Disney (NYSE:DIS) is finally doing what it should have done a couple of years ago. It's arming its Hong Kong theme park with the depth and attractions to make it succeed.
The family-entertainment giant will be investing roughly $450 million to expand Hong Kong Disneyland in hopes that new themed lands and rides will help the turnstiles click a little more frequently. As a result of the infusion, Disney's stake in the park will grow from 43% to 48%. Hong Kong's government will retain a majority 52% stake.
The park has been a disappointment since its 2005 opening. Disney figured it could conservatively draw 5.6 million guests in its first year, but that forecast wasn't even close. The park entertained just 5.2 million guests in its inaugural year, and the introduction of annual passes during the second year, to stimulate repeat visits, was also a dud. Attendance fell by 23% to 4 million in the park's second year.
If this performance were an anomaly, it would be easy to blame the park's shortcomings on the cultural divide and the uncertainty of breaking into a new market. But closer to home, Disney's California Adventure in Anaheim, Calif., and its Animal Kingdom in Kissimmee, Fla., also experienced bumpy launches.
The wildlife park in Florida didn't enjoy its first attendance uptick until its fifth year. One can only imagine how successful the park would have been if the now iconic Expedition Everest coaster -- and the initially proposed slate of attractions that got axed along the way -- had been there from the beginning. The same thing goes for California Adventure. It surely wouldn't have been a dud if it had opened with the Pixar-themed attractions that are in the process of being added.
There aren't too many new parks being built these days, so maybe we should give Disney a break. Recent stateside additions such as Hard Rock Park and the rides-based rebirth of Cypress Gardens hit serious snags last year. There's a rumored Legoland set to break ground in Florida in the coming years, but that's about it.
Things are different overseas. Marvel (NYSE:MVL) and DreamWorks Animation (NYSE:DWA) have licensed parks going up in Dubai. And despite its shortcomings in Hong Kong, Disney hasn't silenced the chatter of a new Disney park that's scheduled to be going up in Shanghai.
However, there is a brand to protect here. Attractions can't afford to disappoint their first wave of visitors. Would Great Wolf Resorts (NASDAQ:WOLF) still be around if it had opened its family resorts with just a fraction of its indoor waterpark diversions? Would an IMAX (NASDAQ:IMAX) installation be a success if it had offered only half of a theatrical flick in its larger-than-life presentations?
Disney needs to get this right the first time. Instead of holding back on choice attractions, Diensy should go in with everything it has, and then trust those Disney "imagineers" to dream up the e-ticket additions that will turn things up a notch in the years to come.
Park patrons -- and lonely turnstiles -- deserve better.
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