Shanghai Disney Gets Big Time Investment

PHOTO: Mockups of the Pirates ride at Shanghai Disney.

THE PULSE: Walt Disney gets an $800 million additional commitment from its China partner for Shanghai Disney. 

WHY IT RATES: The funds will allow Disney to capitalize on a red-hot market by going even bigger with the resort than originally planned. There are plenty of established family attraction entities in the Far East, but this allows Disney to even further make a loud impact signaling its arrival. - Tim Wood, TravelPulse editor-in-chief

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The Walt Disney Company announced this week that it has reached an agreement with Shanghai Shendi Group, its joint venture partner in China, to accelerate the expansion of Shanghai Disney Resort.

The increased investment of approximately $800 million will be used primarily for additional attractions, entertainment and other offerings to increase capacity at the theme park, with the majority targeted to be completed for opening day.

“Since we first broke ground in Shanghai we’ve been very impressed with the growth of China’s economy, especially the rapid expansion of the middle class and the significant increase in travel and tourism,” said Robert A. Iger, chairman and chief executive officer of The Walt Disney Company.  “Our accelerated expansion, including additional attractions and entertainment, will allow us to welcome more guests for a spectacular Disney experience on opening day.”

“Like all of our parks, Shanghai Disney Resort was designed to expand over time, and this investment allows us to bring some of those additions online earlier,” said Thomas O. Staggs, chairman of Walt Disney Parks and Resorts. “The expansion underscores the tremendous opportunity we see in Shanghai and demonstrates our long-term commitment to and confidence in China.”

The announcement of this accelerated expansion comes during a boom in China’s travel and tourism market, which is expected to continue its rapid growth.  An income qualified population of 330 million people are within a three-hour travel radius of Shanghai Disney Resort.  From 2012 to 2015, the Chinese travel market is projected to grow 34 percent, according to PhoCusWright. 

The number of upper-middle class and affluent households in China is expected to grow 18 percent annually between 2012 and 2022, according to McKinsey.

Shanghai Shendi Group will continue to hold 57 percent of the shares of the owner companies while Disney will hold the remaining 43 percent. Financing of the additional investment will be proportionate to ownership and, as with the original shareholder investment, it is not anticipated that third-party debt will be incurred to finance the expansion. 

In addition, Disney is the majority shareholder in the management company responsible for creating, developing and operating the resort.