As representatives of the Hong Kong (HK) government in the negotiations of the potential joint venture between the government and Walt Disney Company with the purpose of building a Disneyland theme park in Hong Kong, it is our job to determine what the net benefit will be of the project to the Hong Kong economy and how we should strive to structure the venture in negotiations with Disney to maximize the net benefit to Hong Kong. Based on our best assumptions about the future and how we think the venture will ultimately be structured, we believe that the net benefit to the Hong Kong economy will be HK$345,689.79 million dollars. In the following paragraphs, we will provide some background information on the project, identify the key value drivers from our perspective, provide a summary of our sensitivities to these value drivers, estimate the value of the joint venture under alternative scenarios, map out a negotiation strategy, and explain how we calculated our best estimate of the net benefit of the project to Hong Kong.
Background Information
First, we believe that it is necessary to provide some background information about the project from Disney’s and Hong Kong’s perspective. Walt Disney has been considering a proposal to build a new theme park in Asia for some years. In the last few years (late 1990s), the company has seen investors flock to mainland China and is therefore keen to gain a foothold in the Chinese market by opening a new theme park. To Disney, Hong Kong
Walt Disney Co. plans to open its new theme park in Shanghai in the first half of 2016, according to a person familiar with the situation, after Chief Executive Officer Robert Iger earlier aimed for a late 2015 debut.
The case “Euro Disney: First 100 days” talks about the issues faced by the Walt Disney Company when expanding to international borders. The case begins with the history of Disneyland and then describes the reasons behind its success and expansion to various states across the country. It then describes the success of Tokyo Disneyland, first Disney theme park outside America and the factors affecting it.
Recently, at Universal Studios, the Wizarding World of Harry Potter opened up. This magical land is based off of J.K. Rowling’s Harry Potter series, and includes fun rides, a Hogwarts replica, exciting shops, and even Moaning Myrtle in the bathrooms! This recent success is expected to help some, but hurt others. Disneyland might be seeing a loss of customers, due to this addition to Universal Studios. Disneyland is expected to lose business, but the wonderful land full of fairy tales has started competing for customers. Disneyland has started building a Star Wars themed development, the opening date has not been released yet. Who will win the war for service? Only time will
The Walt Disney Company has seen their share of success in taking their parks and resorts into global markets. “60 years ago, the first Disney theme park opened, in California and was the brainchild of Walt Disney himself, who was motivated by the lack of entertainment options available to him and his two young daughters.” (Forbes, 2016). Disneyland California penetrated the market rapidly, and its popularity led to the opening of Disney World in Florida, followed by global expansion in Tokyo, Paris, and Hong Kong. Their latest expansion came in June 2016, on a 963 acres’ site in Shanghai, China (Xu, 2012). After one year in operation, Shanghai Disneyland is outpacing their most optimistic projections, and the park’s
Many of the employees working at Disneyland are from many different countries. As tourists from all over the world came to visit the recently opened Disneyland, Walt Disney’s original profit margin was 1000% (Biography.com, eds). Walt Disney made a financial risk because when Walt Disney was preparing to purchase the land where Disneyland is placed, he mortgaged his life insurance, stock holdings, house and furniture (“Walter”). If Disneyland flopped, Walt Disney would not have anything left; no house, no life insurance and no furniture.
Price was also an issue leading Disney to lower admission prices. When Disney began working on the Hong Kong park, they had learned a few things from the France experience. In Hong Kong culture feng shui is an important aspect. Things must be placed in specific places to promote good flow. Disney took this into account and hired an expert on feng shui to help with the design.
Hong Kong Disneyland, opened to visitors in 2005, is one of the two largest theme parks in Hong Kong. It successfully brings magical experience of Walt Disney to all the visitors just like other Disneyland around the world.
Tokyo Disneyland was opened to the public on April 15, 1983. This amusement park was owned and operated by an unrelated Japanese corporation. The Walt Disney Company received royalties, paid in Yen, on certain revenues generated by Tokyo Disneyland. This new overseas business venture was bringing some concern about the foreign exchange risk to Disney. The management team at the Disney has been considering hedging future Yen inflows from Disney Tokyo since 1985. Mr. Anderson, the director of finance at The Walt Disney Company, focused his attention on a possible 15 billion ten-year term loan with an interest rate of 7.5% paid semiannually. On the other hand, Goldman Sachs, who had been working with
After Eisner invested tens of millions of dollars to update and expand attractions and park facilities, Disney recovered its investment with attendance-building strategies. By creating a range of complementary services and entertainment at the park, customers stayed longer and spent more money. A plan was also put in place to develop Disney’s unused acreage and further maximize the profitability of these assets. One result of the above measures was that attendance at Tokyo Disneyland increased by 50% from 10.2m in 1983 to 15.8m in 1991.
Three years after its opening in September 2005, Hong Kong Disneyland had yet to gather
Disney’s target market consists mainly of family-oriented Asian tourists, primarily those from mainland China, Taiwan, and Southeast Asia. The mainland China accounted for large number of incoming visitors. At the time of Hong Kong Disneyland’s establishment, Hong Kong already enjoyed booming business and tourism sectors, but the government believed that the latter would be invigorated by the creation of a then absent “family tourist” niche. Below are the
For my final paper I chose to discuss The Walt Disney Company. Since the Company is so large and made up of four primary business segments, I decided to focus on one particular segment: Parks and Resorts. This segment is composed of the theme parks, cruise-line, and vacation club resorts.
The reason why I am interested in developing a career with Hong Kong Disneyland is that Disneyland is one of the famous theme park in the world. I believe working in Disneyland can broaden my horizon and expand my social network. Most importantly, Hong Kong Disneyland has the passion to become the best theme park. As a newspaper reports, Hong Kong Disneyland will launch an expansion plan, including building new theme areas and new amusement facilities for Marvel Super heroes. With this new theme areas and new amusement facilities, I believe Hong Kong Disneyland will obtain great support in Chinese market. Also, I think Hong Kong Disneyland will become more attractive and famous in the future since the Disneyland company has owned the 21st century fox. By owning the 21st century fox, Disneyland company has the copyright of many new characters, which makes Hong Kong Disneyland able to build more theme areas, such as deadpool's theme area, alien's theme area, or x-men's theme area. With the copyright of the new characters, I believe Hong Kong Disneyland has a broad development space in the future. Therefore, I want to join Hong Kong Disneyland.
Disneyland in Hong Kong- Good or Bad? The aim of this essay is to discuss the advantages and disadvantages in having Disneyland coming into Hong Kong. Disneyland is a famous theme part, with outlets all around the world, including Japan, America and France. And now, Disney decided that the next theme part it is going to locate itself is Hong Kong- is how beneficial will it be to Hong Kong? The diagram on the left shows the proposed location of Disney land in Hong Kong. It will be situated at the west of Hong Kong island, in Penny?s Bay. Land reclamation will be used if extra land is needed for Disney to expand in the future.
Hong Kong was a prime tourist destination for a large number of people from the mainland. Disney focused on people from mainland, the local residents and