Terrie's Take 798 (Tourism Edition) - Is New Shanghai Disneyland a Threat to Japan's Inbound Tourism?

Terrie's Take terrie at mailman.japaninc.com
Mon Apr 6 00:20:57 JST 2015

* * * * * * * * TERRIE'S (TOURISM) TAKE - BY TERRIE LLOYD * * * * * *
A bi-weekly focused look at the tourism sector in Japan, by Terrie 
Lloyd, a long-term technology and media entrepreneur living in Japan. 

Tourism Sector Edition Sunday, April 05, 2015, Issue No. 798

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+++ Is New Shanghai Disneyland a Threat to Japan's Inbound Tourism?

Several weeks ago a reader asked me a good question. He noted that 
Shanghai Disneyland is opening early next year, and wants to know if 
this will be a threat to regional tourism into Japan? To be honest, 
while I've ridden the train past the Hong Kong Disneyland station from 
Changi airport more than a few times, I've never given much thought to 
Chinese resorts' impact on Japanese tourism. Perhaps I should.

On doing some research, I was surprised to learn that the Hong Kong 
Disneyland is Disney's largest international property, at 150 acres. It 
also attracts a large number of visitors -- 7.4m in 2014, 12% more than 
2013. The park is an integral part of the Hong Kong government's tourism 
line-up and gets promoted and supported significantly thanks in no small 
part because the government owns 52% of the facility. Recently the 
government said it will help to shore up Disney-related tourist growth 
by providing financial, legislative, and logistical support for a second 
phase that will double the park's size.

But despite the record earnings and increasing guest numbers, Disney and 
the Hong Kong government have some thunder clouds on their horizon, in 
the form of an even larger Disney property opening in early 2016 just 2 
hours flight to the North, in Shanghai. The new property will be built 
on 1,000 acres at a cost of US$5.5bn and will be the largest outside the 
USA. Given that about half of Hong Kong Disneyland's guests are from 
mainland China, the new facility will surely be a threat to Hong Kong 
inbound tourism.

Which brings me to our reader's question about whether the Shanghai 
facility will also be a threat to Japanese inbound numbers.

This is really two questions. Firstly, will Shanghai Disneyland siphon 
off Chinese and overseas visitors to Japan, and secondly, what other 
overseas facilities or events could derail Japan's ascendency as a 
tourist destination for the throngs in Asia?

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Firstly the Disneyland competition.

If Shanghai Disneyland follows Japan in terms of demographics, then its 
biggest source of customers will be local females, particularly young 
working age women. Now it is true that this is much the same demographic 
that favors overseas travel, and in fact under-35's comprise about 56% 
of China's overseas leisure travelers. But what we have seen from Tokyo 
Disneyland's numbers is that cramming days out with girlfriends to 
Disneyland or DisneySea doesn't seem to interfere with their 
international travel plans. Instead, it tends to be an affordable 
regular escape while longer haul travel plans are being put into place.

In case you are wondering. In 2013 there were 31.29m guests to both 
Disneyland and DisneySea. Of these 64.6% were locals from Kanto, 70.2% 
were female, and 49.5% were aged 18-39. Interestingly, only 3.9% of 
Tokyo Disneyland guests were from overseas. So even if Shanghai 
Disneyland was a big hit, its impact on Tokyo Disneyland's numbers would 
probably be minimal.

This brings me to the second, bigger question: what else might derail 
the unfolding tourism boom?

[Continued below...]

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My guess is that Japan's biggest risks to tourist growth in the next 
five years will be physical threats, the economy, and politics -- in 
that order. The biggest physical threats are likely to be: i) another 
major earthquake, Tokyo is overdue for the big one; ii) an accident or 
inconvenient safety disclosure about the Fukushima Daiichi plant, such 
as the fact that the coria from reactors One, Two, and Three might 
already be deep in the earth and are essentially irretrievable; iii) a 
renewed outbreak of SARS or something worse, particularly if it 
originates in China.

Economic threats could include: i) the collapse of the U.S. dollar 
either through lack of international confidence, or through an overdue 
correction of the U.S. stock market; ii) escalation of fighting in the 
Middle East and the outbreak of a full-blown war between Sunni and 
Shiite nations -- something that will drive up the price of oil as well 
as the value of the Japanese yen (as a haven currency); iii) an 
escalation of currency wars among Asian nations following Japan's 
apparently successful quantitative easing example, and which will make 
Japan more expensive for those whose countries decide to take this route.

Political threats include: i) re-emergence of the senkaku's as a 
political issue, likely if the Chinese economy takes a dive or if the 
current top leadership destabilize through scandal, infighting, or 
untimely death ; ii) a terrorist action against travelers to Japan, as 
part of a new strategy to pick off U.S. allies as a means to divide 
global leaders; iii) idiotic comments by some Japanese LDP politician 
that they hate foreigners -- unfortunately, the likelihood of this 
happening is quite high.

So to my reader, I think you can safely assume that Shanghai Mickey, 
Mulan, and friends will have little effect on Japan and its inbound 
tourism sector. Instead, you should be watching and planning for factors 
that have already been experienced and which have a high chance of 
recurring and escalating.

...The information janitors/


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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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