Shanghai Disney Resort, the first Disney destination in the Chinese mainland, on Wednesday reported a year-on-year decrease in operating income in Walt Disney Co's second fiscal quarter, which ended on March 31.
"At Shanghai Disney Resort, unfavorable weather early in the quarter resulted in lower attendance, which drove a decrease in operating income compared with the prior year," Christine M. McCarthy, senior executive vice president and CFO of Walt Disney, told an earnings conference call on Wednesday.
The company did not disclose figures for the Shanghai Disney Resort.
Experts said that the decrease wasn't surprising because attendance was bound to fall after the nation's most enthusiastic Disney fans have visited, which many of them did in the first year after it opened in June 2016.
Parks and resorts revenues for the quarter increased 13 percent to $4.9 billion and segment operating income increased 27 percent to $1 billion, the US entertainment conglomerate said in its earnings report.
"The increase at our international parks and resorts was due to growth at Disneyland Paris and higher occupied room nights and attendance at Hong Kong Disneyland Resort. These increases were partially offset by a decrease at Shanghai Disney Resort driven by lower attendance, cost inflation and an unfavorable foreign currency impact," Walt Disney said.
As Shanghai's winter is quite cold, fewer people are likely to visit the facility and that would reduce operating income, said Song Ding, an expert at the Shenzhen-based China Development Institute.
"We saw a nice recovery starting in March and expect this positive trend to continue given the recent launch of Toy Story Land," McCarthy said.
Shanghai Disney Resort in April announced the opening of Toy Story Land, the seventh themed land and first major expansion of the theme park since it opened its gates to the Chinese visitors.
Song told the Global Times on Wednesday that the performance of Shanghai Disneyland exceeded expectations during the past two years. The resort welcomed its 10 millionth guest on May 1, 2017, just 11 months after it opened.
Although Shanghai Disney Resort has attracted many tourists, it has not contributed much to local economic growth or the development of the local tourism sector, Yang Yong, dean with the School of Tourism at East China Normal University, told the Global Times.
"As the domestic theme park market has great growth potential, Shanghai Disney will encounter intensified competition from foreign and local rivals," Song said.
Universal Parks & Resorts and its Chinese partners are expanding plans for a 300-acre (121 hectares) theme park in Beijing, doubling their investment to $6.5 billion, the Wall Street Journal reported on Monday, citing a person familiar with the matter. The investment would surpass that of Shanghai Disney Resort, which cost more than $5.5 billion.
Competition could help improve the Chinese theme-park industry, Song said, noting that "as Chinese theme parks scatter across the country, they will form a complementary situation with global theme parks in China in terms of the style of derivative products and operation mode."
Lan Shi, a high school student in Nanning, capital of South China's Guangxi Zhuang Autonomous Region, told the Global Times. "It may not be that convenient for me to visit Disneyland in Shanghai or Hong Kong, but I have the choice of visiting a local theme park in the city where I live such as the Wanda Theme Park, which is also good."
According to UK-based market research firm Mintel, total revenue for the Chinese theme park industry increased 27 percent year-on-year to $6 billion in 2017 and is forecast to reach about $14 billion by 2022.
