By the Numbers: Three Observations About the (Under Construction) Shanghai Disneyland

A Park Database Feature

By Wonwhee Kim, Founder of The Park Database (left)

The upcoming Shanghai Disneyland is among the most anticipated attraction projects in Asia.  The Shanghai park will be the first on China’s mainland, and is of an unprecedented size and scale.  With the potential to change the entire Chinese theme park industry, and we here at Pro Forma Advisors have participated in numerous discussions about its impact.  

Three Observations About the (Under Construction) Shanghai Disneyland:

1.     LOCATION: To state the obvious, Shanghai is a prime location.  Not only does the city boast the highest per capita incomes in China, its markets are unusually deep.  We estimate a population of approximately 22 million residents within a 1-hour travel time.  We estimate a population of approximately 19 million residents within a 2-hour travel time.    Also advantageous, by Chinese standards, is the depth of its urban market, at nearly 60 to 90 percent of the total population.  In a country where urban residents average incomes that are 2-4 times that of their rural counterparts, this is quite significant.

2.    COMPETITION: Shanghai is not without competition when it comes to outdoor theme parks.  There is the Happy Valley Shanghai (of the near-ubiquitous Happy Valley chain), and the fairgrounds-like Jin Jiang Action Park.    Happy Valley Shanghai’s resident markets encompass all of Shanghai within a 1- and 2-hour travel time, and has superior access to the more inland markets of Jiangsu and Zhejiang.  It has a larger market from a raw population perspective.  We estimate a population of 26 million residents within a 1-hour travel time, and a population of 29 million within a 2-hour travel time of the park.

3.    PRICING: Although the pricing for the Disneyland park has not yet been determined, reports have pegged the adult headline price to be potentially between 300 to 400 RMB, in current terms.  Most outdoor theme parks (Happy Valley included) charge 200 RMB, and Hong Kong Disneyland achieves a 450 HKD ticket price, which translates to well above 300 RMB.    At 300 RMB, an adult headline ticket will be equivalent to approximately 15% of the available per capita monthly expenditures per urban consumer in Shanghai.  (How’s that for a mouthful?)  At 400 RMB, the ratio is 20% of monthly expenditures.

Will it succeed?  Will it be profitable?  Will it achieve 10 million visitors?  All those questions are beyond the scope of this feature (and three different goals, by the way), but one thing is for sure.

Disney does not venture lightly into new markets and territories.  Not only has it chosen a prime location in the path of development (Pudong) and a site well served by transportation infrastructure, but it has entered the typical Disney theme park deal (unavailable to most, if not all, theme park developers): a nearly equal partnership with the government, land and infrastructure support, a large degree of (Chinese) bank financing, all backed by the support of the Disney corporation, for which theme parks are a significant, but minority segment of revenues.

We are all big Disney fans here, and await its newest arrival with anticipation.  It will be a game-changer.

Image credit artist rendering: Disney