. At the same time, they’re a business so they have to deliver strong profits to shareholders.
The question is then; do they cut labor, or do they raise their already-high ticket prices?
Not the first time, Paris caused major issues in both California and Florida expansions. -_-
And it can be felt already in the parks, FL feels more and more as money vacuum and you can see maintenance lacking in some areas.
Two words…. NO connection!
Disney World has definitely gone downhill in cleanliness and quality. Possibly too big for its britches. What will keep my family away will be the lack of new attractions in all the parks and overall satisfaction of the parks. Yes we all know new stuff is coming, but the lack of “fixing” is evident at Epcot and with DHS and DAK as construction zones, this leaves poor MK to entertain the masses. Only reason to go back this year is to use our annual passes that were purchased last year. Then we may have to give the parks a little time to be fully functional again. This is also true for DL and DCA.
This is why I´m a constant reader of this blog. Posts like this show you are truly a blogger who stands out from the crowd. Congratulations for the analysis, John.
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