Cuts coming to every area of parks and resorts - thanks to Shanghai and Paris

[ford91exploder]

Please recall that Iger has already indicated that SDL will not be profitable in the short-term due to startup costs. Presumably these startup costs will go away eventually but, historically, some U.S. businesses have struggled with controlling "startup" cost when opening offices in China.

The immediate question is whether SDL is meeting attendance and PCGS goals, something I expect Iger to not answer directly during the next earnings call.

No matter what happens, he's sure to say "Shanghai Disneyland is doing great" and is "exceeding expectations", while cherry picking the metrics he mentions on the call.

This doesn't mean SDL is doing poorly; this simply means Iger is doing what a good CEO should do.

I suspect it will be years before we get a clear indication of which way the wind is blowing in Shanghai...

I suspect the CUT activity at the US parks will be more informative, If the cuts increase in frequency and depth as they are now starting to again we will know SDL is struggling and Disney is propping it up.

 

[ParentsOf4]

Of course, I look at Paris and see that things haven't been quite right across 25 years now (from everything I've read). I don't get that at all. It seems like Paris should have been a definite "win" for them.

EuroDisney (now DLP) had several institutional flaws:

1. Until the recent recapitalization, it was saddled with oppressive debt.
2. It assumed American vacation patterns, ignoring local custom.
3. Its market didn't support higher ticket prices similar to those found at DLR and WDW.

Disney took steps to correct the first problem, but the other two challenges remain.

Will Shanghai Disneyland face similar challenges?

What's clear is that corporate Disney has assumed Magic Kingdom like attendance and a market willing to pay (locally) high prices in order for Shanghai Disneyland to realize long-term profitability.

Despite a couple of rather pessimistic news articles, it's too early to tell. Still, behind closed doors, I suspect Iger was expecting a stronger start.