Following another successful round of financial results for Disney's Parks and Resorts division last week, Disney CEO Bob Iger said building Disney parks in more countries was inevitable. What was less obvious was which country, other than China, might be a suitable home for the next Disney theme park.
"We think that there's opportunity to expand in China, and there may also be opportunities in other parts of the world," Iger said on the company's second-quarter earnings call last week. "We are constantly engaging in conversations with people from different markets who would love to put Disneyland in their market. We're going to take a look at some of them.
"I'd say there's an inevitability to us building parks in other countries, but it doesn't necessarily mean that we're going to build something anytime very soon."
Dennis Speigel, president of Cincinnati-based International Theme Park Services, a global theme park consulting firm, said that there are some destinations, such as India or Brazil, that could attract Disney, but parks in those countries are probably at least two decades down the line. Speigel said the most probable scenario anytime sooner than that would be another theme park in China.
"By 2025, I believe China will eclipse the U.S. and be the No. 1 theme park market in the world," Speigel said. "China just passed $6 billion in revenue in theme parks, and they're expected to exceed $14 billion in the next five years."
Speigel said he could picture a scenario in which Disney looks at some of China's larger secondary cities, like Chongqing, that have populations of 10 million or more.
Lance Hart, news editor of the theme park blog Screamscape, said he has discussed the topic with others in the theme park industry and the consensus is that there is no obvious candidate beyond China that rises to the top of the list.
"For me, the first one I always thought of was Australia, but in talks with others, the economy and population numbers just aren't there to support something like a massive Disney resort," Hart said.
He added that destinations like Brazil and India have attractive population sizes, but their economies wouldn't necessarily be able to support it. "Plus, Brazil is a huge market that feeds into Walt Disney World," he said, "so they would be cannibalizing some of their own business in the process."
And since the Tokyo park is said to always be packed, he added, another location in Japan might make sense. But then the question would be where in Japan?
"The most likely international destination may be someplace in China away from Hong Kong and Shanghai, with the most likely place being Beijing," Hart said.
The only drawback to Beijing is that Universal Parks & Resorts is already in the process of building a 300-acre theme park there. Universal announced the project in 2014 with an initial opening date slated for 2019, but news reports suggest the opening has now been pushed back to 2020.
Following the success of the Shanghai Disney Resort, which welcomed more than 11 million guests in its first year, Universal is reported to have doubled its budget for the Beijing project from an estimated $3.3 billion to $6.5 billion.
"To really get into the international markets correctly today, it's [at least] a $5 billion play," Speigel said.
For that reason, he said, wherever Disney decides to build a theme park next, it is going to be extremely cautious, especially after some of the difficulties the company had making Disneyland Paris and Hong Kong Disneyland profitable.
In the past five years, Disney said it has invested some $15 billon into its Parks and Resorts division. Since opening Disneyland in Anaheim, Calif., in 1955, the division has grown to 12 theme parks and 51 resorts in six destinations in North America, Europe and Asia. The division also includes Disney Cruise Line, with four ships and plans for two more to be completed in 2021 and 2023; Disney Vacation Club, with more than 220,000 members; the tour operation Adventures by Disney; and Aulani, a Disney Resort & Spa in Ko Olina, Hawaii.
The division has also been a consistent driver of solid gains for Disney, despite how large and diverse the rest of the company's portfolio has become, with a media networks division that includes ABC and ESPN and a very active studio entertainment business consisting of Disney, Pixar, Marvel and Lucasfilm.
In the second quarter, Disney's Parks and Resorts division reported a 13% increase in revenue, to $4.9 billion, up from $4.3 billion for the same year-ago period, second only to its media networks division. Operating income for the division grew 27%, to $954 million, up from $750 million for the second quarter in 2017.
When asked by an analyst how and whether the Parks and Resorts division could sustain the double-digit gains it has been producing for the past several years, Iger responded that there are several avenues the division will take to continue on a successful financial path.
"One, [growth] will come from expansion," Iger said. "We are building out all our parks. Two, we believe that the use of our IP [intellectual property] creates growth. And of course, the more popular our IP is, the more in demand it is at our parks. Another opportunity is in pricing as we build out these experiences in terms of scope and scale. As we make them better experiences, doing things like using technology to [enable guests to] book attractions in advance, we believe that gives us pricing leverage simply by delivering better experiences."