TOKYO -- Oriental Land's new focus on service quality, spelled out in the latest development plan, stems from the Tokyo Disney Resort operator's realization that new attractions alone are not enough to keep people coming through the gates.
The plan, unveiled in late April, represents a clear shift from an emphasis on "hardware" to "software," by focusing on service improvements rather than adding facilities. It was presented as a revision of an initial plan announced in 2014.
Previously, Oriental Land had earmarked approximately 500 billion yen ($4.56 billion) for refurbishing and enhancing facilities by the year through March 2024. The strategy included developing attractions such as "Beauty and the Beast" and "Alice in Wonderland" at Tokyo Disneyland, and introducing attractions such as "Frozen" at Tokyo DisneySea.
The new plan sees construction of the "Frozen" attraction delayed at least until fiscal 2020 and "Alice in Wonderland" scrapped altogether.
The market's main concern over the initial plan was a likely decline in visitor numbers during construction. Building new attractions inside the limited area of the park inevitably requires closing off certain sections. An analyst at a foreign brokerage said he received numerous inquiries from foreign investors wary of the negative impact of construction work on earnings.
The company now intends to close Tokyo Disneyland's Grand Circuit Raceway in January 2017 to make way for new attractions including "Beauty and the Beast." Having been there since the opening, Grand Circuit Raceway is one of the park's oldest facilities and Executive Director Akiyoshi Yokota sees a negligible impact on visitor traffic from its closure.
At DisneySea, a new Soarin' attraction will be introduced ahead of "Frozen," in a deliberate move to ease congestion.
Soarin' is an indoor attraction popular in the U.S. that can accommodate many guests at a time. Steering visitors indoors will help free up space outside. The Beauty and the Beast attraction will include a restaurant and other facilities, meaning it can take in more visitors than Grand Circuit Raceway. "If more visitors can be accommodated than before, it will help ease crowding," said an Oriental Land executive.
Many visitors to Tokyo Disney Resort complain about overcrowding. The number of visitors fell 4% on the year in fiscal 2015, but attendance stood at 30.19 million, exceeding 30 million for the third straight year. Tokyo Disneyland often has to limit admission during high season, a clear sign that the number of visitors exceeds capacity.
At an analyst briefing, President Kyoichiro Uenishi stressed internal data shows customer satisfaction has not declined. However, he said he understands there are external surveys suggesting it has fallen due to the crowds.
A key aspect of Oriental Land's new strategy is enhancing service quality. The company will take measures such as leadership training programs for employees, and switching contract employees to full-time positions. Personnel costs are expected to jump about 3.5 billion yen on the year in fiscal 2016.
Despite the crowds, visitors keep coming back to Tokyo Disney Resort, which is testament to the quality service the park offers. One regular customer from Hyogo, western Japan, said she thinks employees are well trained, adding that she visits the park a couple of times a year and always has a good time.
Admission to Tokyo Disney Resort now stands at 7,400 yen, up about 20% from five years ago. "There will be no future growth unless Oriental Land can enhance guest satisfaction," said Eiji Maeda, a senior analyst at SMBC Nikko Securities. "It is a positive change that the company acknowledges they have to improve in that area."
Despite the praise from analysts, the company's stock price has remained below the level of April 27, when the company announced its new development plan. It appears market players are yet to be convinced by the shift in focus to customer service.