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Why Is Shanghai Disneyland Important for Disney?

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Importance of Shanghai Disneyland

The Walt Disney Company (DIS) views the opening of its Shanghai Disneyland in China (FXI) as a strong revenue growth driver. The company expects to declare its Shanghai Disney Resort open on June 16, 2016. It will be Disney’s first resort in mainland China. Disney expects pre-opening expenses for the Shanghai resort to be around $300 million in fiscal 2016.

According to a South China Morning Post report citing the consultancy firm Aecom, China is expected to be the world’s biggest theme park market by 2020, surpassing the United States. In 2015, theme parks in China attracted around 111 million visitors. This number is expected to almost double to around 221 million visitors by 2020.

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This is why US theme park giants Disney, Comcast’s NBCUniversal (CMCSA), and Six Flags (SIX) are eyeing the Chinese market. Comcast’s NBCUniversal is expected to open a Universal theme park in Beijing by 2019 and a Six Flags theme park is expected to open in Tianjin in 2018. According to the South China Morning Post, China has around 300 theme parks.

Key features of Shanghai Disneyland

Disney gave more details on Shanghai Disneyland at the MoffettNathanson Media & Communications Summit last week. Disney stated that the company has two kinds of hotels at the theme park—a luxury hotel called Disneyland Hotel with around 400 rooms, and a value priced hotel called Toy Story Hotel with about 800 rooms.

Disney has added its first-ever Pirates of the Caribbean attraction at the theme park in China. The company has also added a Lion King show in the Mandarin language at the theme park. Disney is expecting higher attendance at its Shanghai Disneyland. The park has good connectivity, and it has kept its ticket prices “affordable.”

Disney also said at the MoffettNathanson conference that a key concept of the attractions at Shanghai Disneyland is to keep them “authentically Disney, but distinctly Chinese.”

Disney makes up 0.83% of the SPDR S&P 500 ETF (SPY). SPY has a 3.5% exposure to the computer sector, and a 0.18% exposure to 21st Century Fox (FOXA).

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