ECA continues its series of attraction market profiles with an overview and insights on the greater Yangtze River Delta (YRD) region in Eastern China and theme park attraction development. ECA is currently working on multiple theme park destination developments in China including Shanghai, Suzhou, Wuxi, Hangzhou, and Ningbo/Zhoushan in the greater YRD region.
By Viviette Luo (left), Associate and Martin Wong, Associate (Entertainment + Culture Advisors, Hong Kong).
Yangtze River Delta (YRD) Overview
The Yangtze River Delta centered around Shanghai is one of the three most populous and affluent regions in China, along with the Pearl River Delta (Southern China) and the Beijing/Tianjin centered Bohai Economic Rim. The YRD region officially covers 16 major cities including Shanghai, Nanjing, Suzhou, Wuxi, Changzhou, Zhenjiang, Nantong, Taizhou, Yangzhou in southern Jiangsu province as well as Hangzhou, Huzhou, Shaoxing, Taizhou, Ningbo, Zhoushan, Jiaxing in northern Zhejiang province according to the Yangtze River Delta Regional Plan issued by National Development and Reform Commission (NDRC).
YRD region is strategically positioned to become the international gateway in China; global center for modern services (finance/banking) and advanced manufacturing industries; and strongly competitive world-class metropolis. YRD has been one of the most active economic zones in China – its GRDP (gross regional domestic product) reached more than RMB9, 000 billion in 2012 (US$1, 429 billion), representing 17.4% of national GDP.
The six core cities that lead economic development in the area contribute more than 68% of YRD’s total economic output (GRDP). Shanghai, Nanjing, Suzhou, Wuxi, Hangzhou and Ningbo, are highly urbanized with 70-90% of the total resident population in the urban area. The per capita GDP and disposable income of urban households for these 6 core cities are one-and-a-half times to double the national averages.
The 6 core cities (Shanghai, Nanjing, Suzhou, Wuxi, Hangzhou, and Ningbo) have an estimated total permanent population of approximately 65 million, which is more than half of the YRD region’s population, which totaled almost 110 million (8% of China’s total) in 2012.
Detailed market analysis of the market for theme park development would require income qualification, however income data for the region shows most YRD urban residents have the capability to support international standard admission prices, while rural residents in the region are rapidly catching up.
In addition to a large resident market base, YRD is also ranked as the top regional tourism market with Shanghai, Hangzhou, Nanjing, Suzhou identified as the major destination cities in the region, according to the recently released report for top popularity of domestic tourism destinations during the most recent holiday period by China’s leading travel booking e-channel, Ctrip (similar to Expedia/Travelocity in the United States).
The YRD tourism market is supported by approximately 200, 000+/- star-rated hotel room inventory (in addition to significant non-star accommodations, guest houses/inns).
Aside from the increasing income profiles in the region, strong investment and improvement in the YRD infrastructure and transportation networks also contributed to the rapid growth in regional tourism. The regional market has experienced rapid tourism growth, averaging 10-18% over the past decade (according to official estimates).
The estimates of tourism to the greater region total some 170+ million overnight visits. Accounting for overlaps of markets, multi-destination visitation, and income qualification adjustments, ECA estimates the potential tourism market in the greater extended YRD region relevant for theme park visitation could total 65 to 80 million unique, qualified visitors.
Robust growth is expected to continue with the opening of Shanghai Disneyland Resort and other large-scale pipeline tourism developments, which will further enhance Shanghai and YRD as a top tourist destination.
Transportation infrastructure in the YRD region is highly developed, providing excellent access within the region as well as to the rest of China through roads, rail and airports. There are 11 airports in the YRD region with passenger throughput of 130+ million in 2013.
The greater YRD region (Shanghai, Jiangsu and Zhejiang provinces) has a well-developed road network with 9, 000 kilometers of highways (2012) that offer direct and convenient access within the region and to major cities in China. It is also a major hub for railway transportation, interconnected by several High Speed Rail (HSR) and Inter-City express rail lines.
The growth of the region will be further supported by several major infrastructure projects that are currently under planning or construction stage. All of these projects will significantly improve connectivity with cities in the region and the rest of China, further facilitating the movement of residents and tourists, and provide a strong foundation for the continual development of the attractions industry in the region:
- Air: Nanjing has a second airport currently under construction, which is expected to be completed in 2015/16. The expansion of Pudong Airport with the 4th and 5th runways is expected to be completed in late 2014 and 2017, respectively.
- Rail: New railway connections include Hangzhou – Changsha (2014/15), Shanghai – Kunming (2015), Hangzhou – Guangzhou (2015/16), Shanghai – Nantong (2017), Hangzhou – Ningbo (2018), Changzhou – Suzhou – Jiaxing (2020)
- Highway: Several new highways will improve the accessibility and travel efficiency in the region, namely Yixing/Wuxi – Changzhou Expressway (2015), Wuxi – Taicang Expressway (2015), Wuxi – Nantong Cross River Tunnel (2018), Hangzhou – Shaoxing – Taizhou (2018), new Shanghai – Ningbo cross sea bridge
Greater YRD Extended Theme Park Cluster
With a large population and tourism base, as well as close proximity between several major cities, the YRD is strategically positioned to become a major, extended multi-theme park destination cluster, alongside the other established international theme park hubs, such as Southern California, Central Florida and the up-and-coming Southern Malaysia/Singapore region. Within the YRD, there are three main areas for attraction groupings– Shanghai, Suzhou-Changzhou and Hangzhou.
The YRD is currently home to several major theme parks, water parks and other attractions with a combined theme park attendance of 15-20 +/- million visitors. Comparing theme park visitation to total market size (qualified adjusted resident and tourist markets combined), theme park visits per capita could grow significantly in the next 5-10 years from the recent year’s level of 0.10-0.15 +/-. With the opening of Shanghai Disneyland (late 2015/early 2016), and new parks entering YRD such as Wanda Group (Wuxi Wanda Cultural Tourism City), this figure is expected to grow to more than 0.20-0.25+ theme park visits per capita over time.
Theme park visits per capita are based on total theme park visitation in the market divided by the total resident and tourist markets of the region after adjusting for income level and overlap resident/tourist traffic. It shows the number of theme park visits each person in the defined market makes per year, illustrating the propensity to visit of theme parks in the market. Comparison to established markets can illustrate the potential for growth.
The headline adult admission prices for theme parks in the YRD range from RMB160-230 (US$26.1-$37.6), with most at the RMB200 level (US$32.7). These price levels are typical of Chinese regional theme parks. Price levels at Chinese parks are expected to rise significantly over time with the development of new, higher investment, destination theme parks, notably Shanghai Disneyland.
World of Joyland raised its adult admission price to RMB230 (US$37.6) with an increase of 15% in early 2014. The park is adding components to create a destination environment including 4-star hotel, treehouse resort, and a second gate (water park).
A new children’s themed area called DinoBoB was added to Changzhou Dinosaur Park in early 2014, targeting families with children aged between 2 and 15 years old. With a reported investment of over RMB100 million (US$16.3 million), the expansion includes 10+ rides and programs featuring new character and merchandise line. Other recent expansions are targeted to upgrade the park and create a destination including a new gate, new themed Adventure Port area with a new 4D theater, Dino Water Town, retail outlet village, commercial street, entertainment zone, cinema, as well as a 300-room themed family hotel.
YRD Growth Outlook and Pipeline Projects
Shanghai Disneyland Resort (2015/16)
The sixth Disney theme park destination worldwide and the first in Mainland China is expected to open in Shanghai in late 2015 or early 2016. Currently under construction, the park will be located in the Pudong New Area, eastern suburb of Shanghai, 12 km from Pudong International Airport. A new metro transit line will be built for the project. The first phase is expected to cover about half of Disney’s property, with future plan to expand the resort to include 2 additional theme park gates. Construction for the first phase broke ground in April 2011.
The Shanghai Disneyland theme park site covers 225 acres (91.5 hectares) and will be positioned as a mega theme park that combines classic Disney characters and storytelling with the uniqueness and beauty of Chinese culture. It will feature the traditional components of Disney theme parks such as Adventureland, Tomorrowland, Fantasyland, Disneyland Railroad, and Thunder Mountain. Additional components of the park could include a “Cars” themed section and Pirates of the Caribbean. The “Main Street” area will reserve space for an 11-acre park-like space (central hub).
The first phase of Shanghai Disney Resort development is reported to represent an investment of US$4.7 billion/RMB28.8 billion, including the initial theme park development, hotels, and retail, dining and entertainment (RDE) district. First year attendance target for the park is estimated at 9-10+ million visitors.
The opening of Shanghai Disneyland will represent a watershed event in Chinese theme park industry. As has occurred in other markets where Disney has developed parks, Shanghai Disneyland is expected to act as a catalyst for leisure and tourism development in the region and China.
Theme parks and other tourist attractions can have both competitive and complementary effects on each other. In many cases, increasing the number of attraction and tourism products in an area can spur growth in the industry, expand the market with growing awareness/education, and lead to better products.
Shanghai Disneyland is expected to become the leader in price and quality for theme park attractions in China, which will raise the industry standards and expectation of Chinese consumers.
We expect Shanghai Disneyland will drive key changes in the Mainland China theme park industry, including:
- Industry expansion – the “complementary effect”
- Price and product leadership
- Market awareness and market education
- Product positioning and increasing standards at other parks/industry
- Development of destination theme parks
- Industry expertise and service standards
Shanghai Disneyland’s development will boost direct investment and accelerate the development pace of the larger Shanghai International Tourism Resort Zone (ITRZ). Centering on Shanghai Disneyland as the destination anchor attraction, the ITRZ will contain tourism-related entertainment supporting facilities and service sector components such as resort hotels, dining, retail (including premium outlets), meeting/convention, cultural innovation, tourism industry-training and backup, logistics nodes, and other themed entertainment attractions.
Outside Shanghai Disney and the ITRZ, there are several other notable attraction development destinations in the pipeline in the YRD region:
- A 9.5-hectare Hello Kitty Theme Park with a reported investment of RMB2 billion (US$327 million), as part of a proposed large Angels Paradise Resort in Anji town (RMB7 billion / US$1.1 billion), suburban area of Huzhou city, is currently under construction and planned to open first initial phase in late 2014.
- Polar Ocean World theme park with a planned area of 32 hectares in Dishui Lake area in Shanghai Lingang New District is targeted to start construction by end of 2014. The park is a development of Haichang Holdings Ltd., which went public (IPO) in Hong Kong in March this year raising a fund for additional attraction developments.
- Dream Center by Oriental DreamWorks is a proposed major urban lifestyle and cultural theater district with several significant entertainment anchors possibly utilizing DreamWorks intellectual properties (IPs) in addition to retail, restaurants, Broadway-style theaters, cinemas (IMAX for film premieres), waterfront hotels, galleries, studios and other commercial facilities (corporate offices).
- A leading Chinese film studio, Huayi Brothers Media (HB) has formed a joint-venture with Suzhou Industrial Park (SIP) Administrative Committee to co-develop a proposed 66-hectare Chinese movie studio theme park along the banks of Yangcheng Lake in Suzhou. Reported total investment will be RMB3+ billion (US$490 million). The proposed development is envisioned to include an anchor theme park based on movie blockbusters with entertainment and interactive experiences and integrated with Chinese cultural elements, along with hotel(s) and other complementary facilities/amenities over the next several years.
- The Dalian Wanda Group headed up by Chairman Wang Jianlin, is expanding aggressively into the cultural tourism industry. As part of Wanda’s strategy to transition from commercial real estate company to cultural tourism, the proposed Wuxi Wanda Cultural Tourism Industry project located in the Binhu District of Wuxi is a key landmark project in the YRD region. The project broke ground in February 2014 and total investment has been reported at RMB 40 billion (US$6.5 billion). Wanda plans to spend more than half (RMB 21 billion / US$3.4 billion) on the destination projects cultural, tourism and leisure components including a major outdoor Wanda theme park, several indoor attractions, Wanda cinema, hotel/resort cluster, major spectacular stage show, Wanda retail mall, bar street and residential and other commercial land uses. The Wuxi Wanda theme park will draw inspiration from China’s rich history and culture, local customs and traditions and combined with world-class rides, shows and attractions. Expected opening in 2017/18.
The YRD theme park market is expected to expand significantly over time and should eventually become one of the world-largest attraction markets. With a large regional resident base, strong tourism, growing income-qualified population, active consumption pattern, and improving infrastructure, we foresee robust growth potential in the market. The YRD region will grow with existing theme parks being upgraded and additional parks developed by leading domestic and international real estate developers over time. These theme parks could provide conceptual diversity, product innovation and tourism growth to leverage YRD as a leading theme park destination in China.
About Entertainment + Culture Advisors (ECA)
Entertainment + Culture Advisors (ECA) is focused on delivering economic insight for entertainment and cultural development projects worldwide with offices in Los Angeles and a growing regional office in Hong Kong. Fellow ECA Principals/Directors (Christian Aaen, Asia/China practice lead and Janice Li, Regional Director) have worked extensively in China (tier 1, tier 2 and numerous up-and-coming tier 3 and 4 cities) and the YRD region during the past 15 years, including advising on theme park and attraction development and expansion strategy for leading Chinese developers and international attraction groups (OCT Group, China Resources Land, R&F Group, Beijing Tourism Group/BTG, Huayi Brothers, West Kowloon Cultural District Hong Kong, Ocean Park Hong Kong, CITIC Trust, LEGOLAND Parks/Merlin Entertainments Group, Universal Studios, Village Roadshow, DreamWorks, Twentieth Century Fox, Paramount Studios and others). For further information on ECA please visit: www.entertainmentandculture.com
Shanghai Disney Resort: Kind courtesy Shanghai Disney
YRD Map: Kind courtesy Hong Kong City University Library
Changzhou Dinosaur Park: Kind courtesy Travel China
Wuxi Wanda Cultural Tourism City Exhibition Center: Kind courtesy Wanda Group