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17/10/2013

Disney's new heights II

Staggs has high hopes financially for the resort in Shanghai (famous travel city for China vacation deals).

"We invest a tremendous amount to make our parks ready. It will take some time for it to reach profitability. But we expect the park to be there for decades, and therefore, a certain amount of patience in terms of early return is both warranted and should be expected," he said.

The chairman added that Disney's park and resort businesses tend to be sensitive to economic fluctuations, as was the case during the global downturn between 2008 and 2010.

"The businesses dropped a bit more," Staggs said. "But we had significant growth since then, and we have since achieved record level profit. The growth has been good."

Revenue for its parks and resorts last quarter increased year-on-year by 7 percent to $3.7 billion and operating income increased 9 percent to $689 million.

While some have worried that the geographical proximity between Hong Kong Disneyland (must-see for Hong Kong tour) and the Shanghai Disney Resort may offset the number of potential visitors, Staggs said the size of the potential audience is large enough that business will be maximized at both sites.

"The best thing to do for Hong Kong is to make Shanghai successful and vice versa," he said. "The more Hong Kong is successful, the better it is for Shanghai."

The two Disney properties in Hong Kong (more via Hong Kong city guide) and Shanghai will not affect the volume of visitors to the Tokyo resort, Staggs said, because more than 90 percent of visitors to the Japanese site are domestic travelers.

Staggs said they will continue to develop Walt Disney Parks and Resorts. The company has many new attractions that were recently launched or are in the works, including New Fantasyland in Florida, which opened last year; a new attraction in Paris that will open next summer and is based on the Disney/Pixar film Ratatouille; three new theme lands to Hong Kong Disneyland; and the anticipated debut of Star Tours: The Adventures Continue at Tokyo Disneyland, which is a 3-D attraction inspired by the Star Wars movies.

Staggs said the company's biggest news will be the opening of the Shanghai resort. He said Disney will continue to expand their properties in Hong Kong and in Shanghai after its opening at the end of 2015.

In recent years, China has seen a cluster of theme parks and resorts, with many brands developed into chains scattered across major cities, such as the Happy Valley amusement parks developed by the Overseas Chinese Town Enterprises Co. Yang Yansong, from the Chinese Tourism Academy, said Disney's resorts will create a bit of competition for domestic brands, but that the impact would mostly be visible in Shanghai。

The magic of Disneyland Parks and Resorts is not only about cartoon characters or adventure facilities, but they also connect with Disney's various entertainment businesses, Staggs said. Over the years, The Walt Disney Co has grown into a business empire with units ranging from entertainment, parks and resorts to consumer products.

Among them, Disney's films serve as the opportunity to explore new themes in the parks while merging people deeper into the stories they encounter, Staggs said.

During the tenure of Bob Iger, chairman and CEO of The Walt Disney Co, Disney has reached a total shareholder return of 193 percent and a market capitalization that has risen to $113.7 billion from $48.4 billion in 2005, when Iger became CEO, said Orin C. Smith, independent lead director of the Disney board of trustees.

With the acquisitions of Pixar, Marvel and Lucasfilm, major investments in the company's parks and resorts and an expansion into key international markets, Disney has focused its next chapter of growth in technology.

"Technology informs all of our creative businesses," said Iger. "You don't succeed nor survive unless you are capable of adapting to new technology and adopting technology in every aspect of how the company runs."

Iger said new technology is creating new venues by which Disney can reach consumers and new ways that consumers consume intellectual property. In terms of future growth, aside from creating more intellectual properties and growing internationally, it is also important to create new content, he said, citing Youtube as an example.

"We have to participate in these kinds of growth. We don't have to acquire any more to achieve that. We have to make sure we have infused our creative talent with the mandate to tell our stories through these new platforms."

On the international market, borders have been broken down because of new technology, he said.

In talking about the company's television division, Iger said it is important to create locally and to embed talent locally so they understand the people, culture and the government and the market. "We believe in deepening our roots in places around the world such as China, Russia and India," he said. "In order for us to grow the company internationally, we have to do so by organic investment and also by acquisitions."

Iger, who was excited about the park in Shanghai, said, "We are building a future where children in China can grow up dreaming about a trip to Disneyland in Shanghai which will make a contribution to China tourism."

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