I got this bit of news from the Orlando Sentinel. It looks like there will not be any major spending here in the immediate future.
Parks in India, China's future
Disney CEO: Lack of infrastructure, other issues in way
Scott Powers | Sentinel Staff Writer
Posted March 2, 2006
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Robert Iger thinks the Walt Disney Co. will build theme parks in India and mainland China during his lifetime though maybe not during his tenure as the company's chief executive officer.
At a conference sponsored by the Bear Stearns brokerage house earlier this week in Palm Beach, Iger said big challenges with local infrastructure such as transportation and waste disposal need to be overcome before such widely speculated developments can occur.
"For now we're willing to be patient," he said.
Disney sees a tremendous amount of worldwide growth opportunity in the family-vacation market. But Iger said it is unlikely the Walt Disney Co. would invest huge amounts of theme-park money anytime soon if there are other ways to go after more family vacationers.
As an example, he referred to Disney's Magical Express, the program started last spring that seamlessly transports customers and their luggage from airplanes at Orlando International Airport to Walt Disney World-owned hotels. People who stay in Disney hotels and don't have transportation to travel elsewhere spend more money at Disney, he said.
Outside observers weren't surprised -- either by Iger's long-term projection for China and India or his assertion that Disney probably won't soon invest much more in Orlando.
Dennis Speigel, president of Cincinnati-based International Theme Park Services, said India probably is 10 to 12 years away from being able to support a theme park the size of Disneyland, and China might be eight to 10 years away before anything can even be announced. While each country has 1 billion people and a rapidly developing economy, neither is ready yet, he said.
"What Bob Iger is saying is absolutely true," Speigel said. "Unfortunately the infrastructure is not in place. That's been the problem in China. That's the problem in India."
J. Clay Singleton, professor at the Crummer Graduate School of Business at Rollins College, said the challenges are not just the need for more developed physical infrastructure in India and China, but everything from supply chains to brand recognition. "But I believe it is inevitable," he said.
Iger said his company is waiting for changes in those countries' protections of trademark and copyright interests, more favorable government regulations, access to government-run media and the development of critical public infrastructure.
"It's hard to build a park in India, even though there are people with a lot of money who would write us a check now, when you don't have great mass transportation or adequate waste-removal systems, or all the kinds of things we typically need to drive huge traffic through a small location in a concentrated period of time," Iger said.
"It will come, I believe, in both places," he added. "We'll see a Disneyland in China and India, not necessarily during my tenure as CEO but hopefully during my lifetime."
Later in his talk Monday night, Iger said he expects Disney to invest heavily in international markets five or 10 years out, though probably not within the next five years.
"We believe that both India and China represent great opportunities for the company," he said. "But the near-term issues are great. They're not for the faint of heart."
Iger said Disney has less than 5 percent of the family-vacation market and, at least for now, can earn more without huge investments.
"We don't intend to go through another capital cycle to the extent we went through back a decade ago, or five or 10 years ago. We don't have to," he said. "There's a lot we can do with what we have invested to drive growth."
Though he didn't specifically name Magical Express, Iger said the company can now get customers and their luggage from the airplane directly to a Walt Disney World hotel.
"The result of that is we move a lot more people on property. And when they're on property, versus off, they spend a lot more money with us and more time with us, and that's created growth from the investments we made in the hotels," he said.
Elsewhere, Iger said Disney-arranged guided vacations to third-party hotel resorts in such varied places as Wyoming, Hawaii, Italy and Costa Rica, under the "Adventures by Disney" program now being test-marketed, can give the company a chance to capture more family vacations and build the Disney brand without having to build a theme park.
Singleton, the Rollins professor, said Disney has shown with its cruise line that it can do well in non-theme park vacation businesses. The Disney brand gives families a high level of confidence that they're booking a quality vacation, wherever it is, he said.
"The danger is," he said, "in order to assure the quality of that resort, you have to have a lot of control."
Scott Powers can be reached at firstname.lastname@example.org or 407-420-5441.
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