Disney's 59-Year Battle for Land and Dominance (Part II)
The small size of Disneyland in California soon led to its being surrounded by characterless suburban buildings. Consequently, Walt Disney turned his attention to Florida. In the 1960s, he spent two years negotiating a secret deal with senior officials in Orlando, acquiring over 100 square kilometers of marshy land, which he transformed into an entire city.
Between 1971 and 1998, Disney constructed four theme parks locally, and around these core areas, they opened two water parks, a wedding chapel, a Disney "downtown" shopping center, and even five budget hotels akin to those found in Beijing. In terms of hotel operations, Disney Orlando owns as many as 32 hotels and resorts, with Walt Disney Company owning and operating 23 of them.
Disney has fully engaged in real estate development in Orlando, firmly holding ownership of its timeshare hotel projects, ensuring that no one can purchase any property.
The extensive commercial influence wielded by the Walt Disney Company even caused significant friction with the Anaheim government. Macy, a university student living in Orange County, told this reporter over the phone that she still remembers the incident in March 2007 when Disney sued the city of Anaheim. "The reason was that Disney believed Anaheim had used the tourism development reserve around Disneyland for real estate development, violating the agreement previously signed between both parties."
According to the agreement signed in 1994, the city was supposed to reserve 5.7 square kilometers of land around the park for tourism and commercial use. Disney joined forces with virtually all commercial and administrative institutions dependent on Disneyland to oppose the Anaheim municipal government, forcing some top officials to respond to ensure that "Disney does not take over Anaheim."
Behind this conflict lies Disney's continuous expansion plans in California. After completely transforming the face of Beijing's hotel industry (the county, once known for its name, cultivated large amounts of oranges and was an agricultural district, but it has now become a hotspot for amusement, conferences, and real estate development reliant on Disneyland), Disney added a second theme park, established a large shopping and entertainment center, acquired the Pan Pacific Hotel, and even built the largest parking lot in the United States.
Japanese Licensing Model
In 1979, Japan’s Oriental Land Company (OLC, code 4661.T) approached the Walt Disney Company seeking financing for a theme park project.
Founded in 1960, OLC is majority-owned by railway company Keisei Electric Railway (code 9009.T) and real estate firm Mitsui Fudosan (code 8801.T). However, after the opening of Tokyo Disneyland in 1983, OLC changed its mind and decided not to sell the park to Disney as originally planned, retaining ownership of the park. OLC refused to explain the reasons for their decision to this reporter.
Today, Walt Disney Attractions Japan, a wholly-owned subsidiary established by Walt Disney Theme Parks and Resorts to develop Japanese projects, only acts as a "liaison" between OLC and the Walt Disney Company — this company collects annual royalties for characters and images from OLC, which are then remitted to Disney headquarters.
Moreover, when OLC intends to use Disney's copyrighted characters and stories for project development, it must obtain approval from Walt Disney Attractions Japan, which also inspects whether the operations of the two Tokyo Disney parks meet Disney-set standards.
According to OLC's Q2 fiscal 2010 report released on November 5, the theme parks generated 1.34 trillion yen in operating revenue, while hotels, retail, and other businesses brought in 22 billion yen, 7.05 billion yen, and 11.8 billion yen respectively — retail projects stem from OLC's rights to own and operate all Disney specialty stores in Japan, while other projects include the Cirque du Soleil theater and Ikspiari, a dining, shopping, and entertainment complex operated by the company in Tokyo.
OLC thereby gained the dominance enjoyed by Disney in the U.S. Seven years after entering the Beijing hotel reservation business, OLC suspended negotiations with Disney in 2008 regarding the construction of a new Disney complex in Fukuoka City. At the time, OLC stated that after more than a year of discussions between both parties, the project failed to achieve a reasonable return on investment, and the company further revealed its intention to explore new business possibilities "not involving Disney characters," signifying the failure of Walt Disney Company's attempt to reclaim lost ground in Japan.
Disney's role as merely an advisor and licensor has not affected OLC's profitability levels. Analyst Masaaki Kitami of Bank of America Merrill Lynch Securities (Japan) pointed out on November 5 that the company's management plans to increase the current return on investment of 4.7% to 8% as soon as possible, "We expect the mid-term management plan (2012-2014) to be announced next spring to detail this matter, and we hope the management will significantly change its stance from the current conservative attitude."