Steve takes you to Hong Kong Disneyland - Part 2

[Tannerman]

Hong Kong Disneyland is the 2nd Disney theme park complex to be built in Asia; the first was the Tokyo Disneyland park which opened in 1983. It's also the first Magic Kingdom to be built since 1992's Euro Disney. Just two years later, in the midst of struggles at the French resort, the theme park was renamed Disneyland Paris. It's important to understand what took place in 1994, as it had a profound effect on today's Hong Kong Disneyland. It was a major turning point in the philosophy of The Walt Disney Company.

Post-1994 "Cheap Parks"
Disneyland Paris flopped rather quickly for various reasons (mainly, building too many hotels on the property, resulting in huge debt). Shortly after the opening, CEO Michael Ei$ner's #2 man, Frank Wells, was killed in a helicopter accident. Wells was long considered to be the "ying" to Ei$ner's "yang", providing the proper balance of creativity vs. cost on Disney projects, much as Roy Disney did the same for Walt. Disneyland Paris was a very lavish theme park; most observers consider it the best-themed Magic Kingdom. After that point, however, Ei$ner overcompensated for the expense of Disneyland Paris by attempting to build theme parks "on the cheap." The initial plans for the never-constructed Disney's America project were an outcome of this philosophy shift.

Since 1994, Disney has built 4 theme parks around the world: Disney's Animal Kingdom (1998, Florida), Disney's California Adventure (2001, California), Walt Disney Studios (2002, Paris), and Tokyo DisneySea (2001, Tokyo). All of these projects have been complete and utter financial failures, minus Tokyo DisneySea. The problem? Animal Kingdom, California Adventure, and Disney Studios Paris were all built as half-day parks, with major budget reductions in attractions and things to do. Thus, Disney has been charging the full price for these parks even though there is less value there. Customers haven't been stupid... they've avoided the parks in droves.

Some parks have been beautifully detailed, such as Disney's Animal Kingdom, but with little to actually do there. Others have no themeing at all, like Walt Disney Studios in France. Finally, some just have pointless themes and lame execution, like Disney's California Adventure -- situated right next to the flagship Disneyland and themed to recreate California... even though it's already in California. The only new park exception to this "build cheaply" trend has been Tokyo DisneySea, which many analysts now consider to be one of the top theme parks in the world. The difference? Disney doesn't own this park, they just provide a licensed name. Which leads us to the ownership of Hong Kong Disneyland.

While The Walt Disney Company has complete ownership of the Disneyland Resort in California and Walt Disney World in Florida, most folks don't know that they don't own one bit of the parks in Tokyo. In the pre-Ei$ner era of the late-1970s/early 1980s, current Disney management wanted to limit their risk into international expansion. To do so, they allowed a Japanese firm, Oriental Land Company, to build Tokyo Disneyland. Disney licensed their name to this 3rd party and provided all the planning, training, and execution for the park. The result? Tokyo Disneyland is probably one of the most profitable theme parks in the world.

Reducing Risk Via Joint Ventures
Much of this Asian success can be attributed to the passion the Japanese have with all things Disney. And their theme park owners know that quality matters, thus they spare no expense in their projects. Time and time again, the Japanese have proven that it takes money to make money. Obviously, when Ei$ner came into power in 1984, he was rather bummed that Disney was only getting a percentage of the profits from the Tokyo park. Thus, he determined there to not make the same mistake twice.

When Disneyland Paris opened, Disney owned 49% of the park, as European law prohibited a foreign company to own a majority in a project such as that. When it didn't do so well, Disney got burned. Thus resulting in their rather cheap theme park moves since then. Japan moved to expand to a second theme park, Tokyo DisneySea, and spent a LOT of money on it... but since it wasn't Disney's money, Ei$ner didn't care.

Eventually, when negotiations developed to put the company's first park in China, Disney pulled off a rather shrewd business deal. Disney would invest just $250 million in the new project, while the Hong Kong government (basically China) would pay for the remaining $2.6 billion. Even with the disparity in investment, The Walt Disney Company retains 43% of the joint venture's profits, while Hong Kong gets only 57%. Someone really messed up on the math there!

Saving the Park Before Opening It
The management team at The Walt Disney Company that was responsible for the various theme park flops since 1994 has been largely removed from power. The primary evil dude was a guy named Paul Pressler, an Ei$ner "yes man". He actually believed that eating and shopping were the only reasons people came to Disney theme parks, rather than to experience attractions. He was pushed out in part from the pressure placed on the company by Roy E. Disney's Save Disney campaign from 2003-2005. Incidentally, and perhaps more occupationally fitting, Pressler is now the CEO of Gap, Inc.

Unfortunately, under Pressler's leadership, Hong Kong Disneyland was planned to be "Disneyland Lite". The idea being that only a few attractions would be built, and then over time, more would be added to make it a full-day experience. Of course, full-price admission would be charged the whole time.

Sensing that this plan would be a big flop like Disney's California Adventure and Walt Disney Studios Paris, new management worked quickly to try to fix the Hong Kong park before it opened. However, since theme parks are planned 5-10 years in advance, construction was already underway and major infrastructure improvements could not be included in the park launch. In an attempt to fix the park before it opened, a rapidly developed Phase 2 plan was put into place to begin expansion of the park in 2006, featuring more attractions. In the short term, greater attention was placed on themeing and scenic beauty at the park to make it seem less "cheap." It remains to be seen if these last minute plans will be successful.

So there's your overview! I hope you can see how this background history has effected the planning, development, and creation of what sits on the harbor in Hong Kong. Now it's time to take a look at the park itself!