How Does Tokyo Disney Charge Less, but Make More?

Last week was a blur. I met up with the family, who had preceded me by two weeks, in Japan, and we made a quick visit through Tokyo for 6 days until we returned on the 4th of July.

A number of observations:

• 1 week is the optimal trip length to Asia to maximize jet lag torture. I was finally over my outbound jet lag on the day we flew home. I’ll let you know when I’m done with the return.
• Jet lag is best shared. Going it alone while entertaining your well-rested 8 and 4 y.o. boys who haven’t seen you in two weeks is not as highly recommended.
• Hotel points are even more awesome in Japan. I hate paying for hotels in general, but especially in Japan because they often charge per person after 2. But somehow booking an award night with points sneaks through the system, so you save not only the base rate but also the extra charge for my 8 y.o. (my 4 y.o. apparently isn’t a person yet…).

We capped the week’s fun with a trip to Tokyo Disney. And that was perhaps the highlight, from a personal finance perspective: Tokyo Disney was way cheaper than its counterparts in the U.S.

Tokyo Disney costs less than half. And it’s a very fair comparison – the layouts are very similar, and the Tokyo parks are as nice, if not nicer, than the ones in California. The staff & service are much better (this is always a safe assumption anywhere in Japan). The quality of the product is certainly not what’s driving the lower price. And I have a sneaking suspicion that most of the input costs – land, construction, labor – are a lot higher in Japan. So what gives?

Why Tokyo Disney is Cheap, But Doing Just Fine

First, the yen is getting beat up hard. Japanese exporters and Tokyo Disney-bound travelers rejoice.

But that isn’t nearly enough to explain the price differential – even at ¥100 / USD it’s a steal (relatively speaking…). As always, when confronted with good fortune, I couldn’t just accept it but had to understand WHY.

My first hint was from Wikipedia: turns out that Tokyo Disney is the only Disney location that is not owned by Disney. The owner, Oriental Land Company, pays a license fee on ticket sales and merchandise to Disney (per Forbes, 10% of admissions and 5% of food and souvenir revenues). But they own the site, and appear to be able to play with the business model with broad discretion. They’re clearly doing something right, because Tokyo Disneyland has regularly been the most profitable Disney location and is nipping the heels of Disney World as the most attended park in the galaxy.

Tokyo: Where You Look Like a Dork if You’re NOT Wearing Disney Gear

Then we entered the park, and it was quite a spectacle. Because the Japanese like Disney. A lot.

Sure, you expect to see little kids kitted out with all of their Disney gear. What’s a little surprising is to see troupes of high school girls and young ladies all wearing the same identical shirts, skirts, hats, and other gear. What’s really surprising is all of the dudes were decked out too. A complete Disney-inspired ensemble was the norm regardless of age, sex, or kid status. Coordinating outfits across your entire family or group is clearly smiled upon.

And for those of you less knowledgeable about Japanese: they’re not so inclined to buy things at a discount, or through a secondary channel. If Japanese folks want Disney gear, they’re going to buy it at the park.

Smoother Demand + Nonstop Merchandise Sales, a Winning Combination

Disneyland and Disney World seem to survive on “major event” vacations from inbound travelers, which makes spring break at one such an exciting treat. Disney Tokyo, however, is able to tap into its 30+ million person metro area, so probably doesn’t suffer the peaks and valleys of the U.S. parks.

To make it work, however, they seem to have decided to charge a lower ticket price. You don’t need to take out a mortgage on your house for a Tokyo Disney adventure, and it can be styled as a quick getaway for someone local. What they lose in ticket revenue is probably more than made up with merchandise sales. The gift shops were minting money, and if I were a weaker person I would have felt bad my little boys were limited to one souvenir <¥1,800 ($15) when all of the other kids – and adults – were backing up the truck.

The Best Type of Revenue: Being Paid for Nothing

Ticket and merchandise sales are really cool, but the drawback is you actually have to provide services and goods in return.

How much better, if you can get a bunch of money for (more or less) free? And maybe not even owe a license fee on it to Disney?

It took me about 10 seconds of looking at the park map to see something that jumped out at me. For an example, check out Tomorrowland from the Tokyo and California parks:

Do you see what I see? Corporate sponsorships. Sweet, juicy corporate sponsorships. Just about every Tokyo Disney ride has a corporate sponsor. It gets to the point of ridiculousness, but rain or shine, earthquakes or not, each one represents a steady stream of income for the park.

My personal favorite was The Journey to the Center of the Earth, which is one of the more scary rides, being sponsored by the Dai-ichi Life Insurance Company. What in God’s green earth is going on there? Is the ride so dangerous I need life insurance? Is it supposed to scare me so much that I’ll want some? What is Dai-ichi’s angle? Who knows? Who cares? I bet the park owners certainly don’t.

I don’t know why Disney doesn’t do this more at its own U.S. parks. Perhaps they\’re worried about diluting the brand. But here’s a newsflash: the brand is doing just fine in Japan. Plus I imagine no one except a nerd like me even notices the corporate sponsors (shhhhhh).

 

So score wins for entrepreneurship and brilliant tailoring to a local market. I might score a big loss for Disney in not owning Tokyo Disney itself, but I wonder if they’d have been willing to tweak the business model as much as the locals. It’ll be interesting to compare Tokyo with the partially-owned Paris, Hong Kong, and (coming soon) Shanghai locations over time to see which model works best.

Tokyo Disney was a lot of fun. If you can overcome the small matter of getting to Tokyo, and a complete lack of chicken nuggets and hot dogs on the menus, I recommend it very highly. It’s nice to see how corporate sponsorships and boatloads of merchandise sales allow the park to charge way less for admission. With uncertain value for those corporate sponsors, and crazy prices for all of the Disney kit, I can’t say that everyone wins. But we certainly did.

 

I’m a newbie to Disney – my parents never took us as kids so my first experience was just last year. Do you have a favorite park? Is Disney a once / lifetime affair, an annual tradition, or a ripoff to be avoided? And most importantly for Dai-ichi, do you feel inclined to buy life insurance after a scary ride?