Tourism dries up at Shanghai Disneyland as visitors complain of high prices and poor service on social media inside mainland China

Before: Disneyland Shanghai entry gates crowded with visitors on opening day, June 16, 2016
After only six months of operation, the recently opened Shanghai Disneyland—Disney's sixth theme park resort opened around the world—is officially struggling to keep its turnstiles clicking, according to credible sources from the Nikkei Asian Review.

After: Same entry lines at the main entry gates on Dec. 3 shows business has collapsed at Shanghai Disneyland
Crowds have reportedly precipitously dried up at Shanghai Disney, which just opened this past June 16th to much international media hype and fanfare, as visitors' complaints about high prices and poor customer service have spread like wildfire throughout social media networks in mainland China.

Clearly, the word-of-mouth about Disney's newest theme park is not good, and there's not much Disney can do to counteract the bad publicity through its own publicity and marketing machine inside mainland China.


That's because mainland China's media outlets are largely closed off to western media sources by the ruling Communist politburo, which tightly controls, regulates, and restricts access to foreigners or outsiders, including global international media conglomerates like the Walt Disney Company.

The outlook on Shanghai Disneyland has become significantly darker over the
past month as bad word-of-mouth about the resort is spreading in China
Chinese consumers are complaining about high prices of food and souvenirs offered inside the park and about poor service from Disney employees on numerous Chinese social media outlets, so many incoming visitors to Disneyland Shanghai are now packing lunches and drinks from cheaper convenience stores outside the park or simply not coming to the park at all.

"I heard everything in the park was expensive," said one college student from Jiangxi Province who was visiting the park, "so I bought lunch ahead of time." She added that she did not plan on buying any souvenirs or gifts while she was inside the park.

40% of the respondents to the Nikkei survey said that poor customer service was a big issue for not coming back to the new resort. Guests frequently complained about Disney staff members doing nothing about line-jumpers, giving unclear directions or help when asked for assistance, as well as staff using course or vulgar language in their interactions with paying guests.

"There are plenty of staff around," a college student visiting from Hangzhou said, having asked two separate cast members for help in directions to no avail, "but they can't even give clear directions." 


During a clear, sunny day in early December, entry lines at the main entry gate of the Shanghai Disneyland resort were reported to be almost non-existent at 9 a.m. when the theme park first opens for the day for business. (See photo at the top.)

How did things go south so fast for Disney in China and Hong Kong?
In the afternoon, wait times for attractions and shows are only 5 to 50 minutes for all but the most popular attractions. And Disney workers are reportedly killing time on the job by hanging out and chatting at deserted gift shops across from the theme park because they have nothing better to do.

Repeat business to Shanghai Disneyland was always a major key to the theme park's long and short term financial success, but with the unexpected bad word-of-mouth from existing visitors, turning the fortunes around for the new theme park maybe a much harder task than anyone could have imagined.

Without much media support inside mainland China (e.g., no Disney Channel, TV or radio stations), dispelling the existing bad word-of-mouth about the new theme park will take a great deal of time and effort to overcome as that counter message, too, will rely on word-of-mouth to trickle down to the mass that things have finally changed.


Disney had very high hopes for Shanghai Disneyland going into its grand opening on June 16th.

Many visitors are complaining on social media that food and souvenirs at
Disneyland Shanghai are just too expensive
They originally projected more than 15 million visitors coming to visit Shanghai Disneyland during its first year of operations.

Some Disney officials even said that the number of visitors in its first year could easily exceed the number of visitors going to the Magic Kingdom in Walt Disney World, which was a record 20.4 million visitors in 2015.

Why wouldn't anyone not expect those kinds of spectacular numbers from Shanghai? After all, China is the most populous nation in the world, so none of these kinds of numbers would be far-fetched or unexpected.

However, those kind of numbers never materialized. The estimates after the grand opening were downgraded to about 10 to 12 million visitors per year. Now it seems to Disney will have a difficult time even meeting the lowest estimate of 10 million visitors in its first year of operations.


Shanghai Disney has already begun offering guests 100-yuan gift certificates just to get customers inside its doors. Disney also began selling relatively cheap annual passes through March 2017, which pay for themselves after just three trips to the theme park. But Disney can't seem to publicize these deals to make them known to the public in any effective way.

Disney is now in a theme park war with several Chinese theme park developers,
including China's richest man, Jianlin Wang, chairman of the Dalian Wanda Group
Disney officials, however, are adamant in saying the new theme park and resort are a phenomenal success. Disney CEO Robert Iger said in previous quarterly investor earning calls that it had drawn four million visitors in its first four months of operations, and CFO Christine McCarthy said Shanghai Disney's earnings have been ahead of expectations, but they are now in danger of falling behind expectations.

Shanghai Disney's fortunes have not been as rosy of late, as Disney executives have tried to portray them to be, and the underlying reason why the resort is floundering is a reason we pointed out in one of our earlier articles: Disney does not have any significant media presence or support inside mainland China to help promote the resort or to help market its products or services inside the relatively cloistered and tightly controlled media outlets inside the Middle Kingdom.

It's all an existential marketing question that needs to be asked by investors and business people alike: If a tree falls in a forest and no one around to hear it, does it make a sound?


Despite the writing on the walls, Disney has unexpectedly already announced plans to expand the new theme park with another new addition to the theme park next year, constructions plans for a new Toy Story Land, but that announcement comes so unexpectedly soon after the grand opening that it may be more a sign of desperation than confidence that business is really booming inside Shanghai.

Problems at Hong Kong Disney compound the loss of business at Shanghai
Disneyland as both parks are now cannibalizing each other's business
Disney had also announced plans for large-scale renovations and expansions for Disney parks in Tokyo and Hong Kong recently, but the reasons for those announced expansion plans were because business in those Disney theme parks have been either been stagnant or were losing significant amounts of money this past year. It appears there are expansion projects at all the Disney theme parks worldwide due to significant losses in business this past year.

It should be noted that Disney has yet to successfully open a new theme park resort outside of the United States, apart from Disneyland Toyko, which is wholly owned and operated by an outside third-party entity, the Oriental Land Company, and not owned in any part by Disney. EuroDisney (later redubbed as Disneyland Paris) and Disneyland Hong Kong had both floundered when they initially opened and have been financial failures for years before even breaking even.


The fortunes of Disney's theme parks in both Paris and Hong Kong have since gone south again last year, worrying many Disney shareholders. Both Disney theme parks in China are becoming bottomless money pits for the House of Mouse moving forward for many years to come.

Disney has already and suspiciously announced plans and broken ground on a
new expansion to Shanghai Disneyland with a new Toy Story Land which
suggests there may not be enough things to do in the existing theme park
Hong Kong Disneyland had suffered its first major net loss in over four years in fiscal 2015, after the bottom dropped out of the mainland Chinese tourism industry in Hong Kong, which accounted for roughly more than 40% of Disney's business. But many tourism experts also believe that market cannibalization from Shanghai Disneyland also contributed to huge losses at Hong Kong Disneyland this past year.

Business in Disneyland Paris has dropped by more than 10% due to fears of recent and escalating terrorist attacks on high-profile, soft-targets on the European continent. That disturbing and nagging problem isn't going away anytime soon.

Having the three Disney theme parks in Asia now, all competing with one another and against a number of other new and upcoming theme parks and retail/entertainment projects in mainland China, doesn't seem to bode very well for Disney's theme park operations.


This may be why, during the fourth quarter financial earnings call recently, Disney reverted to some questionable accounting trickery by shortening its fiscal fourth quarter by one week this year compared to the same quarter last year.

Problems with slumping attendance numbers at Disneyland Paris round out the
problems with dropping attendance at all the Disney theme parks worldwide
Although 2015—or any year for that matter—doesn't have a leap-week to speak of, Disney shortened its fourth quarter by one week this year so that earnings estimates for the fourth quarter could not be compared directly from last year. In fact, Disney used the loss of a week as an excuse why they fell short on revenue expectations for the fourth quarter this year.

It appears Disney was hiding significant financial losses in its theme park operations and other business segments from investors and Wall Street analysts by using this deceptive accounting trick.

Estimates show that attendance numbers to all Disney parks dropped at or near 10% across every Disney theme park around the world, which is just alarming.

Thus, it appears that Disney now has significant financial problems across all its Business segments—apart from the movie studios—and Disney's financial woes extend far beyond just its media networks segment as is popularly perceived, which includes significant subscription losses at its most profitable unit, ESPN.


2017 may be more of the challenge to Disney then anyone would have first thought, but 2016 was definitely a year that Disney would rather forget and put behind them, especially with its theme parks and resorts segment.

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