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HK Disneyland learns the ways of Chinese tourists
By GEOFFREY A. FOWLER and MERISSA MARR (Wall Street Journal)
Updated: 2006-02-09 15:02

Li Zeng, a fourteen-year-old Chinese tourist, wandered Hong Kong Disneyland yesterday -- and left after two hours.

Mr. Li isn't that familiar with Mickey Mouse and his companions, and he and his father didn't take any rides, buy souvenirs, or eat food. "We don't understand this park," said the teenager, waiting for his tour bus. "We gave up looking at the map."

Five months after Walt Disney Co. opened its Hong Kong theme park in a bid to tap the booming Chinese market, the cultural divide that separates Mickey and Mr. Li is still a major challenge. It is one that the company is trying hard to bridge, though with mixed results.

The need to adapt was on display here last week. After Disney underestimated the number of people who would visit during mainland China's weeklong Lunar New Year holiday, vacationing crowds poured in, filling the park to its maximum capacity. Disney officials ordered the gates shut, and hundreds of angry guests from China who held valid tickets found themselves unable to enter. Some engaged in shouting matches with park staff, and at least one excluded family tried to pass a child over the park's wrought-iron fence.

Before last week, Disney's problem wasn't too many visitors, but the flak it was getting for having too few. It drew public rebuke over low attendance from local politicians, who questioned the wisdom of the Hong Kong government's 57% stake in the park. Local retailers said they didn't get the sales boost they were expecting from the new tourists Disneyland had promised to draw.

The company is "still learning" about Chinese culture, said the park's managing director, Bill Ernest, on Saturday during an emotional public apology for last week's ticket fiasco.

Jay Rasulo, the head of Disney's theme-park division, notes it is early days yet and stresses the need to put such criticism in "context." He says overall guest experiences at the park are "some of the best in the world," with over 90% of the visitors Disney interviewed last week saying they had a positive time. "Part of the way we make people happy is that we listen, learn and adjust as necessary," said Mr. Rasulo.

These lessons are crucial for Disney as Chief Executive Robert Iger holds what he calls "ongoing negotiations" to open another Asian park in Shanghai and seeks to build the company's consumer products, movie and television business in China.

Disney has trumpeted its attempts to accommodate Chinese culture, some of which later drew fire. Conservationists blasted the company for planning to serve environmentally unfriendly shark's fin soup, and Disney later decided to forgo the practice. Efforts to woo local celebrities backfired when some complained of mistreatment by visiting American Disney executives. Disney designed the park for Chinese tourists, who the company said preferred photo opportunities over roller coasters. Many visitors now criticize the park for being too small.

Chinese travel agencies also have noted some visitor befuddlement. "Many customers complain they do not know how to enjoy Disneyland," says Chen Mei, the international tours manager of the Ju Cheng agency, which brings groups to the park from the city of Zhongshan in southern China. Some mainland tourists show up at the park only to walk aimlessly around Main Street U.S.A. and snap a few photos with Marie the Cat -- a minor character from the 1970's film "The Aristocats." Marie is familiar to some from the movie's repeat showings in southern China. She also happens to look like another Asian favorite, Hello Kitty.

Even before last week's incident, Disney was changing the way it does business at the park. Disney invited in more Chinese celebrities and made sure they got VIP treatment. It cut the cost of tickets for local residents during a low period for tourists, and added a local promotion, artificial snow, to Hong Kong's subtropical climate. Disney also now produces marketing that includes the testimonials of real people who have visited the park, instead of just slick studio shots.

To help confused visitors, since November Disney has started producing special "one-day trip guides" in Chinese, beyond the basic maps, to explain in clear terms exactly how to enjoy Disneyland -- and why it is enjoyable. "You can get together with family to relax and improve communication and relationships with the people you love," reads the guide. Disney hands out the fliers inside the park, and at other Hong Kong tourist attractions.

Perhaps most significantly for park attendance, Hong Kong Disneyland is changing the way it works with Chinese travel agents.

Most mainland Chinese still take vacations through package tours, and they make up about 50% of the Chinese visitors to the park. The guides who direct these tours frequently select hotels, restaurants, shopping stops and even tour destinations based on where they share in the profits. Because of lucrative deals with tour operators, one Hong Kong transvestite cabaret brags that its five-times-a-day $20 show draws more Chinese tourists on a regular basis than Disneyland.

Mr. Ernest says Disney, which doesn't have much experience with such financial arrangements, now realizes that changing something as simple as how it offers dinners can make a big difference to the local travel industry. Many tour packages for visitors from China include pre-arranged dinners. Tour operators typically get a cut of the meal costs. Without group dinner deals and significant commissions, Disney wasn't offering guides much financial incentive to funnel tourists into the park. Now Mr. Ernest says he is considering starting a "dining with Disney" program. Special group breakfasts with Disney characters are another option, he says.

Disney is reaching out in other ways. When the Ju Cheng agency publicly threatened to sue over last week's ticket problem, Disney offered a conciliatory tone -- and refunds for people who couldn't come back on another day. "We are probably as critical on ourselves as anybody is with us," says Mr. Ernest.

To build relationships, Disney is giving Chinese travel agents a 50% personal discount if they come visit its park and hotels. The company also beefed up incentives for tour operators to build a Disneyland visit into packages by increasing the margin it offered them to about $2.50 per adult ticket. And it changed its sales packages to include open-ended instead of just fixed-date tickets so operators wouldn't have to eat the cost of returned tickets.

It was the old ticketing system combined with unexpected crowds, says Disney's Mr. Ernest, which created the overcrowding problems last week.

Disney declines to release specific attendance figures. When legislators in the Hong Kong government demanded some public accountability in late November, two months after the park's mid-September opening, Disney said that it had hosted more than one million guests. While that figure suggests that the park is behind its 5.6 million forecast for the opening year, Mr. Rasulo says the park still expects to reach that level.

In the wake of the changes, Disney officials say overall attendance is "ramping up," particularly among mainland Chinese tourists, whose attendance during the Lunar New Year period more than doubled compared with another weeklong Chinese holiday in October.

Understanding the peaks and troughs of attendance is another thing Disney concedes it has yet to master. Mr. Rasulo noted that Disney once suffered through some overcrowding at the EuroDisney park based in Paris: after the first summer in 1992, the park was inundated in September with locals who had been putting off their trips to avoid the early wave of tourists.

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