Shanghai Disneyland Prices Tickets, Battles Scalpers

| About: The Walt (DIS)

Bottom line: Shanghai Disneyland's (NYSE:DIS) ticket pricing and proactive efforts to stop scalpers are being well received by media and local Chinese, boding well for a broadly positive launch when the park opens in June.

It's still 4 months until Shanghai Disneyland formally opens its doors to the public, but already the park operator is fixating on its entrance tickets that are almost certain to become a hot commodity when they start hitting the market next month. The announcement of pricing for Shanghai Disneyland tickets, which was quickly followed by measures the company is taking to avoid scalpers, are part of a barrage of hype that will only accelerate as the park charges towards its opening date in mid-June.

I'm usually a bit cynical about this kind of thing, since companies like Disney are masters at creating news just to keep their names in the headlines ahead of a big event, even if there's no real news to report. But in this case, the opening of the Shanghai Disneyland really does seem worthy of the buzz, since the new park marks a major milestone for both China and Disney itself.

Disney is one of the few foreign entertainment brands that is a household name in China, known to everyone from the biggest city slickers in Shanghai all the way down to farmers living in the nation's thousands of tiny villages. Accordingly, the park is almost certain to attract millions of people when it opens, and could become a major money maker for Disney's highly profitable theme park division.

Mindful that Chinese earn only a fraction of their peers in most other Disneyland locations, the company has just announced pricing for its Shanghai park tickets that is among the lowest in the world. One-day tickets for the park will start as low as 370 yuan, or about $56, which is well below the $69 adult ticket price for the Disneyland in nearby Hong Kong and well below the price of about $100 for each of the company's US theme parks. Surprisingly, the Shanghai price is just slightly lower than Disney's other Asian park in Tokyo. (English article; Chinese article)

Positive Reports

Most Chinese media have been putting a relatively positive spin on the ticket announcement, pointing out the price is the lowest for Disney's 6 parks worldwide, even though in reality the figure is just a tad lower price for far wealthier Japanese. That spin reflects the huge amount of goodwill that the Disney name commands in China, and also a certain element of pride among Chinese that their nation has been tapped for only the sixth Disneyland in the world.

But the many challenges that Disney will face in opening its $5.5 billion park were quick to follow the pricing announcements, as media reported that Disney is taking aggressive steps to head off the ticket scalpers that are a fixture in China's gray markets. (Chinese article) Just a day after announcing the ticket prices, Disney has announced 30 partners that will help it to sell travel packages and other related services for the park.

Those partners include many of China's biggest names, such as online travel giants Ctrip (NASDAQ:CTRP) and Tuniu (NASDAQ:TOUR), and hotel operator Jin Jiang (OTC:SJJIY). But the reports point out that Disney is strictly limiting the number of tickets it's giving to its partners. That move is designed to avoid too many falling into the hands of scalpers, who are often company insiders in addition to the usual entrepreneurs who buy the tickets and then try to sell them at higher prices.

The reports say Disney is contemplating a system using a China's new generation of ID cards with high-tech chips to confirm individual's identities and limit the number of tickets an individual can buy. Such high-tech efforts for such a seemingly small issue may seem excessive to many outside China, where scalping is far less common. But as someone who lives here, I have to commend Disney for this kind of proactive move to avoid future negative publicity. I suspect this will be just one of many such unusual challenges it will face due to the many unique qualities of the Chinese market.

Disclosure: None.

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