Related: Hong Kong Disneyland is suffering losses
A Hong Kong real estate businessman ascribes Hong Kong Disneyland's heavy losses to the huge franchise fee demanded by the US headquarters, so that only a small portion of the business earnings go to the Special Administration Region (SAR) government. According to the agreement, the SAR government holds 57 percent of the equity stake in the form of capital injection, land allocation and loan provision, while Disney invested HK$2.45 billion (US$315.91 million) and holds the minority 43 percent. In addition, Disney also charges the Hong Kong government fees for brand value, franchise and management.
Previous media reports pointed out that Shanghai Disneyland would assume the business operation mode of Tokyo Disneyland rather than Hong Kong's. The Shanghai government will provide a much bigger share of the Park's initial investment cost in exchange for a lower contribution in management and other fees, while the operational management of the Park will be the responsibility of the Disney Group.
In addition to the financial pressure of the franchise and management fees, Shanghai Disneyland may also encounter "content problems". Denny, a Shanghai local who has been to Disneyland in the USA, says that ordinary people are unlikely to go to Disneyland more than once because of the slow updating of facilities and the lack of innovation. He thinks no one except children under 14 years old will take a long-term interest in Mickey Mouse. How Shanghai Disneyland will attract return customers remains an open question.
The above-mentioned Hong Kong real estate representative also claims that locals are bored with the conservative Disneyland, and they prefer the constantly innovative Ocean Park. "American culture is on the decline and will struggle to maintain its attraction to tourists. Natural theme parks like Ocean Park and Wild Animal Park are more appealing to visitors."
WeMe Research Center chief Cai Weimin also thinks Shanghai Disneyland can expect to receive many visitors when it opens, but its long-term profit prospects are more difficult to assess. "Visitors won't go there more than a couple of times." Without return visitors, Shanghai Disneyland will face the same problems that burden its predecessor in Hong Kong.
However, Zhu Lianqin, chief of the Business Research Center of Shanghai Academy of Social Science thinks otherwise. "If it wasn't a good idea, other cities wouldn't be bidding for it with us," Zhu says with confidence. Moreover, Shanghai will initially be the only Disneyland city on the mainland, and the business impact will cover not only Shanghai, but also the Yangtze Delta and beyond.