According to Forbes, Tokyo Disneyland has faced a significant setback this year, with its value plummeting by $16 billion. This comes after years of the pandemic severely affecting the tourism industry in Japan.
For three years, Disney’s theme parks worldwide enjoyed a resurgence as pandemic restrictions lifted and travel demand surged. However, Japan, still reeling from extended lockdowns and strict tourism limits, struggled to attract visitors. Tokyo Disney Resort, Japan’s most-visited theme park complex, was among the hardest hit.
Pandemic’s Impact on Tokyo Disney
Tokyo Disneyland and DisneySea are not owned by The Walt Disney Company but by the Oriental Land Company (OLC). OLC’s operations were heavily impacted by the pandemic. Shows were canceled, park hours reduced, and attendance limits enforced. The resort’s recovery has been slow, with many flagship shows still closed and single-day tickets being the only option for visitors.
OLC’s challenges extend beyond pandemic recovery. Many operational procedures at Tokyo Disney are outdated. Shows require a lottery system for seats, and guests cannot join ride queues close to park closing times. Additionally, access to the parks is cumbersome, with a paid monorail and limited digital infrastructure.
Financial Struggles and Visitor Challenges
The resort’s reliance on international visitors has grown, but high airfares and slow wage growth have deterred domestic tourists. The absence of annual passes, which were popular among locals, has further reduced visitor numbers. Social media is rife with complaints about the high costs and limited options.
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Despite these challenges, OLC reported a $1 billion operating income on $3.9 billion revenue last year, aided by expensive single-day tickets. However, the opening of Fantasy Springs, a new land in DisneySea, hasn’t significantly improved the situation. Costing $2.1 billion, Fantasy Springs is one of the most expensive expansions in Tokyo Disney’s history.
Fantasy Springs: A Costly Expansion
Fantasy Springs includes a deluxe hotel, restaurants, and attractions based on Frozen, Peter Pan, and Tangled. Yet, entry barriers, such as the need for a $13 Disney Premier Access pass or a Fantasy Springs Magic Passport, have limited its impact. Reports suggest the area remains underutilized despite selling out access passes.
OLC forecasts record revenues and operating income this year, but attendance is still down 11% from its 2019 peak. Investors remain cautious, with OLC’s market capitalization falling by $15.8 billion since January. High capital expenditure on new attractions without immediate returns has raised concerns.
Investor Concerns and Future Prospects
OLC’s stock performance contrasts sharply with the Nikkei 225 Domestic Exposure 50 Index, which has surged. Heavy spending on attractions like Tangled, which may not have long-term appeal, worries investors. The true financial impact of Fantasy Springs will become clearer with the release of OLC’s second-quarter results later this year.
Some investors are pushing major shareholders like Keisei Electric Railway and Mitsui Fudosan to reduce their stakes in OLC. The future of Tokyo Disneyland hinges on balancing capital expenditure with revenue generation while adapting to post-pandemic realities.
Tokyo Disneyland’s recent struggles highlight the broader challenges faced by the theme park industry in a post-pandemic world. Balancing innovation with financial prudence will be key to its recovery.