- $5.5 billion mainland resort will emphasize Chinese culture
- CEO stays bullish on region amid slower economy, market drop
Walt Disney Co. said it will open the new Shanghai Disney Resort on June 16, unveiling the company’s largest foreign investment at a time of turmoil in the Chinese economy.
The $5.5 billion resort, Disney’s first on mainland China, features the company’s tallest castle, two hotels and a pirates-themed land. At 963 acres, it’s three times the size of Hong Kong Disneyland.
The project, years in the planning, represents a long-term bet on a region now experiencing economic pain. In an interview with Bloomberg TV last month, Chairman and Chief Executive Officer Bob Iger said a slowdown in the Chinese economy and decline in the stock market there hadn’t dimmed his optimism for the project.
“We’re very bullish on China,” he said. “We actually believe that the Chinese consumer is still spending. And the Chinese consumer represents, as far as we’re concerned, a great market for our company.”
Construction began in 2011. Disney owns 43 percent of the resort, with the rest held by a consortium of Chinese state-owned businesses.
The world’s largest theme-park operator is targeting the 330 million people who live within a three-hour train or car trip of Shanghai, the country’s wealthiest metropolis. Burbank, California-based Disney is adding local flourishes to the park, including acrobats in its shows and a dim sum restaurant in an adjacent entertainment complex.
The park was originally set to open at the end of last year. In April 2014, Iger announced an $800 million expansion with additional attractions. Maintaining Disney’s high construction standards has been a challenge, Iger said last month.
“The structures that we build in a theme park are extremely complex,” he said. “They’re not just buildings but they’re shows and they’re rides. And there aren’t that many examples of the Chinese construction industry building things that are as a complex as what we’re building.”
The resort isn’t expected to contribute to Disney’s earnings this year, according to Macquarie Capital analyst Tim Nollen. By 2018, the property could generate $165 million in earnings before interest, taxes, depreciation and amortization, on revenue of $1.4 billion, he said.