The Walt Disney Company chose Paris, France, as the site of Euro Disneyland for many reasons....

       

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The Walt Disney Company chose Paris, France, as the site of Euro Disneyland for many reasons. One was the success of Tokyo Disneyland. On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park. To find a site for their fourth theme park, the i Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise. From 1983 through 1987 the company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its climate, France had a larger population and a spectacular transportation network (Scimone, 1989). The Walt Disney Company executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney executives admit that ...without the cold-climate (Tokyo) Disneyland success, they would never have picked Paris, which has the same or worse weather than Tokyo" (Anything but a 'Mickey Mouse', 1989). Thus, Paris was selected to be the site of their fourth theme park. The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called Marne-la-Vallée." In fact, the land is one-fifth the size of Paris itself (Scimone, 1991). When the French government used its right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for approximately $7,500 an acre. Marne-la-Vallée is located in an ideal geographic location since it is 20 miles (32 kilometers) due cast of the center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de- Gaulle. The French railway regional express network connects Marne-la-Vallée with the Paris metro. system, and major highways are nearby. In fact, of the more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car. With the scheduled opening (which took place May 1994) of direct rail links to Great Britain via the English Channel there were countless additional potential guests. Thus, due to its transportation availability, Paris offers Euro Disneyland a wealth of potential guests and employees. The Walt Disney Company signed a contract with the French national, regional and local governments, which promised Disney: favorable loan terms; that the rapid transit railway system would be extended to the theme park from Paris; that two interchanges would be built to link Euro Disneyland with a main highway; and that a special station for high-speed trains would be constructed at the park. The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members (employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property, and the remainder in recreation and support facilities. The area was suffering high unemployment at the time and the Walt Disney Company executives believed the economic benefits to the region would be great since they would employee so many local citizens and since tourism generates revenue without requiring such costly social services as schools and hospitals. Euro Disneyland is a public company with 51% of equity owned by EC individuals and institutions (Anything but a 'Mickey Mouse', 1989). The other 49% of the shares are owned by the Walt Disney Company who maintains management control of the company (Grey, 1989). Opening Day, April 12, 1992 Despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland opened its doors to the public with essentially the same attractions as in the other Disney theme parks in California, Florida, and Japan. Euro Disneyland executives hoped to attract 11 million guests a year, more than twice the number that visit the Eiffel Tower. Half of the guests were expected to be French. Unfortunately, the dream of succeeding did not become a reality and eventually Euro Disneyland brought in new management and made other changes in order to save Euro Disneyland. THE PROBLEMS Euro Disneyland's target of 11 million guests in the first year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million loss for the fiscal year that ended in September 30, 1993, and by December 31, 1993, Euro Disneyland had amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars. Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by some on both sides." He was replaced in 1993 by Frenchman Philippe Bourguignon. European Recession Euro Disneyland executives and advisors failed to see the signs of the approaching European recession. "Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives) didn't realize a major recession was coming". As the recession began to develop the French real-estate market tumbled, thus, destroying Euro Disneyland's hopes of selling their assets and receiving revenues. In addition, the recession caused French and European disposable incomes to shrink, causing families to think twice about taking an expensive trip to Euro Disneyland. Furthermore, Euro Disneyland did not realize the magnitude of the impending recession and when given numerous opportunities to sign partners who would share the risk or buy the existing hotels, Disney refused. Euro Disneyland did not want to give up any of the potential revenues once the recession was over. Real Estate Market The Walt Disney Company executives involved in the development of Euro Disneyland were determined they would not repeat two mistakes which they had made in past ventures. One mistake was allowing other companies to build lucrative hotels surrounding their theme park, as happened at Walt Disney World in Orlando, Florida, where the Walt Disney Company owns only 14% of all hotels. The other mistake was in letting another company own a Disney theme park, as in Tokyo, Japan, where Disney just collects royalties from an immensely profitable attraction. Thus, in France the Walt Disney Company bought far more land then it needed in order to eventually build 700,000 square meters of office space, a 750,000 square meter corporate park, 2,500 individual homes, a 95,000 square meter shopping mall, 2,400 apartments and 3,000 time share apartments. Euro Disneyland planned to develop the land and then sell it to prospective buyers, making a large profit. In addition, this would allow Euro Disneyland stringent control over designing and building of future. areas within the resort and then the ability to sell off the completed commercial properties in due course and at a large profit. Unfortunately, this revenue generating plan never really "got off the ground" due to the collapse of the real-estate market which, in turn, caused the demise of the planned development around the theme park. Thus, Euro Disneyland did not receive revenue from property development as had been anticipated. Operational Errors There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its American experience the Walt Disney Company thought Monday would be the light day for guests and Friday a heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the high season can be 10 times the number in the low season" Furthermore, to add to the operation problem is the difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members feel extremely irritated by and have a very difficult time accepting the inflexible scheduling. Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers. A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels. Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen. Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and then checked out early the next morning before heading back to the park. Since there were so many guests checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease the amount of time the guests stood in line. Labor Costs Before the opening of Euro Disneyland executives had estimated labor cost would be 13% of their revenues. This was another area where the executives were wrong in their assumptions. In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%... Staffing and Training Euro Disneyland recruited through job fairs, a popular European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's requirements for employment are so high, for every 10 candidates interviewed only one was hired. To complicate the hiring process, there were language requirements since the official languages of Euro Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that the park would draw guests from all over Europe, The success to Disney parks' repeat guest visits is the employee-customer rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality and teaching 12,000 European employees to smile the "Disney smile" all day. Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13 page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a well-scrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they are not American and they believe this requirement has stripped them of their "individualism". In December 1994 Euro Disneyland was taken to French court contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to patch up the rocky labor relations at the theme park. Cultural Issues An example of cultural issues was Walt Disney Company's policy of serving no alcohol in its parks in California, Florida, and Tokyo which it extended to France. This caused astonishment and rebellion in France where a glass of wine for lunch is a given. After much consideration, in May 1993, the Walt Disney Company changed its policy and allowed wine and beer in the Euro Disneyland theme park. Another example is the Walt Disney Company's belief that it understood European breakfast norms. Disney was told Europeans did not eat sit-down breakfasts. This resulted in Disney downsizing their restaurants before Euro Disneyland opened. Once it opened the restaurants were bombarded with breakfast eaters. In fact, they were trying to serve 2,500 breakfasts in a 350-seat restaurant at some of the hotels." Further, guests wanted bacon and eggs rather than just coffee and croissants. Disney reacted quickly with prepackaged breakfasts delivered to rooms and satellite locations. In much the same vein, the Walt Disney Company had difficulty realizing that the Europeans were accustomed to eat at a set time every day. Where Americans are content to wander around the parks with lunch in their hands, a large majority of the European guests would converge on the restaurants at 12:30 p.m. expecting to be seated for a leisurely lunch. This caused the lines to be very long. To complicate matters further, once the Europeans reached the front of the line they were told they could not have wine or beer with their lunch. Thus, the Europeans did not have a positive "Disney experience" while eating their meals. In addition, it was difficult for Euro Disneyland's managers to staff for these one or two hour "rush hours." A final example of a cultural error is the Europeans approach to vacation time. The Europeans are reluctant to take their children from school for a vacation in mid-session whereas Americans do it frequently. Also, the Europeans prefer a few longer holidays rather than several short breaks. The Walt Disney Company was convinced that it would be able to "Americanize" the European habits. Unfortunately for the Walt Disney Company, this was not the case. Per-capita Spending There also were miscalculations made by the executives regarding the per-capita spending of the guests at Euro Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact, spending was about 12% less than predicted. European guests came to the theme park paying the steep entry fees ($43 for adults and $30 for children), but spent less per-capita on food and merchandise than Americans. This may be due in part to the fact that many guests spend as much time on the rides as possible because of the high admission price (30% more than Disney World in Florida) and less time shopping for souvenirs. American and Japanese consumers do not leave the theme parks empty handed, whereas Europeans do. This resulted in lower- than-expected revenue by Euro Disneyland. Interest Rates The total construction cost of Euro Disneyland was $4 billion. Disney put in just $170 million in equity capital, while public shareholders, who own 51% of the shares put in $1 billion in equity capital. Thus, the remaining $2.9 billion was borrowed, at high rates running as much as 11%. "Thus, from the start, the project was highly leveraged," there was an additional necessity to borrow more money. This second set of loans increased the amount of money owed handcuffed Euro Disney. With high interest rates, large loans, and lower than expected revenue Euro Disneyland was in financial trouble. Marketing Euro Disneyland was marketed with the assumption that it was "a complete vacation destination that offers enough to keep a family happily occupied for a week." Instead of marketing the park in the American-style appeal of "...bigness and extravagance", Euro Disneyland should have concentrated on the emotional aspect, marketing that guests would have a unique, extraordinary family experience they would never forget. The American-style bigness approach insulted Europeans. Euro Disneyland made a huge mistake not considering the views of the French when developing their marketing strategies. The Walt Disney Company agrees there may have been marketing mistakes, but it blames the mistakes to lack of data on how Europeans would react to the "Disney Magic." Additionally, communication with the media has been very poor by the Euro Disneyland executives. Those managers who dealt with the media would not return phone calls, much less answer questions. Realizing they made a huge error, it has become Euro Disneyland executives' goal to improve their reputation with the media. Convention Business According to Turner & Coleman (1994), one of the few pieces of good news about Euro Disneyland is that its convention business exceeded expectations from the beginning. In fact, convention space at Euro Disneyland's themed New York Hotel, located adjacent to the park, was overbooked and more capacity was needed. Euro Disneyland did not anticipate the success of its convention facilities. Had it done so, it could have increased its conference groups and revenue. Euro Disneyland frantically tried to increase its convention facilities. THE RESOLUTIONS Disney's Financial Rescue Package On March 14, 1994, Walt Disney Company developed a restructuring "rescue" plan which would decrease the amount of Euro Disneyland's debt and increase profit. Name Change Euro Disneyland unofficially changed its name in September 1994 to Disneyland Paris in order to adapt to "... European tastes and turn around continued losses and reported slumping attendance". Through the emphasis on the name recognization of Paris, Disney executives hoped to capitalize on its proximity to the French capital. It was hoped that this would result in increased attendance and revenues. Downsizing and Price Breaks In order for Euro Disneyland to hold down costs and increase revenues it has cut 950 administrative posts, or 8.6% of its overall work force In addition, responding to complaints regarding high entrance fees and hotel prices, Euro Disneyland has broken a Walt Disney Company taboo by introducing cut-rate entry and room rates for the off-season Another first is that it is offering a lower-priced 'After 5' evening entrance ticket. Marketing Changes The Walt Disney Company is changing its marketing philosophy in order to expand its efforts to countries such as Israel and Africa. In addition, rather than market Euro Disneyland as vacation destination for a period of time, the Walt Disney Company decided to market it as one of many stops on a month-long European itinerary. Labor Disputes To end numerous labor disputes over long-hours and poor pay, Euro Disneyland has "...shifted away from imported American working practices and towards a more French approach." This new approach set a maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the French method which allowed French citizens the ability to recognize their standard French job classifications. As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force. CONCLUSION Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. Because the Walt Disney Company executives were determined to adhere to American philosophies, they did not thoroughly investigate all aspects of the European environment. This failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their American dream theme park on foreign soil with little if any regard for the practical reality of the physical, financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's "...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure itself, which depended on a highly optimistic financial scenario with little room for glitches." These massive oversights were contributing factors to the problems faced at Euro Disneyland. 1. Explain the reasons why Disney executives were so confident that Euro Disney (Disneyland Paris) would be a great success. 2. Based on your understanding of the case, define the most important target market for Euro/Paris Disney - use all of the segmentation variables. 3. What are some of the main cultural differences between the US and France (list and explain at least 4)? 4. List and explain four specific key issues that created problems in the first few years after the opening of the park. Which were of the most concern? 5. What specifically could Disney have done differently to make the construction, staffing, and opening of Euro Disneyland go smoother? - Explain 5 major changes that would have made a significant difference. 6. What other parks does Disney have world-wide? List, give the year established, and give the most recent attendance figures for each. 7. Overall, was Euro Disneyland a good idea for France and for Disney? Why or why not? Give in-depth reasoning for your answer. 8. Research and describe changes at Disneyland Paris since the case study was written. Specifically, describe changes to the park, updated attendance figures (for 2014, 2015, 2016 and 2017) and a brief overview of their current financial status and any future expansion plans. The Walt Disney Company chose Paris, France, as the site of Euro Disneyland for many reasons. One was the success of Tokyo Disneyland. On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park. To find a site for their fourth theme park, the i Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise. From 1983 through 1987 the company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its climate, France had a larger population and a spectacular transportation network (Scimone, 1989). The Walt Disney Company executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney executives admit that ...without the cold-climate (Tokyo) Disneyland success, they would never have picked Paris, which has the same or worse weather than Tokyo" (Anything but a 'Mickey Mouse', 1989). Thus, Paris was selected to be the site of their fourth theme park. The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called Marne-la-Vallée." In fact, the land is one-fifth the size of Paris itself (Scimone, 1991). When the French government used its right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for approximately $7,500 an acre. Marne-la-Vallée is located in an ideal geographic location since it is 20 miles (32 kilometers) due cast of the center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de- Gaulle. The French railway regional express network connects Marne-la-Vallée with the Paris metro. system, and major highways are nearby. In fact, of the more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car. With the scheduled opening (which took place May 1994) of direct rail links to Great Britain via the English Channel there were countless additional potential guests. Thus, due to its transportation availability, Paris offers Euro Disneyland a wealth of potential guests and employees. The Walt Disney Company signed a contract with the French national, regional and local governments, which promised Disney: favorable loan terms; that the rapid transit railway system would be extended to the theme park from Paris; that two interchanges would be built to link Euro Disneyland with a main highway; and that a special station for high-speed trains would be constructed at the park. The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members (employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property, and the remainder in recreation and support facilities. The area was suffering high unemployment at the time and the Walt Disney Company executives believed the economic benefits to the region would be great since they would employee so many local citizens and since tourism generates revenue without requiring such costly social services as schools and hospitals. Euro Disneyland is a public company with 51% of equity owned by EC individuals and institutions (Anything but a 'Mickey Mouse', 1989). The other 49% of the shares are owned by the Walt Disney Company who maintains management control of the company (Grey, 1989). Opening Day, April 12, 1992 Despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland opened its doors to the public with essentially the same attractions as in the other Disney theme parks in California, Florida, and Japan. Euro Disneyland executives hoped to attract 11 million guests a year, more than twice the number that visit the Eiffel Tower. Half of the guests were expected to be French. Unfortunately, the dream of succeeding did not become a reality and eventually Euro Disneyland brought in new management and made other changes in order to save Euro Disneyland. THE PROBLEMS Euro Disneyland's target of 11 million guests in the first year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million loss for the fiscal year that ended in September 30, 1993, and by December 31, 1993, Euro Disneyland had amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars. Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by some on both sides." He was replaced in 1993 by Frenchman Philippe Bourguignon. European Recession Euro Disneyland executives and advisors failed to see the signs of the approaching European recession. "Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives) didn't realize a major recession was coming". As the recession began to develop the French real-estate market tumbled, thus, destroying Euro Disneyland's hopes of selling their assets and receiving revenues. In addition, the recession caused French and European disposable incomes to shrink, causing families to think twice about taking an expensive trip to Euro Disneyland. Furthermore, Euro Disneyland did not realize the magnitude of the impending recession and when given numerous opportunities to sign partners who would share the risk or buy the existing hotels, Disney refused. Euro Disneyland did not want to give up any of the potential revenues once the recession was over. Real Estate Market The Walt Disney Company executives involved in the development of Euro Disneyland were determined they would not repeat two mistakes which they had made in past ventures. One mistake was allowing other companies to build lucrative hotels surrounding their theme park, as happened at Walt Disney World in Orlando, Florida, where the Walt Disney Company owns only 14% of all hotels. The other mistake was in letting another company own a Disney theme park, as in Tokyo, Japan, where Disney just collects royalties from an immensely profitable attraction. Thus, in France the Walt Disney Company bought far more land then it needed in order to eventually build 700,000 square meters of office space, a 750,000 square meter corporate park, 2,500 individual homes, a 95,000 square meter shopping mall, 2,400 apartments and 3,000 time share apartments. Euro Disneyland planned to develop the land and then sell it to prospective buyers, making a large profit. In addition, this would allow Euro Disneyland stringent control over designing and building of future. areas within the resort and then the ability to sell off the completed commercial properties in due course and at a large profit. Unfortunately, this revenue generating plan never really "got off the ground" due to the collapse of the real-estate market which, in turn, caused the demise of the planned development around the theme park. Thus, Euro Disneyland did not receive revenue from property development as had been anticipated. Operational Errors There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its American experience the Walt Disney Company thought Monday would be the light day for guests and Friday a heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the high season can be 10 times the number in the low season" Furthermore, to add to the operation problem is the difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members feel extremely irritated by and have a very difficult time accepting the inflexible scheduling. Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers. A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels. Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen. Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and then checked out early the next morning before heading back to the park. Since there were so many guests checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease the amount of time the guests stood in line. Labor Costs Before the opening of Euro Disneyland executives had estimated labor cost would be 13% of their revenues. This was another area where the executives were wrong in their assumptions. In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%... Staffing and Training Euro Disneyland recruited through job fairs, a popular European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's requirements for employment are so high, for every 10 candidates interviewed only one was hired. To complicate the hiring process, there were language requirements since the official languages of Euro Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that the park would draw guests from all over Europe, The success to Disney parks' repeat guest visits is the employee-customer rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality and teaching 12,000 European employees to smile the "Disney smile" all day. Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13 page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a well-scrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they are not American and they believe this requirement has stripped them of their "individualism". In December 1994 Euro Disneyland was taken to French court contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to patch up the rocky labor relations at the theme park. Cultural Issues An example of cultural issues was Walt Disney Company's policy of serving no alcohol in its parks in California, Florida, and Tokyo which it extended to France. This caused astonishment and rebellion in France where a glass of wine for lunch is a given. After much consideration, in May 1993, the Walt Disney Company changed its policy and allowed wine and beer in the Euro Disneyland theme park. Another example is the Walt Disney Company's belief that it understood European breakfast norms. Disney was told Europeans did not eat sit-down breakfasts. This resulted in Disney downsizing their restaurants before Euro Disneyland opened. Once it opened the restaurants were bombarded with breakfast eaters. In fact, they were trying to serve 2,500 breakfasts in a 350-seat restaurant at some of the hotels." Further, guests wanted bacon and eggs rather than just coffee and croissants. Disney reacted quickly with prepackaged breakfasts delivered to rooms and satellite locations. In much the same vein, the Walt Disney Company had difficulty realizing that the Europeans were accustomed to eat at a set time every day. Where Americans are content to wander around the parks with lunch in their hands, a large majority of the European guests would converge on the restaurants at 12:30 p.m. expecting to be seated for a leisurely lunch. This caused the lines to be very long. To complicate matters further, once the Europeans reached the front of the line they were told they could not have wine or beer with their lunch. Thus, the Europeans did not have a positive "Disney experience" while eating their meals. In addition, it was difficult for Euro Disneyland's managers to staff for these one or two hour "rush hours." A final example of a cultural error is the Europeans approach to vacation time. The Europeans are reluctant to take their children from school for a vacation in mid-session whereas Americans do it frequently. Also, the Europeans prefer a few longer holidays rather than several short breaks. The Walt Disney Company was convinced that it would be able to "Americanize" the European habits. Unfortunately for the Walt Disney Company, this was not the case. Per-capita Spending There also were miscalculations made by the executives regarding the per-capita spending of the guests at Euro Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact, spending was about 12% less than predicted. European guests came to the theme park paying the steep entry fees ($43 for adults and $30 for children), but spent less per-capita on food and merchandise than Americans. This may be due in part to the fact that many guests spend as much time on the rides as possible because of the high admission price (30% more than Disney World in Florida) and less time shopping for souvenirs. American and Japanese consumers do not leave the theme parks empty handed, whereas Europeans do. This resulted in lower- than-expected revenue by Euro Disneyland. Interest Rates The total construction cost of Euro Disneyland was $4 billion. Disney put in just $170 million in equity capital, while public shareholders, who own 51% of the shares put in $1 billion in equity capital. Thus, the remaining $2.9 billion was borrowed, at high rates running as much as 11%. "Thus, from the start, the project was highly leveraged," there was an additional necessity to borrow more money. This second set of loans increased the amount of money owed handcuffed Euro Disney. With high interest rates, large loans, and lower than expected revenue Euro Disneyland was in financial trouble. Marketing Euro Disneyland was marketed with the assumption that it was "a complete vacation destination that offers enough to keep a family happily occupied for a week." Instead of marketing the park in the American-style appeal of "...bigness and extravagance", Euro Disneyland should have concentrated on the emotional aspect, marketing that guests would have a unique, extraordinary family experience they would never forget. The American-style bigness approach insulted Europeans. Euro Disneyland made a huge mistake not considering the views of the French when developing their marketing strategies. The Walt Disney Company agrees there may have been marketing mistakes, but it blames the mistakes to lack of data on how Europeans would react to the "Disney Magic." Additionally, communication with the media has been very poor by the Euro Disneyland executives. Those managers who dealt with the media would not return phone calls, much less answer questions. Realizing they made a huge error, it has become Euro Disneyland executives' goal to improve their reputation with the media. Convention Business According to Turner & Coleman (1994), one of the few pieces of good news about Euro Disneyland is that its convention business exceeded expectations from the beginning. In fact, convention space at Euro Disneyland's themed New York Hotel, located adjacent to the park, was overbooked and more capacity was needed. Euro Disneyland did not anticipate the success of its convention facilities. Had it done so, it could have increased its conference groups and revenue. Euro Disneyland frantically tried to increase its convention facilities. THE RESOLUTIONS Disney's Financial Rescue Package On March 14, 1994, Walt Disney Company developed a restructuring "rescue" plan which would decrease the amount of Euro Disneyland's debt and increase profit. Name Change Euro Disneyland unofficially changed its name in September 1994 to Disneyland Paris in order to adapt to "... European tastes and turn around continued losses and reported slumping attendance". Through the emphasis on the name recognization of Paris, Disney executives hoped to capitalize on its proximity to the French capital. It was hoped that this would result in increased attendance and revenues. Downsizing and Price Breaks In order for Euro Disneyland to hold down costs and increase revenues it has cut 950 administrative posts, or 8.6% of its overall work force In addition, responding to complaints regarding high entrance fees and hotel prices, Euro Disneyland has broken a Walt Disney Company taboo by introducing cut-rate entry and room rates for the off-season Another first is that it is offering a lower-priced 'After 5' evening entrance ticket. Marketing Changes The Walt Disney Company is changing its marketing philosophy in order to expand its efforts to countries such as Israel and Africa. In addition, rather than market Euro Disneyland as vacation destination for a period of time, the Walt Disney Company decided to market it as one of many stops on a month-long European itinerary. Labor Disputes To end numerous labor disputes over long-hours and poor pay, Euro Disneyland has "...shifted away from imported American working practices and towards a more French approach." This new approach set a maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the French method which allowed French citizens the ability to recognize their standard French job classifications. As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force. CONCLUSION Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. Because the Walt Disney Company executives were determined to adhere to American philosophies, they did not thoroughly investigate all aspects of the European environment. This failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their American dream theme park on foreign soil with little if any regard for the practical reality of the physical, financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's "...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure itself, which depended on a highly optimistic financial scenario with little room for glitches." These massive oversights were contributing factors to the problems faced at Euro Disneyland. 1. Explain the reasons why Disney executives were so confident that Euro Disney (Disneyland Paris) would be a great success. 2. Based on your understanding of the case, define the most important target market for Euro/Paris Disney - use all of the segmentation variables. 3. What are some of the main cultural differences between the US and France (list and explain at least 4)? 4. List and explain four specific key issues that created problems in the first few years after the opening of the park. Which were of the most concern? 5. What specifically could Disney have done differently to make the construction, staffing, and opening of Euro Disneyland go smoother? - Explain 5 major changes that would have made a significant difference. 6. What other parks does Disney have world-wide? List, give the year established, and give the most recent attendance figures for each. 7. Overall, was Euro Disneyland a good idea for France and for Disney? Why or why not? Give in-depth reasoning for your answer. 8. Research and describe changes at Disneyland Paris since the case study was written. Specifically, describe changes to the park, updated attendance figures (for 2014, 2015, 2016 and 2017) and a brief overview of their current financial status and any future expansion plans. The Walt Disney Company chose Paris, France, as the site of Euro Disneyland for many reasons. One was the success of Tokyo Disneyland. On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park. To find a site for their fourth theme park, the i Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise. From 1983 through 1987 the company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its climate, France had a larger population and a spectacular transportation network (Scimone, 1989). The Walt Disney Company executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney executives admit that ...without the cold-climate (Tokyo) Disneyland success, they would never have picked Paris, which has the same or worse weather than Tokyo" (Anything but a 'Mickey Mouse', 1989). Thus, Paris was selected to be the site of their fourth theme park. The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called Marne-la-Vallée." In fact, the land is one-fifth the size of Paris itself (Scimone, 1991). When the French government used its right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for approximately $7,500 an acre. Marne-la-Vallée is located in an ideal geographic location since it is 20 miles (32 kilometers) due cast of the center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de- Gaulle. The French railway regional express network connects Marne-la-Vallée with the Paris metro. system, and major highways are nearby. In fact, of the more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car. With the scheduled opening (which took place May 1994) of direct rail links to Great Britain via the English Channel there were countless additional potential guests. Thus, due to its transportation availability, Paris offers Euro Disneyland a wealth of potential guests and employees. The Walt Disney Company signed a contract with the French national, regional and local governments, which promised Disney: favorable loan terms; that the rapid transit railway system would be extended to the theme park from Paris; that two interchanges would be built to link Euro Disneyland with a main highway; and that a special station for high-speed trains would be constructed at the park. The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members (employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property, and the remainder in recreation and support facilities. The area was suffering high unemployment at the time and the Walt Disney Company executives believed the economic benefits to the region would be great since they would employee so many local citizens and since tourism generates revenue without requiring such costly social services as schools and hospitals. Euro Disneyland is a public company with 51% of equity owned by EC individuals and institutions (Anything but a 'Mickey Mouse', 1989). The other 49% of the shares are owned by the Walt Disney Company who maintains management control of the company (Grey, 1989). Opening Day, April 12, 1992 Despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland opened its doors to the public with essentially the same attractions as in the other Disney theme parks in California, Florida, and Japan. Euro Disneyland executives hoped to attract 11 million guests a year, more than twice the number that visit the Eiffel Tower. Half of the guests were expected to be French. Unfortunately, the dream of succeeding did not become a reality and eventually Euro Disneyland brought in new management and made other changes in order to save Euro Disneyland. THE PROBLEMS Euro Disneyland's target of 11 million guests in the first year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million loss for the fiscal year that ended in September 30, 1993, and by December 31, 1993, Euro Disneyland had amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars. Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by some on both sides." He was replaced in 1993 by Frenchman Philippe Bourguignon. European Recession Euro Disneyland executives and advisors failed to see the signs of the approaching European recession. "Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives) didn't realize a major recession was coming". As the recession began to develop the French real-estate market tumbled, thus, destroying Euro Disneyland's hopes of selling their assets and receiving revenues. In addition, the recession caused French and European disposable incomes to shrink, causing families to think twice about taking an expensive trip to Euro Disneyland. Furthermore, Euro Disneyland did not realize the magnitude of the impending recession and when given numerous opportunities to sign partners who would share the risk or buy the existing hotels, Disney refused. Euro Disneyland did not want to give up any of the potential revenues once the recession was over. Real Estate Market The Walt Disney Company executives involved in the development of Euro Disneyland were determined they would not repeat two mistakes which they had made in past ventures. One mistake was allowing other companies to build lucrative hotels surrounding their theme park, as happened at Walt Disney World in Orlando, Florida, where the Walt Disney Company owns only 14% of all hotels. The other mistake was in letting another company own a Disney theme park, as in Tokyo, Japan, where Disney just collects royalties from an immensely profitable attraction. Thus, in France the Walt Disney Company bought far more land then it needed in order to eventually build 700,000 square meters of office space, a 750,000 square meter corporate park, 2,500 individual homes, a 95,000 square meter shopping mall, 2,400 apartments and 3,000 time share apartments. Euro Disneyland planned to develop the land and then sell it to prospective buyers, making a large profit. In addition, this would allow Euro Disneyland stringent control over designing and building of future. areas within the resort and then the ability to sell off the completed commercial properties in due course and at a large profit. Unfortunately, this revenue generating plan never really "got off the ground" due to the collapse of the real-estate market which, in turn, caused the demise of the planned development around the theme park. Thus, Euro Disneyland did not receive revenue from property development as had been anticipated. Operational Errors There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its American experience the Walt Disney Company thought Monday would be the light day for guests and Friday a heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the high season can be 10 times the number in the low season" Furthermore, to add to the operation problem is the difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members feel extremely irritated by and have a very difficult time accepting the inflexible scheduling. Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers. A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels. Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen. Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and then checked out early the next morning before heading back to the park. Since there were so many guests checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease the amount of time the guests stood in line. Labor Costs Before the opening of Euro Disneyland executives had estimated labor cost would be 13% of their revenues. This was another area where the executives were wrong in their assumptions. In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%... Staffing and Training Euro Disneyland recruited through job fairs, a popular European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's requirements for employment are so high, for every 10 candidates interviewed only one was hired. To complicate the hiring process, there were language requirements since the official languages of Euro Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that the park would draw guests from all over Europe, The success to Disney parks' repeat guest visits is the employee-customer rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality and teaching 12,000 European employees to smile the "Disney smile" all day. Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13 page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a well-scrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they are not American and they believe this requirement has stripped them of their "individualism". In December 1994 Euro Disneyland was taken to French court contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to patch up the rocky labor relations at the theme park. Cultural Issues An example of cultural issues was Walt Disney Company's policy of serving no alcohol in its parks in California, Florida, and Tokyo which it extended to France. This caused astonishment and rebellion in France where a glass of wine for lunch is a given. After much consideration, in May 1993, the Walt Disney Company changed its policy and allowed wine and beer in the Euro Disneyland theme park. Another example is the Walt Disney Company's belief that it understood European breakfast norms. Disney was told Europeans did not eat sit-down breakfasts. This resulted in Disney downsizing their restaurants before Euro Disneyland opened. Once it opened the restaurants were bombarded with breakfast eaters. In fact, they were trying to serve 2,500 breakfasts in a 350-seat restaurant at some of the hotels." Further, guests wanted bacon and eggs rather than just coffee and croissants. Disney reacted quickly with prepackaged breakfasts delivered to rooms and satellite locations. In much the same vein, the Walt Disney Company had difficulty realizing that the Europeans were accustomed to eat at a set time every day. Where Americans are content to wander around the parks with lunch in their hands, a large majority of the European guests would converge on the restaurants at 12:30 p.m. expecting to be seated for a leisurely lunch. This caused the lines to be very long. To complicate matters further, once the Europeans reached the front of the line they were told they could not have wine or beer with their lunch. Thus, the Europeans did not have a positive "Disney experience" while eating their meals. In addition, it was difficult for Euro Disneyland's managers to staff for these one or two hour "rush hours." A final example of a cultural error is the Europeans approach to vacation time. The Europeans are reluctant to take their children from school for a vacation in mid-session whereas Americans do it frequently. Also, the Europeans prefer a few longer holidays rather than several short breaks. The Walt Disney Company was convinced that it would be able to "Americanize" the European habits. Unfortunately for the Walt Disney Company, this was not the case. Per-capita Spending There also were miscalculations made by the executives regarding the per-capita spending of the guests at Euro Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact, spending was about 12% less than predicted. European guests came to the theme park paying the steep entry fees ($43 for adults and $30 for children), but spent less per-capita on food and merchandise than Americans. This may be due in part to the fact that many guests spend as much time on the rides as possible because of the high admission price (30% more than Disney World in Florida) and less time shopping for souvenirs. American and Japanese consumers do not leave the theme parks empty handed, whereas Europeans do. This resulted in lower- than-expected revenue by Euro Disneyland. Interest Rates The total construction cost of Euro Disneyland was $4 billion. Disney put in just $170 million in equity capital, while public shareholders, who own 51% of the shares put in $1 billion in equity capital. Thus, the remaining $2.9 billion was borrowed, at high rates running as much as 11%. "Thus, from the start, the project was highly leveraged," there was an additional necessity to borrow more money. This second set of loans increased the amount of money owed handcuffed Euro Disney. With high interest rates, large loans, and lower than expected revenue Euro Disneyland was in financial trouble. Marketing Euro Disneyland was marketed with the assumption that it was "a complete vacation destination that offers enough to keep a family happily occupied for a week." Instead of marketing the park in the American-style appeal of "...bigness and extravagance", Euro Disneyland should have concentrated on the emotional aspect, marketing that guests would have a unique, extraordinary family experience they would never forget. The American-style bigness approach insulted Europeans. Euro Disneyland made a huge mistake not considering the views of the French when developing their marketing strategies. The Walt Disney Company agrees there may have been marketing mistakes, but it blames the mistakes to lack of data on how Europeans would react to the "Disney Magic." Additionally, communication with the media has been very poor by the Euro Disneyland executives. Those managers who dealt with the media would not return phone calls, much less answer questions. Realizing they made a huge error, it has become Euro Disneyland executives' goal to improve their reputation with the media. Convention Business According to Turner & Coleman (1994), one of the few pieces of good news about Euro Disneyland is that its convention business exceeded expectations from the beginning. In fact, convention space at Euro Disneyland's themed New York Hotel, located adjacent to the park, was overbooked and more capacity was needed. Euro Disneyland did not anticipate the success of its convention facilities. Had it done so, it could have increased its conference groups and revenue. Euro Disneyland frantically tried to increase its convention facilities. THE RESOLUTIONS Disney's Financial Rescue Package On March 14, 1994, Walt Disney Company developed a restructuring "rescue" plan which would decrease the amount of Euro Disneyland's debt and increase profit. Name Change Euro Disneyland unofficially changed its name in September 1994 to Disneyland Paris in order to adapt to "... European tastes and turn around continued losses and reported slumping attendance". Through the emphasis on the name recognization of Paris, Disney executives hoped to capitalize on its proximity to the French capital. It was hoped that this would result in increased attendance and revenues. Downsizing and Price Breaks In order for Euro Disneyland to hold down costs and increase revenues it has cut 950 administrative posts, or 8.6% of its overall work force In addition, responding to complaints regarding high entrance fees and hotel prices, Euro Disneyland has broken a Walt Disney Company taboo by introducing cut-rate entry and room rates for the off-season Another first is that it is offering a lower-priced 'After 5' evening entrance ticket. Marketing Changes The Walt Disney Company is changing its marketing philosophy in order to expand its efforts to countries such as Israel and Africa. In addition, rather than market Euro Disneyland as vacation destination for a period of time, the Walt Disney Company decided to market it as one of many stops on a month-long European itinerary. Labor Disputes To end numerous labor disputes over long-hours and poor pay, Euro Disneyland has "...shifted away from imported American working practices and towards a more French approach." This new approach set a maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the French method which allowed French citizens the ability to recognize their standard French job classifications. As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force. CONCLUSION Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. Because the Walt Disney Company executives were determined to adhere to American philosophies, they did not thoroughly investigate all aspects of the European environment. This failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their American dream theme park on foreign soil with little if any regard for the practical reality of the physical, financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's "...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure itself, which depended on a highly optimistic financial scenario with little room for glitches." These massive oversights were contributing factors to the problems faced at Euro Disneyland. 1. Explain the reasons why Disney executives were so confident that Euro Disney (Disneyland Paris) would be a great success. 2. Based on your understanding of the case, define the most important target market for Euro/Paris Disney - use all of the segmentation variables. 3. What are some of the main cultural differences between the US and France (list and explain at least 4)? 4. List and explain four specific key issues that created problems in the first few years after the opening of the park. Which were of the most concern? 5. What specifically could Disney have done differently to make the construction, staffing, and opening of Euro Disneyland go smoother? - Explain 5 major changes that would have made a significant difference. 6. What other parks does Disney have world-wide? List, give the year established, and give the most recent attendance figures for each. 7. Overall, was Euro Disneyland a good idea for France and for Disney? Why or why not? Give in-depth reasoning for your answer. 8. Research and describe changes at Disneyland Paris since the case study was written. Specifically, describe changes to the park, updated attendance figures (for 2014, 2015, 2016 and 2017) and a brief overview of their current financial status and any future expansion plans. The Walt Disney Company chose Paris, France, as the site of Euro Disneyland for many reasons. One was the success of Tokyo Disneyland. On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park. To find a site for their fourth theme park, the Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise. From 1983 through 1987 the company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its climate, France had a larger population and a spectacular transportation network (Scimone, 1989). The Walt Disney Company executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney executives admit that ...without the cold-climate (Tokyo) Disneyland success, they would never have picked Paris, which has the same or worse weather than Tokyo" (Anything but a 'Mickey Mouse', 1989). Thus, Paris was selected to be the site of their fourth theme park. The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called Marne-la-Vallée." In fact, the land is one-fifth the size of Paris itself (Scimone, 1991). When the French government used its right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for approximately $7,500 an acre. Marne-la-Vallée is located in an ideal geographic location since it is 20 miles (32 kilometers) due cast of the center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de- Gaulle. The French railway regional express network connects Marne-la-Vallée with the Paris metro. system, and major highways are nearby. In fact, of the more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car. With the scheduled opening (which took place May 1994) of direct rail links to Great Britain via the English Channel there were countless additional potential guests. Thus, due to its transportation availability, Paris offers Euro Disneyland a wealth of potential guests and employees. The Walt Disney Company signed a contract with the French national, regional and local governments, which promised Disney: favorable loan terms; that the rapid transit railway system would be extended to the theme park from Paris; that two interchanges would be built to link Euro Disneyland with a main highway; and that a special station for high-speed trains would be constructed at the park. The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members (employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property, and the remainder in recreation and support facilities. The area was suffering high unemployment at the time and the Walt Disney Company executives believed the economic benefits to the region would be great since they would employee so many local citizens and since tourism generates revenue without requiring such costly social services as schools and hospitals. Euro Disneyland is a public company with 51% of equity owned by EC individuals and institutions (Anything but a 'Mickey Mouse', 1989). The other 49% of the shares are owned by the Walt Disney Company who maintains management control of the company (Grey, 1989). Opening Day, April 12, 1992 Despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland opened its doors to the public with essentially the same attractions as in the other Disney theme parks in California, Florida, and Japan. Euro Disneyland executives hoped to attract 11 million guests a year, more than twice the number that visit the Eiffel Tower. Half of the guests were expected to be French. Unfortunately, the dream of succeeding did not become a reality and eventually Euro Disneyland brought in new management and made other changes in order to save Euro Disneyland. THE PROBLEMS Euro Disneyland's target of 11 million guests in the first year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million loss for the fiscal year that ended in September 30, 1993, and by December 31, 1993, Euro Disneyland had amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars. Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by some on both sides." He was replaced in 1993 by Frenchman Philippe Bourguignon. European Recession Euro Disneyland executives and advisors failed to see the signs of the approaching European recession. "Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives) didn't realize a major recession was coming". As the recession began to develop the French real-estate market tumbled, thus, destroying Euro Disneyland's hopes of selling their assets and receiving revenues. In addition, the recession caused French and European disposable incomes to shrink, causing families to think twice about taking an expensive trip to Euro Disneyland. Furthermore, Euro Disneyland did not realize the magnitude of the impending recession and when given numerous opportunities to sign partners who would share the risk or buy the existing hotels, Disney refused. Euro Disneyland did not want to give up any of the potential revenues once the recession was over. Real Estate Market The Walt Disney Company executives involved in the development of Euro Disneyland were determined they would not repeat two mistakes which they had made in past ventures. One mistake was allowing other companies to build lucrative hotels surrounding their theme park, as happened at Walt Disney World in Orlando, Florida, where the Walt Disney Company owns only 14% of all hotels. The other mistake was in letting another company own a Disney theme park, as in Tokyo, Japan, where Disney just collects royalties from an immensely profitable attraction. Thus, in France the Walt Disney Company bought far more land then it needed in order to eventually build 700,000 square meters of office space, a 750,000 square meter corporate park, 2,500 individual homes, a 95,000 square meter shopping mall, 2,400 apartments and 3,000 time share apartments. Euro Disneyland planned to develop the land and then sell it to prospective buyers, making a large profit. In addition, this would allow Euro Disneyland stringent control over designing and building of future. areas within the resort and then the ability to sell off the completed commercial properties in due course and at a large profit. Unfortunately, this revenue generating plan never really "got off the ground" due to the collapse of the real-estate market which, in turn, caused the demise of the planned development around the theme park. Thus, Euro Disneyland did not receive revenue from property development as had been anticipated. Operational Errors There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its American experience the Walt Disney Company thought Monday would be the light day for guests and Friday a heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the high season can be 10 times the number in the low season" Furthermore, to add to the operation problem is the difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members feel extremely irritated by and have a very difficult time accepting the inflexible scheduling. Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers. A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels. Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen. Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and then checked out early the next morning before heading back to the park. Since there were so many guests checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease the amount of time the guests stood in line. Labor Costs Before the opening of Euro Disneyland executives had estimated labor cost would be 13% of their revenues. This was another area where the executives were wrong in their assumptions. In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%... Staffing and Training Euro Disneyland recruited through job fairs, a popular European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's requirements for employment are so high, for every 10 candidates interviewed only one was hired. To complicate the hiring process, there were language requirements since the official languages of Euro Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that the park would draw guests from all over Europe, The success to Disney parks' repeat guest visits is the employee-customer rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality and teaching 12,000 European employees to smile the "Disney smile" all day. Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13 page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a well-scrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they are not American and they believe this requirement has stripped them of their "individualism". In December 1994 Euro Disneyland was taken to French court contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to patch up the rocky labor relations at the theme park. Cultural Issues An example of cultural issues was Walt Disney Company's policy of serving no alcohol in its parks in California, Florida, and Tokyo which it extended to France. This caused astonishment and rebellion in France where a glass of wine for lunch is a given. After much consideration, in May 1993, the Walt Disney Company changed its policy and allowed wine and beer in the Euro Disneyland theme park. Another example is the Walt Disney Company's belief that it understood European breakfast norms. Disney was told Europeans did not eat sit-down breakfasts. This resulted in Disney downsizing their restaurants before Euro Disneyland opened. Once it opened the restaurants were bombarded with breakfast eaters. In fact, they were trying to serve 2,500 breakfasts in a 350-seat restaurant at some of the hotels." Further, guests wanted bacon and eggs rather than just coffee and croissants. Disney reacted quickly with prepackaged breakfasts delivered to rooms and satellite locations. In much the same vein, the Walt Disney Company had difficulty realizing that the Europeans were accustomed to eat at a set time every day. Where Americans are content to wander around the parks with lunch in their hands, a large majority of the European guests would converge on the restaurants at 12:30 p.m. expecting to be seated for a leisurely lunch. This caused the lines to be very long. To complicate matters further, once the Europeans reached the front of the line they were told they could not have wine or beer with their lunch. Thus, the Europeans did not have a positive "Disney experience" while eating their meals. In addition, it was difficult for Euro Disneyland's managers to staff for these one or two hour "rush hours." A final example of a cultural error is the Europeans approach to vacation time. The Europeans are reluctant to take their children from school for a vacation in mid-session whereas Americans do it frequently. Also, the Europeans prefer a few longer holidays rather than several short breaks. The Walt Disney Company was convinced that it would be able to "Americanize" the European habits. Unfortunately for the Walt Disney Company, this was not the case. Per-capita Spending There also were miscalculations made by the executives regarding the per-capita spending of the guests at Euro Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact, spending was about 12% less than predicted. European guests came to the theme park paying the steep entry fees ($43 for adults and $30 for children), but spent less per-capita on food and merchandise than Americans. This may be due in part to the fact that many guests spend as much time on the rides as possible because of the high admission price (30% more than Disney World in Florida) and less time shopping for souvenirs. American and Japanese consumers do not leave the theme parks empty handed, whereas Europeans do. This resulted in lower- than-expected revenue by Euro Disneyland. Interest Rates The total construction cost of Euro Disneyland was $4 billion. Disney put in just $170 million in equity capital, while public shareholders, who own 51% of the shares put in $1 billion in equity capital. Thus, the remaining $2.9 billion was borrowed, at high rates running as much as 11%. "Thus, from the start, the project was highly leveraged," there was an additional necessity to borrow more money. This second set of loans increased the amount of money owed handcuffed Euro Disney. With high interest rates, large loans, and lower than expected revenue Euro Disneyland was in financial trouble. Marketing Euro Disneyland was marketed with the assumption that it was "a complete vacation destination that offers enough to keep a family happily occupied for a week." Instead of marketing the park in the American-style appeal of "...bigness and extravagance", Euro Disneyland should have concentrated on the emotional aspect, marketing that guests would have a unique, extraordinary family experience they would never forget. The American-style bigness approach insulted Europeans. Euro Disneyland made a huge mistake not considering the views of the French when developing their marketing strategies. The Walt Disney Company agrees there may have been marketing mistakes, but it blames the mistakes to lack of data on how Europeans would react to the "Disney Magic." Additionally, communication with the media has been very poor by the Euro Disneyland executives. Those managers who dealt with the media would not return phone calls, much less answer questions. Realizing they made a huge error, it has become Euro Disneyland executives' goal to improve their reputation with the media. Convention Business According to Turner & Coleman (1994), one of the few pieces of good news about Euro Disneyland is that its convention business exceeded expectations from the beginning. In fact, convention space at Euro Disneyland's themed New York Hotel, located adjacent to the park, was overbooked and more capacity was needed. Euro Disneyland did not anticipate the success of its convention facilities. Had it done so, it could have increased its conference groups and revenue. Euro Disneyland frantically tried to increase its convention facilities. THE RESOLUTIONS Disney's Financial Rescue Package On March 14, 1994, Walt Disney Company developed a restructuring "rescue" plan which would decrease the amount of Euro Disneyland's debt and increase profit. Name Change Euro Disneyland unofficially changed its name in September 1994 to Disneyland Paris in order to adapt to "... European tastes and turn around continued losses and reported slumping attendance". Through the emphasis on the name recognization of Paris, Disney executives hoped to capitalize on its proximity to the French capital. It was hoped that this would result in increased attendance and revenues. Downsizing and Price Breaks In order for Euro Disneyland to hold down costs and increase revenues it has cut 950 administrative posts, or 8.6% of its overall work force In addition, responding to complaints regarding high entrance fees and hotel prices, Euro Disneyland has broken a Walt Disney Company taboo by introducing cut-rate entry and room rates for the off-season Another first is that it is offering a lower-priced 'After 5' evening entrance ticket. Marketing Changes The Walt Disney Company is changing its marketing philosophy in order to expand its efforts to countries such as Israel and Africa. In addition, rather than market Euro Disneyland as vacation destination for a period of time, the Walt Disney Company decided to market it as one of many stops on a month-long European itinerary. Labor Disputes To end numerous labor disputes over long-hours and poor pay, Euro Disneyland has "...shifted away from imported American working practices and towards a more French approach." This new approach set a maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the French method which allowed French citizens the ability to recognize their standard French job classifications. As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force. CONCLUSION Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. Because the Walt Disney Company executives were determined to adhere to American philosophies, they did not thoroughly investigate all aspects of the European environment. This failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their American dream theme park on foreign soil with little if any regard for the practical reality of the physical, financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's "...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure itself, which depended on a highly optimistic financial scenario with little room for glitches." These massive oversights were contributing factors to the problems faced at Euro Disneyland. 1. Explain the reasons why Disney executives were so confident that Euro Disney (Disneyland Paris) would be a great success. 2. Based on your understanding of the case, define the most important target market for Euro/Paris Disney - use all of the segmentation variables. 3. What are some of the main cultural differences between the US and France (list and explain at least 4)? 4. List and explain four specific key issues that created problems in the first few years after the opening of the park. Which were of the most concern? 5. What specifically could Disney have done differently to make the construction, staffing, and opening of Euro Disneyland go smoother? - Explain 5 major changes that would have made a significant difference. 6. What other parks does Disney have world-wide? List, give the year established, and give the most recent attendance figures for each. 7. Overall, was Euro Disneyland a good idea for France and for Disney? Why or why not? Give in-depth reasoning for your answer. 8. Research and describe changes at Disneyland Paris since the case study was written. Specifically, describe changes to the park, updated attendance figures (for 2014, 2015, 2016 and 2017) and a brief overview of their current financial status and any future expansion plans. The Walt Disney Company chose Paris, France, as the site of Euro Disneyland for many reasons. One was the success of Tokyo Disneyland. On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park. To find a site for their fourth theme park, the i Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise. From 1983 through 1987 the company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its climate, France had a larger population and a spectacular transportation network (Scimone, 1989). The Walt Disney Company executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney executives admit that ...without the cold-climate (Tokyo) Disneyland success, they would never have picked Paris, which has the same or worse weather than Tokyo" (Anything but a 'Mickey Mouse', 1989). Thus, Paris was selected to be the site of their fourth theme park. The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called Marne-la-Vallée." In fact, the land is one-fifth the size of Paris itself (Scimone, 1991). When the French government used its right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for approximately $7,500 an acre. Marne-la-Vallée is located in an ideal geographic location since it is 20 miles (32 kilometers) due cast of the center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de- Gaulle. The French railway regional express network connects Marne-la-Vallée with the Paris metro. system, and major highways are nearby. In fact, of the more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car. With the scheduled opening (which took place May 1994) of direct rail links to Great Britain via the English Channel there were countless additional potential guests. Thus, due to its transportation availability, Paris offers Euro Disneyland a wealth of potential guests and employees. The Walt Disney Company signed a contract with the French national, regional and local governments, which promised Disney: favorable loan terms; that the rapid transit railway system would be extended to the theme park from Paris; that two interchanges would be built to link Euro Disneyland with a main highway; and that a special station for high-speed trains would be constructed at the park. The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members (employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property, and the remainder in recreation and support facilities. The area was suffering high unemployment at the time and the Walt Disney Company executives believed the economic benefits to the region would be great since they would employee so many local citizens and since tourism generates revenue without requiring such costly social services as schools and hospitals. Euro Disneyland is a public company with 51% of equity owned by EC individuals and institutions (Anything but a 'Mickey Mouse', 1989). The other 49% of the shares are owned by the Walt Disney Company who maintains management control of the company (Grey, 1989). Opening Day, April 12, 1992 Despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland opened its doors to the public with essentially the same attractions as in the other Disney theme parks in California, Florida, and Japan. Euro Disneyland executives hoped to attract 11 million guests a year, more than twice the number that visit the Eiffel Tower. Half of the guests were expected to be French. Unfortunately, the dream of succeeding did not become a reality and eventually Euro Disneyland brought in new management and made other changes in order to save Euro Disneyland. THE PROBLEMS Euro Disneyland's target of 11 million guests in the first year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million loss for the fiscal year that ended in September 30, 1993, and by December 31, 1993, Euro Disneyland had amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars. Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by some on both sides." He was replaced in 1993 by Frenchman Philippe Bourguignon. European Recession Euro Disneyland executives and advisors failed to see the signs of the approaching European recession. "Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives) didn't realize a major recession was coming". As the recession began to develop the French real-estate market tumbled, thus, destroying Euro Disneyland's hopes of selling their assets and receiving revenues. In addition, the recession caused French and European disposable incomes to shrink, causing families to think twice about taking an expensive trip to Euro Disneyland. Furthermore, Euro Disneyland did not realize the magnitude of the impending recession and when given numerous opportunities to sign partners who would share the risk or buy the existing hotels, Disney refused. Euro Disneyland did not want to give up any of the potential revenues once the recession was over. Real Estate Market The Walt Disney Company executives involved in the development of Euro Disneyland were determined they would not repeat two mistakes which they had made in past ventures. One mistake was allowing other companies to build lucrative hotels surrounding their theme park, as happened at Walt Disney World in Orlando, Florida, where the Walt Disney Company owns only 14% of all hotels. The other mistake was in letting another company own a Disney theme park, as in Tokyo, Japan, where Disney just collects royalties from an immensely profitable attraction. Thus, in France the Walt Disney Company bought far more land then it needed in order to eventually build 700,000 square meters of office space, a 750,000 square meter corporate park, 2,500 individual homes, a 95,000 square meter shopping mall, 2,400 apartments and 3,000 time share apartments. Euro Disneyland planned to develop the land and then sell it to prospective buyers, making a large profit. In addition, this would allow Euro Disneyland stringent control over designing and building of future areas within the resort and then the ability to sell off the completed commercial properties in due course and at a large profit. Unfortunately, this revenue generating plan never really "got off the ground" due to the collapse of the real-estate market which, in turn, caused the demise of the planned development around the theme park. Thus, Euro Disneyland did not receive revenue from property development as had been anticipated. Operational Errors There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its American experience the Walt Disney Company thought Monday would be the light day for guests and Friday a heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the high season can be 10 times the number in the low season" Furthermore, to add to the operation problem is the difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members feel extremely irritated by and have a very difficult time accepting the inflexible scheduling. Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers. A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels. Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen. Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and then checked out early the next morning before heading back to the park. Since there were so many guests checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease the amount of time the guests stood in line. Labor Costs Before the opening of Euro Disneyland executives had estimated labor cost would be 13% of their revenues. This was another area where the executives were wrong in their assumptions. In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%... Staffing and Training Euro Disneyland recruited through job fairs, a popular European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's requirements for employment are so high, for every 10 candidates interviewed only one was hired. To complicate the hiring process, there were language requirements since the official languages of Euro Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that the park would draw guests from all over Europe, The success to Disney parks' repeat guest visits is the employee-customer rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality and teaching 12,000 European employees to smile the "Disney smile" all day. Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13 page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a well-scrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they are not American and they believe this requirement has stripped them of their "individualism". In December 1994 Euro Disneyland was taken to French court contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to patch up the rocky labor relations at the theme park. Cultural Issues An example of cultural issues was Walt Disney Company's policy of serving no alcohol in its parks in California, Florida, and Tokyo which it extended to France. This caused astonishment and rebellion in France where a glass of wine for lunch is a given. After much consideration, in May 1993, the Walt Disney Company changed its policy and allowed wine and beer in the Euro Disneyland theme park. Another example is the Walt Disney Company's belief that it understood European breakfast norms. Disney was told Europeans did not eat sit-down breakfasts. This resulted in Disney downsizing their restaurants before Euro Disneyland opened. Once it opened the restaurants were bombarded with breakfast eaters. In fact, they were trying to serve 2,500 breakfasts in a 350-seat restaurant at some of the hotels." Further, guests wanted bacon and eggs rather than just coffee and croissants. Disney reacted quickly with prepackaged breakfasts delivered to rooms and satellite locations. In much the same vein, the Walt Disney Company had difficulty realizing that the Europeans were accustomed to eat at a set time every day. Where Americans are content to wander around the parks with lunch in their hands, a large majority of the European guests would converge on the restaurants at 12:30 p.m. expecting to be seated for a leisurely lunch. This caused the lines to be very long. To complicate matters further, once the Europeans reached the front of the line they were told they could not have wine or beer with their lunch. Thus, the Europeans did not have a positive "Disney experience" while eating their meals. In addition, it was difficult for Euro Disneyland's managers to staff for these one or two hour "rush hours." A final example of a cultural error is the Europeans approach to vacation time. The Europeans are reluctant to take their children from school for a vacation in mid-session whereas Americans do it frequently. Also, the Europeans prefer a few longer holidays rather than several short breaks. The Walt Disney Company was convinced that it would be able to "Americanize" the European habits. Unfortunately for the Walt Disney Company, this was not the case. Per-capita Spending There also were miscalculations made by the executives regarding the per-capita spending of the guests at Euro Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact, spending was about 12% less than predicted. European guests came to the theme park paying the steep entry fees ($43 for adults and $30 for children), but spent less per-capita on food and merchandise than Americans. This may be due in part to the fact that many guests spend as much time on the rides as possible because of the high admission price (30% more than Disney World in Florida) and less time shopping for souvenirs. American and Japanese consumers do not leave the theme parks empty handed, whereas Europeans do. This resulted in lower- than-expected revenue by Euro Disneyland. Interest Rates The total construction cost of Euro Disneyland was $4 billion. Disney put in just $170 million in equity capital, while public shareholders, who own 51% of the shares put in $1 billion in equity capital. Thus, the remaining $2.9 billion was borrowed, at high rates running as much as 11%. "Thus, from the start, the project was highly leveraged," there was an additional necessity to borrow more money. This second set of loans increased the amount of money owed handcuffed Euro Disney. With high interest rates, large loans, and lower than expected revenue Euro Disneyland was in financial trouble. Marketing Euro Disneyland was marketed with the assumption that it was "a complete vacation destination that offers enough to keep a family happily occupied for a week." Instead of marketing the park in the American-style appeal of "...bigness and extravagance", Euro Disneyland should have concentrated on the emotional aspect, marketing that guests would have a unique, extraordinary family experience they would never forget. The American-style bigness approach insulted Europeans. Euro Disneyland made a huge mistake not considering the views of the French when developing their marketing strategies. The Walt Disney Company agrees there may have been marketing mistakes, but it blames the mistakes to lack of data on how Europeans would react to the "Disney Magic." Additionally, communication with the media has been very poor by the Euro Disneyland executives. Those managers who dealt with the media would not return phone calls, much less answer questions. Realizing they made a huge error, it has become Euro Disneyland executives' goal to improve their reputation with the media. Convention Business According to Turner & Coleman (1994), one of the few pieces of good news about Euro Disneyland is that its convention business exceeded expectations from the beginning. In fact, convention space at Euro Disneyland's themed New York Hotel, located adjacent to the park, was overbooked and more capacity was needed. Euro Disneyland did not anticipate the success of its convention facilities. Had it done so, it could have increased its conference groups and revenue. Euro Disneyland frantically tried to increase its convention facilities. THE RESOLUTIONS Disney's Financial Rescue Package On March 14, 1994, Walt Disney Company developed a restructuring "rescue" plan which would decrease the amount of Euro Disneyland's debt and increase profit. Name Change Euro Disneyland unofficially changed its name in September 1994 to Disneyland Paris in order to adapt to "... European tastes and turn around continued losses and reported slumping attendance". Through the emphasis on the name recognization of Paris, Disney executives hoped to capitalize on its proximity to the French capital. It was hoped that this would result in increased attendance and revenues. Downsizing and Price Breaks In order for Euro Disneyland to hold down costs and increase revenues it has cut 950 administrative posts, or 8.6% of its overall work force In addition, responding to complaints regarding high entrance fees and hotel prices, Euro Disneyland has broken a Walt Disney Company taboo by introducing cut-rate entry and room rates for the off-season Another first is that it is offering a lower-priced 'After 5' evening entrance ticket. Marketing Changes The Walt Disney Company is changing its marketing philosophy in order to expand its efforts to countries such as Israel and Africa. In addition, rather than market Euro Disneyland as vacation destination for a period of time, the Walt Disney Company decided to market it as one of many stops on a month-long European itinerary. Labor Disputes To end numerous labor disputes over long-hours and poor pay, Euro Disneyland has "...shifted away from imported American working practices and towards a more French approach." This new approach set a maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the French method which allowed French citizens the ability to recognize their standard French job classifications. As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force. CONCLUSION Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. Because the Walt Disney Company executives were determined to adhere to American philosophies, they did not thoroughly investigate all aspects of the European environment. This failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their American dream theme park on foreign soil with little if any regard for the practical reality of the physical, financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's "...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure itself, which depended on a highly optimistic financial scenario with little room for glitches." These massive oversights were contributing factors to the problems faced at Euro Disneyland. 1. Explain the reasons why Disney executives were so confident that Euro Disney (Disneyland Paris) would be a great success. 2. Based on your understanding of the case, define the most important target market for Euro/Paris Disney - use all of the segmentation variables. 3. What are some of the main cultural differences between the US and France (list and explain at least 4)? 4. List and explain four specific key issues that created problems in the first few years after the opening of the park. Which were of the most concern? 5. What specifically could Disney have done differently to make the construction, staffing, and opening of Euro Disneyland go smoother? - Explain 5 major changes that would have made a significant difference. 6. What other parks does Disney have world-wide? List, give the year established, and give the most recent attendance figures for each. 7. Overall, was Euro Disneyland a good idea for France and for Disney? Why or why not? Give in-depth reasoning for your answer. 8. Research and describe changes at Disneyland Paris since the case study was written. Specifically, describe changes to the park, updated attendance figures (for 2014, 2015, 2016 and 2017) and a brief overview of their current financial status and any future expansion plans. The Walt Disney Company chose Paris, France, as the site of Euro Disneyland for many reasons. One was the success of Tokyo Disneyland. On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park. To find a site for their fourth theme park, the i Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise. From 1983 through 1987 the company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its climate, France had a larger population and a spectacular transportation network (Scimone, 1989). The Walt Disney Company executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney executives admit that ...without the cold-climate (Tokyo) Disneyland success, they would never have picked Paris, which has the same or worse weather than Tokyo" (Anything but a 'Mickey Mouse', 1989). Thus, Paris was selected to be the site of their fourth theme park. The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called Marne-la-Vallée." In fact, the land is one-fifth the size of Paris itself (Scimone, 1991). When the French government used its right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for approximately $7,500 an acre. Marne-la-Vallée is located in an ideal geographic location since it is 20 miles (32 kilometers) due cast of the center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de- Gaulle. The French railway regional express network connects Marne-la-Vallée with the Paris metro. system, and major highways are nearby. In fact, of the more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car. With the scheduled opening (which took place May 1994) of direct rail links to Great Britain via the English Channel there were countless additional potential guests. Thus, due to its transportation availability, Paris offers Euro Disneyland a wealth of potential guests and employees. The Walt Disney Company signed a contract with the French national, regional and local governments, which promised Disney: favorable loan terms; that the rapid transit railway system would be extended to the theme park from Paris; that two interchanges would be built to link Euro Disneyland with a main highway; and that a special station for high-speed trains would be constructed at the park. The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members (employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property, and the remainder in recreation and support facilities. The area was suffering high unemployment at the time and the Walt Disney Company executives believed the economic benefits to the region would be great since they would employee so many local citizens and since tourism generates revenue without requiring such costly social services as schools and hospitals. Euro Disneyland is a public company with 51% of equity owned by EC individuals and institutions (Anything but a 'Mickey Mouse', 1989). The other 49% of the shares are owned by the Walt Disney Company who maintains management control of the company (Grey, 1989). Opening Day, April 12, 1992 Despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland opened its doors to the public with essentially the same attractions as in the other Disney theme parks in California, Florida, and Japan. Euro Disneyland executives hoped to attract 11 million guests a year, more than twice the number that visit the Eiffel Tower. Half of the guests were expected to be French. Unfortunately, the dream of succeeding did not become a reality and eventually Euro Disneyland brought in new management and made other changes in order to save Euro Disneyland. THE PROBLEMS Euro Disneyland's target of 11 million guests in the first year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million loss for the fiscal year that ended in September 30, 1993, and by December 31, 1993, Euro Disneyland had amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars. Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by some on both sides." He was replaced in 1993 by Frenchman Philippe Bourguignon. European Recession Euro Disneyland executives and advisors failed to see the signs of the approaching European recession. "Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives) didn't realize a major recession was coming". As the recession began to develop the French real-estate market tumbled, thus, destroying Euro Disneyland's hopes of selling their assets and receiving revenues. In addition, the recession caused French and European disposable incomes to shrink, causing families to think twice about taking an expensive trip to Euro Disneyland. Furthermore, Euro Disneyland did not realize the magnitude of the impending recession and when given numerous opportunities to sign partners who would share the risk or buy the existing hotels, Disney refused. Euro Disneyland did not want to give up any of the potential revenues once the recession was over. Real Estate Market The Walt Disney Company executives involved in the development of Euro Disneyland were determined they would not repeat two mistakes which they had made in past ventures. One mistake was allowing other companies to build lucrative hotels surrounding their theme park, as happened at Walt Disney World in Orlando, Florida, where the Walt Disney Company owns only 14% of all hotels. The other mistake was in letting another company own a Disney theme park, as in Tokyo, Japan, where Disney just collects royalties from an immensely profitable attraction. Thus, in France the Walt Disney Company bought far more land then it needed in order to eventually build 700,000 square meters of office space, a 750,000 square meter corporate park, 2,500 individual homes, a 95,000 square meter shopping mall, 2,400 apartments and 3,000 time share apartments. Euro Disneyland planned to develop the land and then sell it to prospective buyers, making a large profit. In addition, this would allow Euro Disneyland stringent control over designing and building of future. areas within the resort and then the ability to sell off the completed commercial properties in due course and at a large profit. Unfortunately, this revenue generating plan never really "got off the ground" due to the collapse of the real-estate market which, in turn, caused the demise of the planned development around the theme park. Thus, Euro Disneyland did not receive revenue from property development as had been anticipated. Operational Errors There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its American experience the Walt Disney Company thought Monday would be the light day for guests and Friday a heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the high season can be 10 times the number in the low season" Furthermore, to add to the operation problem is the difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members feel extremely irritated by and have a very difficult time accepting the inflexible scheduling. Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers. A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels. Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen. Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and then checked out early the next morning before heading back to the park. Since there were so many guests checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease the amount of time the guests stood in line. Labor Costs Before the opening of Euro Disneyland executives had estimated labor cost would be 13% of their revenues. This was another area where the executives were wrong in their assumptions. In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%... Staffing and Training Euro Disneyland recruited through job fairs, a popular European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's requirements for employment are so high, for every 10 candidates interviewed only one was hired. To complicate the hiring process, there were language requirements since the official languages of Euro Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that the park would draw guests from all over Europe, The success to Disney parks' repeat guest visits is the employee-customer rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality and teaching 12,000 European employees to smile the "Disney smile" all day. Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13 page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a well-scrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they are not American and they believe this requirement has stripped them of their "individualism". In December 1994 Euro Disneyland was taken to French court contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to patch up the rocky labor relations at the theme park. Cultural Issues An example of cultural issues was Walt Disney Company's policy of serving no alcohol in its parks in California, Florida, and Tokyo which it extended to France. This caused astonishment and rebellion in France where a glass of wine for lunch is a given. After much consideration, in May 1993, the Walt Disney Company changed its policy and allowed wine and beer in the Euro Disneyland theme park. Another example is the Walt Disney Company's belief that it understood European breakfast norms. Disney was told Europeans did not eat sit-down breakfasts. This resulted in Disney downsizing their restaurants before Euro Disneyland opened. Once it opened the restaurants were bombarded with breakfast eaters. In fact, they were trying to serve 2,500 breakfasts in a 350-seat restaurant at some of the hotels." Further, guests wanted bacon and eggs rather than just coffee and croissants. Disney reacted quickly with prepackaged breakfasts delivered to rooms and satellite locations. In much the same vein, the Walt Disney Company had difficulty realizing that the Europeans were accustomed to eat at a set time every day. Where Americans are content to wander around the parks with lunch in their hands, a large majority of the European guests would converge on the restaurants at 12:30 p.m. expecting to be seated for a leisurely lunch. This caused the lines to be very long. To complicate matters further, once the Europeans reached the front of the line they were told they could not have wine or beer with their lunch. Thus, the Europeans did not have a positive "Disney experience" while eating their meals. In addition, it was difficult for Euro Disneyland's managers to staff for these one or two hour "rush hours." A final example of a cultural error is the Europeans approach to vacation time. The Europeans are reluctant to take their children from school for a vacation in mid-session whereas Americans do it frequently. Also, the Europeans prefer a few longer holidays rather than several short breaks. The Walt Disney Company was convinced that it would be able to "Americanize" the European habits. Unfortunately for the Walt Disney Company, this was not the case. Per-capita Spending There also were miscalculations made by the executives regarding the per-capita spending of the guests at Euro Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact, spending was about 12% less than predicted. European guests came to the theme park paying the steep entry fees ($43 for adults and $30 for children), but spent less per-capita on food and merchandise than Americans. This may be due in part to the fact that many guests spend as much time on the rides as possible because of the high admission price (30% more than Disney World in Florida) and less time shopping for souvenirs. American and Japanese consumers do not leave the theme parks empty handed, whereas Europeans do. This resulted in lower- than-expected revenue by Euro Disneyland. Interest Rates The total construction cost of Euro Disneyland was $4 billion. Disney put in just $170 million in equity capital, while public shareholders, who own 51% of the shares put in $1 billion in equity capital. Thus, the remaining $2.9 billion was borrowed, at high rates running as much as 11%. "Thus, from the start, the project was highly leveraged," there was an additional necessity to borrow more money. This second set of loans increased the amount of money owed handcuffed Euro Disney. With high interest rates, large loans, and lower than expected revenue Euro Disneyland was in financial trouble. Marketing Euro Disneyland was marketed with the assumption that it was "a complete vacation destination that offers enough to keep a family happily occupied for a week." Instead of marketing the park in the American-style appeal of "...bigness and extravagance", Euro Disneyland should have concentrated on the emotional aspect, marketing that guests would have a unique, extraordinary family experience they would never forget. The American-style bigness approach insulted Europeans. Euro Disneyland made a huge mistake not considering the views of the French when developing their marketing strategies. The Walt Disney Company agrees there may have been marketing mistakes, but it blames the mistakes to lack of data on how Europeans would react to the "Disney Magic." Additionally, communication with the media has been very poor by the Euro Disneyland executives. Those managers who dealt with the media would not return phone calls, much less answer questions. Realizing they made a huge error, it has become Euro Disneyland executives' goal to improve their reputation with the media. Convention Business According to Turner & Coleman (1994), one of the few pieces of good news about Euro Disneyland is that its convention business exceeded expectations from the beginning. In fact, convention space at Euro Disneyland's themed New York Hotel, located adjacent to the park, was overbooked and more capacity was needed. Euro Disneyland did not anticipate the success of its convention facilities. Had it done so, it could have increased its conference groups and revenue. Euro Disneyland frantically tried to increase its convention facilities. THE RESOLUTIONS Disney's Financial Rescue Package On March 14, 1994, Walt Disney Company developed a restructuring "rescue" plan which would decrease the amount of Euro Disneyland's debt and increase profit. Name Change Euro Disneyland unofficially changed its name in September 1994 to Disneyland Paris in order to adapt to "... European tastes and turn around continued losses and reported slumping attendance". Through the emphasis on the name recognization of Paris, Disney executives hoped to capitalize on its proximity to the French capital. It was hoped that this would result in increased attendance and revenues. Downsizing and Price Breaks In order for Euro Disneyland to hold down costs and increase revenues it has cut 950 administrative posts, or 8.6% of its overall work force In addition, responding to complaints regarding high entrance fees and hotel prices, Euro Disneyland has broken a Walt Disney Company taboo by introducing cut-rate entry and room rates for the off-season Another first is that it is offering a lower-priced 'After 5' evening entrance ticket. Marketing Changes The Walt Disney Company is changing its marketing philosophy in order to expand its efforts to countries such as Israel and Africa. In addition, rather than market Euro Disneyland as vacation destination for a period of time, the Walt Disney Company decided to market it as one of many stops on a month-long European itinerary. Labor Disputes To end numerous labor disputes over long-hours and poor pay, Euro Disneyland has "...shifted away from imported American working practices and towards a more French approach." This new approach set a maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the French method which allowed French citizens the ability to recognize their standard French job classifications. As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force. CONCLUSION Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. Because the Walt Disney Company executives were determined to adhere to American philosophies, they did not thoroughly investigate all aspects of the European environment. This failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their American dream theme park on foreign soil with little if any regard for the practical reality of the physical, financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's "...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure itself, which depended on a highly optimistic financial scenario with little room for glitches." These massive oversights were contributing factors to the problems faced at Euro Disneyland. 1. Explain the reasons why Disney executives were so confident that Euro Disney (Disneyland Paris) would be a great success. 2. Based on your understanding of the case, define the most important target market for Euro/Paris Disney - use all of the segmentation variables. 3. What are some of the main cultural differences between the US and France (list and explain at least 4)? 4. List and explain four specific key issues that created problems in the first few years after the opening of the park. Which were of the most concern? 5. What specifically could Disney have done differently to make the construction, staffing, and opening of Euro Disneyland go smoother? - Explain 5 major changes that would have made a significant difference. 6. What other parks does Disney have world-wide? List, give the year established, and give the most recent attendance figures for each. 7. Overall, was Euro Disneyland a good idea for France and for Disney? Why or why not? Give in-depth reasoning for your answer. 8. Research and describe changes at Disneyland Paris since the case study was written. Specifically, describe changes to the park, updated attendance figures (for 2014, 2015, 2016 and 2017) and a brief overview of their current financial status and any future expansion plans. The Walt Disney Company chose Paris, France, as the site of Euro Disneyland for many reasons. One was the success of Tokyo Disneyland. On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park. To find a site for their fourth theme park, the i Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise. From 1983 through 1987 the company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its climate, France had a larger population and a spectacular transportation network (Scimone, 1989). The Walt Disney Company executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney executives admit that ...without the cold-climate (Tokyo) Disneyland success, they would never have picked Paris, which has the same or worse weather than Tokyo" (Anything but a 'Mickey Mouse', 1989). Thus, Paris was selected to be the site of their fourth theme park. The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called Marne-la-Vallée." In fact, the land is one-fifth the size of Paris itself (Scimone, 1991). When the French government used its right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for approximately $7,500 an acre. Marne-la-Vallée is located in an ideal geographic location since it is 20 miles (32 kilometers) due cast of the center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de- Gaulle. The French railway regional express network connects Marne-la-Vallée with the Paris metro. system, and major highways are nearby. In fact, of the more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car. With the scheduled opening (which took place May 1994) of direct rail links to Great Britain via the English Channel there were countless additional potential guests. Thus, due to its transportation availability, Paris offers Euro Disneyland a wealth of potential guests and employees. The Walt Disney Company signed a contract with the French national, regional and local governments, which promised Disney: favorable loan terms; that the rapid transit railway system would be extended to the theme park from Paris; that two interchanges would be built to link Euro Disneyland with a main highway; and that a special station for high-speed trains would be constructed at the park. The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members (employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property, and the remainder in recreation and support facilities. The area was suffering high unemployment at the time and the Walt Disney Company executives believed the economic benefits to the region would be great since they would employee so many local citizens and since tourism generates revenue without requiring such costly social services as schools and hospitals. Euro Disneyland is a public company with 51% of equity owned by EC individuals and institutions (Anything but a 'Mickey Mouse', 1989). The other 49% of the shares are owned by the Walt Disney Company who maintains management control of the company (Grey, 1989). Opening Day, April 12, 1992 Despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland opened its doors to the public with essentially the same attractions as in the other Disney theme parks in California, Florida, and Japan. Euro Disneyland executives hoped to attract 11 million guests a year, more than twice the number that visit the Eiffel Tower. Half of the guests were expected to be French. Unfortunately, the dream of succeeding did not become a reality and eventually Euro Disneyland brought in new management and made other changes in order to save Euro Disneyland. THE PROBLEMS Euro Disneyland's target of 11 million guests in the first year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million loss for the fiscal year that ended in September 30, 1993, and by December 31, 1993, Euro Disneyland had amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars. Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by some on both sides." He was replaced in 1993 by Frenchman Philippe Bourguignon. European Recession Euro Disneyland executives and advisors failed to see the signs of the approaching European recession. "Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives) didn't realize a major recession was coming". As the recession began to develop the French real-estate market tumbled, thus, destroying Euro Disneyland's hopes of selling their assets and receiving revenues. In addition, the recession caused French and European disposable incomes to shrink, causing families to think twice about taking an expensive trip to Euro Disneyland. Furthermore, Euro Disneyland did not realize the magnitude of the impending recession and when given numerous opportunities to sign partners who would share the risk or buy the existing hotels, Disney refused. Euro Disneyland did not want to give up any of the potential revenues once the recession was over. Real Estate Market The Walt Disney Company executives involved in the development of Euro Disneyland were determined they would not repeat two mistakes which they had made in past ventures. One mistake was allowing other companies to build lucrative hotels surrounding their theme park, as happened at Walt Disney World in Orlando, Florida, where the Walt Disney Company owns only 14% of all hotels. The other mistake was in letting another company own a Disney theme park, as in Tokyo, Japan, where Disney just collects royalties from an immensely profitable attraction. Thus, in France the Walt Disney Company bought far more land then it needed in order to eventually build 700,000 square meters of office space, a 750,000 square meter corporate park, 2,500 individual homes, a 95,000 square meter shopping mall, 2,400 apartments and 3,000 time share apartments. Euro Disneyland planned to develop the land and then sell it to prospective buyers, making a large profit. In addition, this would allow Euro Disneyland stringent control over designing and building of future. areas within the resort and then the ability to sell off the completed commercial properties in due course and at a large profit. Unfortunately, this revenue generating plan never really "got off the ground" due to the collapse of the real-estate market which, in turn, caused the demise of the planned development around the theme park. Thus, Euro Disneyland did not receive revenue from property development as had been anticipated. Operational Errors There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its American experience the Walt Disney Company thought Monday would be the light day for guests and Friday a heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the high season can be 10 times the number in the low season" Furthermore, to add to the operation problem is the difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members feel extremely irritated by and have a very difficult time accepting the inflexible scheduling. Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers. A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels. Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen. Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and then checked out early the next morning before heading back to the park. Since there were so many guests checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease the amount of time the guests stood in line. Labor Costs Before the opening of Euro Disneyland executives had estimated labor cost would be 13% of their revenues. This was another area where the executives were wrong in their assumptions. In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%... Staffing and Training Euro Disneyland recruited through job fairs, a popular European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's requirements for employment are so high, for every 10 candidates interviewed only one was hired. To complicate the hiring process, there were language requirements since the official languages of Euro Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that the park would draw guests from all over Europe, The success to Disney parks' repeat guest visits is the employee-customer rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality and teaching 12,000 European employees to smile the "Disney smile" all day. Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13 page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a well-scrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they are not American and they believe this requirement has stripped them of their "individualism". In December 1994 Euro Disneyland was taken to French court contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to patch up the rocky labor relations at the theme park. Cultural Issues An example of cultural issues was Walt Disney Company's policy of serving no alcohol in its parks in California, Florida, and Tokyo which it extended to France. This caused astonishment and rebellion in France where a glass of wine for lunch is a given. After much consideration, in May 1993, the Walt Disney Company changed its policy and allowed wine and beer in the Euro Disneyland theme park. Another example is the Walt Disney Company's belief that it understood European breakfast norms. Disney was told Europeans did not eat sit-down breakfasts. This resulted in Disney downsizing their restaurants before Euro Disneyland opened. Once it opened the restaurants were bombarded with breakfast eaters. In fact, they were trying to serve 2,500 breakfasts in a 350-seat restaurant at some of the hotels." Further, guests wanted bacon and eggs rather than just coffee and croissants. Disney reacted quickly with prepackaged breakfasts delivered to rooms and satellite locations. In much the same vein, the Walt Disney Company had difficulty realizing that the Europeans were accustomed to eat at a set time every day. Where Americans are content to wander around the parks with lunch in their hands, a large majority of the European guests would converge on the restaurants at 12:30 p.m. expecting to be seated for a leisurely lunch. This caused the lines to be very long. To complicate matters further, once the Europeans reached the front of the line they were told they could not have wine or beer with their lunch. Thus, the Europeans did not have a positive "Disney experience" while eating their meals. In addition, it was difficult for Euro Disneyland's managers to staff for these one or two hour "rush hours." A final example of a cultural error is the Europeans approach to vacation time. The Europeans are reluctant to take their children from school for a vacation in mid-session whereas Americans do it frequently. Also, the Europeans prefer a few longer holidays rather than several short breaks. The Walt Disney Company was convinced that it would be able to "Americanize" the European habits. Unfortunately for the Walt Disney Company, this was not the case. Per-capita Spending There also were miscalculations made by the executives regarding the per-capita spending of the guests at Euro Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact, spending was about 12% less than predicted. European guests came to the theme park paying the steep entry fees ($43 for adults and $30 for children), but spent less per-capita on food and merchandise than Americans. This may be due in part to the fact that many guests spend as much time on the rides as possible because of the high admission price (30% more than Disney World in Florida) and less time shopping for souvenirs. American and Japanese consumers do not leave the theme parks empty handed, whereas Europeans do. This resulted in lower- than-expected revenue by Euro Disneyland. Interest Rates The total construction cost of Euro Disneyland was $4 billion. Disney put in just $170 million in equity capital, while public shareholders, who own 51% of the shares put in $1 billion in equity capital. Thus, the remaining $2.9 billion was borrowed, at high rates running as much as 11%. "Thus, from the start, the project was highly leveraged," there was an additional necessity to borrow more money. This second set of loans increased the amount of money owed handcuffed Euro Disney. With high interest rates, large loans, and lower than expected revenue Euro Disneyland was in financial trouble. Marketing Euro Disneyland was marketed with the assumption that it was "a complete vacation destination that offers enough to keep a family happily occupied for a week." Instead of marketing the park in the American-style appeal of "...bigness and extravagance", Euro Disneyland should have concentrated on the emotional aspect, marketing that guests would have a unique, extraordinary family experience they would never forget. The American-style bigness approach insulted Europeans. Euro Disneyland made a huge mistake not considering the views of the French when developing their marketing strategies. The Walt Disney Company agrees there may have been marketing mistakes, but it blames the mistakes to lack of data on how Europeans would react to the "Disney Magic." Additionally, communication with the media has been very poor by the Euro Disneyland executives. Those managers who dealt with the media would not return phone calls, much less answer questions. Realizing they made a huge error, it has become Euro Disneyland executives' goal to improve their reputation with the media. Convention Business According to Turner & Coleman (1994), one of the few pieces of good news about Euro Disneyland is that its convention business exceeded expectations from the beginning. In fact, convention space at Euro Disneyland's themed New York Hotel, located adjacent to the park, was overbooked and more capacity was needed. Euro Disneyland did not anticipate the success of its convention facilities. Had it done so, it could have increased its conference groups and revenue. Euro Disneyland frantically tried to increase its convention facilities. THE RESOLUTIONS Disney's Financial Rescue Package On March 14, 1994, Walt Disney Company developed a restructuring "rescue" plan which would decrease the amount of Euro Disneyland's debt and increase profit. Name Change Euro Disneyland unofficially changed its name in September 1994 to Disneyland Paris in order to adapt to "... European tastes and turn around continued losses and reported slumping attendance". Through the emphasis on the name recognization of Paris, Disney executives hoped to capitalize on its proximity to the French capital. It was hoped that this would result in increased attendance and revenues. Downsizing and Price Breaks In order for Euro Disneyland to hold down costs and increase revenues it has cut 950 administrative posts, or 8.6% of its overall work force In addition, responding to complaints regarding high entrance fees and hotel prices, Euro Disneyland has broken a Walt Disney Company taboo by introducing cut-rate entry and room rates for the off-season Another first is that it is offering a lower-priced 'After 5' evening entrance ticket. Marketing Changes The Walt Disney Company is changing its marketing philosophy in order to expand its efforts to countries such as Israel and Africa. In addition, rather than market Euro Disneyland as vacation destination for a period of time, the Walt Disney Company decided to market it as one of many stops on a month-long European itinerary. Labor Disputes To end numerous labor disputes over long-hours and poor pay, Euro Disneyland has "...shifted away from imported American working practices and towards a more French approach." This new approach set a maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the French method which allowed French citizens the ability to recognize their standard French job classifications. As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force. CONCLUSION Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. Because the Walt Disney Company executives were determined to adhere to American philosophies, they did not thoroughly investigate all aspects of the European environment. This failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their American dream theme park on foreign soil with little if any regard for the practical reality of the physical, financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's "...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure itself, which depended on a highly optimistic financial scenario with little room for glitches." These massive oversights were contributing factors to the problems faced at Euro Disneyland. 1. Explain the reasons why Disney executives were so confident that Euro Disney (Disneyland Paris) would be a great success. 2. Based on your understanding of the case, define the most important target market for Euro/Paris Disney - use all of the segmentation variables. 3. What are some of the main cultural differences between the US and France (list and explain at least 4)? 4. List and explain four specific key issues that created problems in the first few years after the opening of the park. Which were of the most concern? 5. What specifically could Disney have done differently to make the construction, staffing, and opening of Euro Disneyland go smoother? - Explain 5 major changes that would have made a significant difference. 6. What other parks does Disney have world-wide? List, give the year established, and give the most recent attendance figures for each. 7. Overall, was Euro Disneyland a good idea for France and for Disney? Why or why not? Give in-depth reasoning for your answer. 8. Research and describe changes at Disneyland Paris since the case study was written. Specifically, describe changes to the park, updated attendance figures (for 2014, 2015, 2016 and 2017) and a brief overview of their current financial status and any future expansion plans. The Walt Disney Company chose Paris, France, as the site of Euro Disneyland for many reasons. One was the success of Tokyo Disneyland. On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park. To find a site for their fourth theme park, the i Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise. From 1983 through 1987 the company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its climate, France had a larger population and a spectacular transportation network (Scimone, 1989). The Walt Disney Company executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney executives admit that ...without the cold-climate (Tokyo) Disneyland success, they would never have picked Paris, which has the same or worse weather than Tokyo" (Anything but a 'Mickey Mouse', 1989). Thus, Paris was selected to be the site of their fourth theme park. The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called Marne-la-Vallée." In fact, the land is one-fifth the size of Paris itself (Scimone, 1991). When the French government used its right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for approximately $7,500 an acre. Marne-la-Vallée is located in an ideal geographic location since it is 20 miles (32 kilometers) due cast of the center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de- Gaulle. The French railway regional express network connects Marne-la-Vallée with the Paris metro. system, and major highways are nearby. In fact, of the more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car. With the scheduled opening (which took place May 1994) of direct rail links to Great Britain via the English Channel there were countless additional potential guests. Thus, due to its transportation availability, Paris offers Euro Disneyland a wealth of potential guests and employees. The Walt Disney Company signed a contract with the French national, regional and local governments, which promised Disney: favorable loan terms; that the rapid transit railway system would be extended to the theme park from Paris; that two interchanges would be built to link Euro Disneyland with a main highway; and that a special station for high-speed trains would be constructed at the park. The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members (employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property, and the remainder in recreation and support facilities. The area was suffering high unemployment at the time and the Walt Disney Company executives believed the economic benefits to the region would be great since they would employee so many local citizens and since tourism generates revenue without requiring such costly social services as schools and hospitals. Euro Disneyland is a public company with 51% of equity owned by EC individuals and institutions (Anything but a 'Mickey Mouse', 1989). The other 49% of the shares are owned by the Walt Disney Company who maintains management control of the company (Grey, 1989). Opening Day, April 12, 1992 Despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland opened its doors to the public with essentially the same attractions as in the other Disney theme parks in California, Florida, and Japan. Euro Disneyland executives hoped to attract 11 million guests a year, more than twice the number that visit the Eiffel Tower. Half of the guests were expected to be French. Unfortunately, the dream of succeeding did not become a reality and eventually Euro Disneyland brought in new management and made other changes in order to save Euro Disneyland. THE PROBLEMS Euro Disneyland's target of 11 million guests in the first year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million loss for the fiscal year that ended in September 30, 1993, and by December 31, 1993, Euro Disneyland had amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars. Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by some on both sides." He was replaced in 1993 by Frenchman Philippe Bourguignon. European Recession Euro Disneyland executives and advisors failed to see the signs of the approaching European recession. "Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives) didn't realize a major recession was coming". As the recession began to develop the French real-estate market tumbled, thus, destroying Euro Disneyland's hopes of selling their assets and receiving revenues. In addition, the recession caused French and European disposable incomes to shrink, causing families to think twice about taking an expensive trip to Euro Disneyland. Furthermore, Euro Disneyland did not realize the magnitude of the impending recession and when given numerous opportunities to sign partners who would share the risk or buy the existing hotels, Disney refused. Euro Disneyland did not want to give up any of the potential revenues once the recession was over. Real Estate Market The Walt Disney Company executives involved in the development of Euro Disneyland were determined they would not repeat two mistakes which they had made in past ventures. One mistake was allowing other companies to build lucrative hotels surrounding their theme park, as happened at Walt Disney World in Orlando, Florida, where the Walt Disney Company owns only 14% of all hotels. The other mistake was in letting another company own a Disney theme park, as in Tokyo, Japan, where Disney just collects royalties from an immensely profitable attraction. Thus, in France the Walt Disney Company bought far more land then it needed in order to eventually build 700,000 square meters of office space, a 750,000 square meter corporate park, 2,500 individual homes, a 95,000 square meter shopping mall, 2,400 apartments and 3,000 time share apartments. Euro Disneyland planned to develop the land and then sell it to prospective buyers, making a large profit. In addition, this would allow Euro Disneyland stringent control over designing and building of future. areas within the resort and then the ability to sell off the completed commercial properties in due course and at a large profit. Unfortunately, this revenue generating plan never really "got off the ground" due to the collapse of the real-estate market which, in turn, caused the demise of the planned development around the theme park. Thus, Euro Disneyland did not receive revenue from property development as had been anticipated. Operational Errors There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its American experience the Walt Disney Company thought Monday would be the light day for guests and Friday a heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the high season can be 10 times the number in the low season" Furthermore, to add to the operation problem is the difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members feel extremely irritated by and have a very difficult time accepting the inflexible scheduling. Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers. A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels. Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen. Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and then checked out early the next morning before heading back to the park. Since there were so many guests checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease the amount of time the guests stood in line. Labor Costs Before the opening of Euro Disneyland executives had estimated labor cost would be 13% of their revenues. This was another area where the executives were wrong in their assumptions. In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%... Staffing and Training Euro Disneyland recruited through job fairs, a popular European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's requirements for employment are so high, for every 10 candidates interviewed only one was hired. To complicate the hiring process, there were language requirements since the official languages of Euro Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that the park would draw guests from all over Europe, The success to Disney parks' repeat guest visits is the employee-customer rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality and teaching 12,000 European employees to smile the "Disney smile" all day. Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13 page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a well-scrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they are not American and they believe this requirement has stripped them of their "individualism". In December 1994 Euro Disneyland was taken to French court contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to patch up the rocky labor relations at the theme park. Cultural Issues An example of cultural issues was Walt Disney Company's policy of serving no alcohol in its parks in California, Florida, and Tokyo which it extended to France. This caused astonishment and rebellion in France where a glass of wine for lunch is a given. After much consideration, in May 1993, the Walt Disney Company changed its policy and allowed wine and beer in the Euro Disneyland theme park. Another example is the Walt Disney Company's belief that it understood European breakfast norms. Disney was told Europeans did not eat sit-down breakfasts. This resulted in Disney downsizing their restaurants before Euro Disneyland opened. Once it opened the restaurants were bombarded with breakfast eaters. In fact, they were trying to serve 2,500 breakfasts in a 350-seat restaurant at some of the hotels." Further, guests wanted bacon and eggs rather than just coffee and croissants. Disney reacted quickly with prepackaged breakfasts delivered to rooms and satellite locations. In much the same vein, the Walt Disney Company had difficulty realizing that the Europeans were accustomed to eat at a set time every day. Where Americans are content to wander around the parks with lunch in their hands, a large majority of the European guests would converge on the restaurants at 12:30 p.m. expecting to be seated for a leisurely lunch. This caused the lines to be very long. To complicate matters further, once the Europeans reached the front of the line they were told they could not have wine or beer with their lunch. Thus, the Europeans did not have a positive "Disney experience" while eating their meals. In addition, it was difficult for Euro Disneyland's managers to staff for these one or two hour "rush hours." A final example of a cultural error is the Europeans approach to vacation time. The Europeans are reluctant to take their children from school for a vacation in mid-session whereas Americans do it frequently. Also, the Europeans prefer a few longer holidays rather than several short breaks. The Walt Disney Company was convinced that it would be able to "Americanize" the European habits. Unfortunately for the Walt Disney Company, this was not the case. Per-capita Spending There also were miscalculations made by the executives regarding the per-capita spending of the guests at Euro Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact, spending was about 12% less than predicted. European guests came to the theme park paying the steep entry fees ($43 for adults and $30 for children), but spent less per-capita on food and merchandise than Americans. This may be due in part to the fact that many guests spend as much time on the rides as possible because of the high admission price (30% more than Disney World in Florida) and less time shopping for souvenirs. American and Japanese consumers do not leave the theme parks empty handed, whereas Europeans do. This resulted in lower- than-expected revenue by Euro Disneyland. Interest Rates The total construction cost of Euro Disneyland was $4 billion. Disney put in just $170 million in equity capital, while public shareholders, who own 51% of the shares put in $1 billion in equity capital. Thus, the remaining $2.9 billion was borrowed, at high rates running as much as 11%. "Thus, from the start, the project was highly leveraged," there was an additional necessity to borrow more money. This second set of loans increased the amount of money owed handcuffed Euro Disney. With high interest rates, large loans, and lower than expected revenue Euro Disneyland was in financial trouble. Marketing Euro Disneyland was marketed with the assumption that it was "a complete vacation destination that offers enough to keep a family happily occupied for a week." Instead of marketing the park in the American-style appeal of "...bigness and extravagance", Euro Disneyland should have concentrated on the emotional aspect, marketing that guests would have a unique, extraordinary family experience they would never forget. The American-style bigness approach insulted Europeans. Euro Disneyland made a huge mistake not considering the views of the French when developing their marketing strategies. The Walt Disney Company agrees there may have been marketing mistakes, but it blames the mistakes to lack of data on how Europeans would react to the "Disney Magic." Additionally, communication with the media has been very poor by the Euro Disneyland executives. Those managers who dealt with the media would not return phone calls, much less answer questions. Realizing they made a huge error, it has become Euro Disneyland executives' goal to improve their reputation with the media. Convention Business According to Turner & Coleman (1994), one of the few pieces of good news about Euro Disneyland is that its convention business exceeded expectations from the beginning. In fact, convention space at Euro Disneyland's themed New York Hotel, located adjacent to the park, was overbooked and more capacity was needed. Euro Disneyland did not anticipate the success of its convention facilities. Had it done so, it could have increased its conference groups and revenue. Euro Disneyland frantically tried to increase its convention facilities. THE RESOLUTIONS Disney's Financial Rescue Package On March 14, 1994, Walt Disney Company developed a restructuring "rescue" plan which would decrease the amount of Euro Disneyland's debt and increase profit. Name Change Euro Disneyland unofficially changed its name in September 1994 to Disneyland Paris in order to adapt to "... European tastes and turn around continued losses and reported slumping attendance". Through the emphasis on the name recognization of Paris, Disney executives hoped to capitalize on its proximity to the French capital. It was hoped that this would result in increased attendance and revenues. Downsizing and Price Breaks In order for Euro Disneyland to hold down costs and increase revenues it has cut 950 administrative posts, or 8.6% of its overall work force In addition, responding to complaints regarding high entrance fees and hotel prices, Euro Disneyland has broken a Walt Disney Company taboo by introducing cut-rate entry and room rates for the off-season Another first is that it is offering a lower-priced 'After 5' evening entrance ticket. Marketing Changes The Walt Disney Company is changing its marketing philosophy in order to expand its efforts to countries such as Israel and Africa. In addition, rather than market Euro Disneyland as vacation destination for a period of time, the Walt Disney Company decided to market it as one of many stops on a month-long European itinerary. Labor Disputes To end numerous labor disputes over long-hours and poor pay, Euro Disneyland has "...shifted away from imported American working practices and towards a more French approach." This new approach set a maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the French method which allowed French citizens the ability to recognize their standard French job classifications. As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force. CONCLUSION Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. Because the Walt Disney Company executives were determined to adhere to American philosophies, they did not thoroughly investigate all aspects of the European environment. This failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their American dream theme park on foreign soil with little if any regard for the practical reality of the physical, financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's "...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure itself, which depended on a highly optimistic financial scenario with little room for glitches." These massive oversights were contributing factors to the problems faced at Euro Disneyland. 1. Explain the reasons why Disney executives were so confident that Euro Disney (Disneyland Paris) would be a great success. 2. Based on your understanding of the case, define the most important target market for Euro/Paris Disney - use all of the segmentation variables. 3. What are some of the main cultural differences between the US and France (list and explain at least 4)? 4. List and explain four specific key issues that created problems in the first few years after the opening of the park. Which were of the most concern? 5. What specifically could Disney have done differently to make the construction, staffing, and opening of Euro Disneyland go smoother? - Explain 5 major changes that would have made a significant difference. 6. What other parks does Disney have world-wide? List, give the year established, and give the most recent attendance figures for each. 7. Overall, was Euro Disneyland a good idea for France and for Disney? Why or why not? Give in-depth reasoning for your answer. 8. Research and describe changes at Disneyland Paris since the case study was written. Specifically, describe changes to the park, updated attendance figures (for 2014, 2015, 2016 and 2017) and a brief overview of their current financial status and any future expansion plans. The Walt Disney Company chose Paris, France, as the site of Euro Disneyland for many reasons. One was the success of Tokyo Disneyland. On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park. To find a site for their fourth theme park, the Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise. From 1983 through 1987 the company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its climate, France had a larger population and a spectacular transportation network (Scimone, 1989). The Walt Disney Company executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney executives admit that ...without the cold-climate (Tokyo) Disneyland success, they would never have picked Paris, which has the same or worse weather than Tokyo" (Anything but a 'Mickey Mouse', 1989). Thus, Paris was selected to be the site of their fourth theme park. The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called Marne-la-Vallée." In fact, the land is one-fifth the size of Paris itself (Scimone, 1991). When the French government used its right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for approximately $7,500 an acre. Marne-la-Vallée is located in an ideal geographic location since it is 20 miles (32 kilometers) due cast of the center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de- Gaulle. The French railway regional express network connects Marne-la-Vallée with the Paris metro. system, and major highways are nearby. In fact, of the more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car. With the scheduled opening (which took place May 1994) of direct rail links to Great Britain via the English Channel there were countless additional potential guests. Thus, due to its transportation availability, Paris offers Euro Disneyland a wealth of potential guests and employees. The Walt Disney Company signed a contract with the French national, regional and local governments, which promised Disney: favorable loan terms; that the rapid transit railway system would be extended to the theme park from Paris; that two interchanges would be built to link Euro Disneyland with a main highway; and that a special station for high-speed trains would be constructed at the park. The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members (employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property, and the remainder in recreation and support facilities. The area was suffering high unemployment at the time and the Walt Disney Company executives believed the economic benefits to the region would be great since they would employee so many local citizens and since tourism generates revenue without requiring such costly social services as schools and hospitals. Euro Disneyland is a public company with 51% of equity owned by EC individuals and institutions (Anything but a 'Mickey Mouse', 1989). The other 49% of the shares are owned by the Walt Disney Company who maintains management control of the company (Grey, 1989). Opening Day, April 12, 1992 Despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland opened its doors to the public with essentially the same attractions as in the other Disney theme parks in California, Florida, and Japan. Euro Disneyland executives hoped to attract 11 million guests a year, more than twice the number that visit the Eiffel Tower. Half of the guests were expected to be French. Unfortunately, the dream of succeeding did not become a reality and eventually Euro Disneyland brought in new management and made other changes in order to save Euro Disneyland. THE PROBLEMS Euro Disneyland's target of 11 million guests in the first year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million loss for the fiscal year that ended in September 30, 1993, and by December 31, 1993, Euro Disneyland had amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars. Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by some on both sides." He was replaced in 1993 by Frenchman Philippe Bourguignon. European Recession Euro Disneyland executives and advisors failed to see the signs of the approaching European recession. "Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives) didn't realize a major recession was coming". As the recession began to develop the French real-estate market tumbled, thus, destroying Euro Disneyland's hopes of selling their assets and receiving revenues. In addition, the recession caused French and European disposable incomes to shrink, causing families to think twice about taking an expensive trip to Euro Disneyland. Furthermore, Euro Disneyland did not realize the magnitude of the impending recession and when given numerous opportunities to sign partners who would share the risk or buy the existing hotels, Disney refused. Euro Disneyland did not want to give up any of the potential revenues once the recession was over. Real Estate Market The Walt Disney Company executives involved in the development of Euro Disneyland were determined they would not repeat two mistakes which they had made in past ventures. One mistake was allowing other companies to build lucrative hotels surrounding their theme park, as happened at Walt Disney World in Orlando, Florida, where the Walt Disney Company owns only 14% of all hotels. The other mistake was in letting another company own a Disney theme park, as in Tokyo, Japan, where Disney just collects royalties from an immensely profitable attraction. Thus, in France the Walt Disney Company bought far more land then it needed in order to eventually build 700,000 square meters of office space, a 750,000 square meter corporate park, 2,500 individual homes, a 95,000 square meter shopping mall, 2,400 apartments and 3,000 time share apartments. Euro Disneyland planned to develop the land and then sell it to prospective buyers, making a large profit. In addition, this would allow Euro Disneyland stringent control over designing and building of future. areas within the resort and then the ability to sell off the completed commercial properties in due course and at a large profit. Unfortunately, this revenue generating plan never really "got off the ground" due to the collapse of the real-estate market which, in turn, caused the demise of the planned development around the theme park. Thus, Euro Disneyland did not receive revenue from property development as had been anticipated. Operational Errors There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its American experience the Walt Disney Company thought Monday would be the light day for guests and Friday a heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the high season can be 10 times the number in the low season" Furthermore, to add to the operation problem is the difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members feel extremely irritated by and have a very difficult time accepting the inflexible scheduling. Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers. A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels. Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen. Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and then checked out early the next morning before heading back to the park. Since there were so many guests checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease the amount of time the guests stood in line. Labor Costs Before the opening of Euro Disneyland executives had estimated labor cost would be 13% of their revenues. This was another area where the executives were wrong in their assumptions. In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%... Staffing and Training Euro Disneyland recruited through job fairs, a popular European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's requirements for employment are so high, for every 10 candidates interviewed only one was hired. To complicate the hiring process, there were language requirements since the official languages of Euro Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that the park would draw guests from all over Europe, The success to Disney parks' repeat guest visits is the employee-customer rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality and teaching 12,000 European employees to smile the "Disney smile" all day. Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13 page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a well-scrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they are not American and they believe this requirement has stripped them of their "individualism". In December 1994 Euro Disneyland was taken to French court contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to patch up the rocky labor relations at the theme park. Cultural Issues An example of cultural issues was Walt Disney Company's policy of serving no alcohol in its parks in California, Florida, and Tokyo which it extended to France. This caused astonishment and rebellion in France where a glass of wine for lunch is a given. After much consideration, in May 1993, the Walt Disney Company changed its policy and allowed wine and beer in the Euro Disneyland theme park. Another example is the Walt Disney Company's belief that it understood European breakfast norms. Disney was told Europeans did not eat sit-down breakfasts. This resulted in Disney downsizing their restaurants before Euro Disneyland opened. Once it opened the restaurants were bombarded with breakfast eaters. In fact, they were trying to serve 2,500 breakfasts in a 350-seat restaurant at some of the hotels." Further, guests wanted bacon and eggs rather than just coffee and croissants. Disney reacted quickly with prepackaged breakfasts delivered to rooms and satellite locations. In much the same vein, the Walt Disney Company had difficulty realizing that the Europeans were accustomed to eat at a set time every day. Where Americans are content to wander around the parks with lunch in their hands, a large majority of the European guests would converge on the restaurants at 12:30 p.m. expecting to be seated for a leisurely lunch. This caused the lines to be very long. To complicate matters further, once the Europeans reached the front of the line they were told they could not have wine or beer with their lunch. Thus, the Europeans did not have a positive "Disney experience" while eating their meals. In addition, it was difficult for Euro Disneyland's managers to staff for these one or two hour "rush hours." A final example of a cultural error is the Europeans approach to vacation time. The Europeans are reluctant to take their children from school for a vacation in mid-session whereas Americans do it frequently. Also, the Europeans prefer a few longer holidays rather than several short breaks. The Walt Disney Company was convinced that it would be able to "Americanize" the European habits. Unfortunately for the Walt Disney Company, this was not the case. Per-capita Spending There also were miscalculations made by the executives regarding the per-capita spending of the guests at Euro Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact, spending was about 12% less than predicted. European guests came to the theme park paying the steep entry fees ($43 for adults and $30 for children), but spent less per-capita on food and merchandise than Americans. This may be due in part to the fact that many guests spend as much time on the rides as possible because of the high admission price (30% more than Disney World in Florida) and less time shopping for souvenirs. American and Japanese consumers do not leave the theme parks empty handed, whereas Europeans do. This resulted in lower- than-expected revenue by Euro Disneyland. Interest Rates The total construction cost of Euro Disneyland was $4 billion. Disney put in just $170 million in equity capital, while public shareholders, who own 51% of the shares put in $1 billion in equity capital. Thus, the remaining $2.9 billion was borrowed, at high rates running as much as 11%. "Thus, from the start, the project was highly leveraged," there was an additional necessity to borrow more money. This second set of loans increased the amount of money owed handcuffed Euro Disney. With high interest rates, large loans, and lower than expected revenue Euro Disneyland was in financial trouble. Marketing Euro Disneyland was marketed with the assumption that it was "a complete vacation destination that offers enough to keep a family happily occupied for a week." Instead of marketing the park in the American-style appeal of "...bigness and extravagance", Euro Disneyland should have concentrated on the emotional aspect, marketing that guests would have a unique, extraordinary family experience they would never forget. The American-style bigness approach insulted Europeans. Euro Disneyland made a huge mistake not considering the views of the French when developing their marketing strategies. The Walt Disney Company agrees there may have been marketing mistakes, but it blames the mistakes to lack of data on how Europeans would react to the "Disney Magic." Additionally, communication with the media has been very poor by the Euro Disneyland executives. Those managers who dealt with the media would not return phone calls, much less answer questions. Realizing they made a huge error, it has become Euro Disneyland executives' goal to improve their reputation with the media. Convention Business According to Turner & Coleman (1994), one of the few pieces of good news about Euro Disneyland is that its convention business exceeded expectations from the beginning. In fact, convention space at Euro Disneyland's themed New York Hotel, located adjacent to the park, was overbooked and more capacity was needed. Euro Disneyland did not anticipate the success of its convention facilities. Had it done so, it could have increased its conference groups and revenue. Euro Disneyland frantically tried to increase its convention facilities. THE RESOLUTIONS Disney's Financial Rescue Package On March 14, 1994, Walt Disney Company developed a restructuring "rescue" plan which would decrease the amount of Euro Disneyland's debt and increase profit. Name Change Euro Disneyland unofficially changed its name in September 1994 to Disneyland Paris in order to adapt to "... European tastes and turn around continued losses and reported slumping attendance". Through the emphasis on the name recognization of Paris, Disney executives hoped to capitalize on its proximity to the French capital. It was hoped that this would result in increased attendance and revenues. Downsizing and Price Breaks In order for Euro Disneyland to hold down costs and increase revenues it has cut 950 administrative posts, or 8.6% of its overall work force In addition, responding to complaints regarding high entrance fees and hotel prices, Euro Disneyland has broken a Walt Disney Company taboo by introducing cut-rate entry and room rates for the off-season Another first is that it is offering a lower-priced 'After 5' evening entrance ticket. Marketing Changes The Walt Disney Company is changing its marketing philosophy in order to expand its efforts to countries such as Israel and Africa. In addition, rather than market Euro Disneyland as vacation destination for a period of time, the Walt Disney Company decided to market it as one of many stops on a month-long European itinerary. Labor Disputes To end numerous labor disputes over long-hours and poor pay, Euro Disneyland has "...shifted away from imported American working practices and towards a more French approach." This new approach set a maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the French method which allowed French citizens the ability to recognize their standard French job classifications. As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force. CONCLUSION Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. Because the Walt Disney Company executives were determined to adhere to American philosophies, they did not thoroughly investigate all aspects of the European environment. This failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their American dream theme park on foreign soil with little if any regard for the practical reality of the physical, financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's "...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure itself, which depended on a highly optimistic financial scenario with little room for glitches." These massive oversights were contributing factors to the problems faced at Euro Disneyland. 1. Explain the reasons why Disney executives were so confident that Euro Disney (Disneyland Paris) would be a great success. 2. Based on your understanding of the case, define the most important target market for Euro/Paris Disney - use all of the segmentation variables. 3. What are some of the main cultural differences between the US and France (list and explain at least 4)? 4. List and explain four specific key issues that created problems in the first few years after the opening of the park. Which were of the most concern? 5. What specifically could Disney have done differently to make the construction, staffing, and opening of Euro Disneyland go smoother? - Explain 5 major changes that would have made a significant difference. 6. What other parks does Disney have world-wide? List, give the year established, and give the most recent attendance figures for each. 7. Overall, was Euro Disneyland a good idea for France and for Disney? Why or why not? Give in-depth reasoning for your answer. 8. Research and describe changes at Disneyland Paris since the case study was written. Specifically, describe changes to the park, updated attendance figures (for 2014, 2015, 2016 and 2017) and a brief overview of their current financial status and any future expansion plans. The Walt Disney Company chose Paris, France, as the site of Euro Disneyland for many reasons. One was the success of Tokyo Disneyland. On April 15, 1983, the Walt Disney Company opened in Tokyo, Japan, their first theme park outside the United States. This theme park, Tokyo Disneyland became an instant hit. In fact, since the Walt Disney Company executives believed they learned so much about operating a theme park in another country, and since Tokyo Disneyland was an instant success, they began immediately to search for a site for a fourth park. To find a site for their fourth theme park, the i Walt Disney Company looked to Europe where Disney films historically have done better than in the United States. Because of this film success, the Western European audience already was familiar with Disney entertainment and merchandise. From 1983 through 1987 the company searched for sites in the United Kingdom, France, Germany, Spain, and Italy. Finally the possibilities were narrowed down to Costa del Sol in Spain and Paris in France. Although Spain had the edge due to its climate, France had a larger population and a spectacular transportation network (Scimone, 1989). The Walt Disney Company executives believed since Tokyo Disneyland located in a cold-weather climate and virtually the same latitude as Paris, was so successful, they would be able to operate in similar weather conditions in Paris. In fact, Disney executives admit that ...without the cold-climate (Tokyo) Disneyland success, they would never have picked Paris, which has the same or worse weather than Tokyo" (Anything but a 'Mickey Mouse', 1989). Thus, Paris was selected to be the site of their fourth theme park. The site for Euro Disneyland is a "...parcel of prime suburban real estate in a mushrooming region called Marne-la-Vallée." In fact, the land is one-fifth the size of Paris itself (Scimone, 1991). When the French government used its right of eminent domain to sell Disney the 4,400-acre (1,943-hectares) site at a fraction of its market value for approximately $7,500 an acre. Marne-la-Vallée is located in an ideal geographic location since it is 20 miles (32 kilometers) due cast of the center of Paris and is halfway between the two international airports of Orly and Roissy-Charles-de- Gaulle. The French railway regional express network connects Marne-la-Vallée with the Paris metro. system, and major highways are nearby. In fact, of the more than 350 million Western Europeans, 17 million can reach the Euro Disneyland resort within two hours by car. With the scheduled opening (which took place May 1994) of direct rail links to Great Britain via the English Channel there were countless additional potential guests. Thus, due to its transportation availability, Paris offers Euro Disneyland a wealth of potential guests and employees. The Walt Disney Company signed a contract with the French national, regional and local governments, which promised Disney: favorable loan terms; that the rapid transit railway system would be extended to the theme park from Paris; that two interchanges would be built to link Euro Disneyland with a main highway; and that a special station for high-speed trains would be constructed at the park. The Walt Disney Company promised new jobs and contracts for local suppliers which resulted in red carpet treatment from France. More specifically, Euro Disneyland planned on hiring 12,000 new Cast Members (employees). About 6,000 would work in Euro Disneyland's Magic Kingdom, 5,200 in hotels on the property, and the remainder in recreation and support facilities. The area was suffering high unemployment at the time and the Walt Disney Company executives believed the economic benefits to the region would be great since they would employee so many local citizens and since tourism generates revenue without requiring such costly social services as schools and hospitals. Euro Disneyland is a public company with 51% of equity owned by EC individuals and institutions (Anything but a 'Mickey Mouse', 1989). The other 49% of the shares are owned by the Walt Disney Company who maintains management control of the company (Grey, 1989). Opening Day, April 12, 1992 Despite a few protests, the Walt Disney Company's fourth theme park, Euro Disneyland opened its doors to the public with essentially the same attractions as in the other Disney theme parks in California, Florida, and Japan. Euro Disneyland executives hoped to attract 11 million guests a year, more than twice the number that visit the Eiffel Tower. Half of the guests were expected to be French. Unfortunately, the dream of succeeding did not become a reality and eventually Euro Disneyland brought in new management and made other changes in order to save Euro Disneyland. THE PROBLEMS Euro Disneyland's target of 11 million guests in the first year was met, but revenues did not roll in as had been planned. In fact, Euro Disneyland reported a $905 million loss for the fiscal year that ended in September 30, 1993, and by December 31, 1993, Euro Disneyland had amassed cumulative loss of 6.04 billion French francs or 1.03 billion US dollars. Euro Disneyland's first chairman, Robert Fitzpatrick, an American, won kudos for setting up the park, yet he stumbled over day-to-day operations. Fitzpatrick spoke French, knew Europe well and his wife was French. But he seemed to be "...caught in the middle and quickly came to be regarded with suspicion by some on both sides." He was replaced in 1993 by Frenchman Philippe Bourguignon. European Recession Euro Disneyland executives and advisors failed to see the signs of the approaching European recession. "Between the glamour and the pressure of opening and the intensity of the project itself, we (the executives) didn't realize a major recession was coming". As the recession began to develop the French real-estate market tumbled, thus, destroying Euro Disneyland's hopes of selling their assets and receiving revenues. In addition, the recession caused French and European disposable incomes to shrink, causing families to think twice about taking an expensive trip to Euro Disneyland. Furthermore, Euro Disneyland did not realize the magnitude of the impending recession and when given numerous opportunities to sign partners who would share the risk or buy the existing hotels, Disney refused. Euro Disneyland did not want to give up any of the potential revenues once the recession was over. Real Estate Market The Walt Disney Company executives involved in the development of Euro Disneyland were determined they would not repeat two mistakes which they had made in past ventures. One mistake was allowing other companies to build lucrative hotels surrounding their theme park, as happened at Walt Disney World in Orlando, Florida, where the Walt Disney Company owns only 14% of all hotels. The other mistake was in letting another company own a Disney theme park, as in Tokyo, Japan, where Disney just collects royalties from an immensely profitable attraction. Thus, in France the Walt Disney Company bought far more land then it needed in order to eventually build 700,000 square meters of office space, a 750,000 square meter corporate park, 2,500 individual homes, a 95,000 square meter shopping mall, 2,400 apartments and 3,000 time share apartments. Euro Disneyland planned to develop the land and then sell it to prospective buyers, making a large profit. In addition, this would allow Euro Disneyland stringent control over designing and building of future areas within the resort and then the ability to sell off the completed commercial properties in due course and at a large profit. Unfortunately, this revenue generating plan never really "got off the ground" due to the collapse of the real-estate market which, in turn, caused the demise of the planned development around the theme park. Thus, Euro Disneyland did not receive revenue from property development as had been anticipated. Operational Errors There were numerous errors made regarding the overall operation of Euro Disneyland. For example, from its American experience the Walt Disney Company thought Monday would be the light day for guests and Friday a heavy one, and allocated staff accordingly. In reality the reverse was the case. In fact to this day, the company still struggles to find the right level of staffing at a theme park where "...the number of visitors per day in the high season can be 10 times the number in the low season" Furthermore, to add to the operation problem is the difference in employee acceptance of conditions of employment. In Orlando Cast Members are accustomed to and have learned to accept being sent home if they are not needed. However, in Paris, French Cast Members feel extremely irritated by and have a very difficult time accepting the inflexible scheduling. Another example of operational assumptions at Euro Disneyland involved the bus drivers. The Walt Disney Company built the French bus parking spaces much too small. Bus drivers were unhappy as they had a very difficult time fitting their busses into their designated spots. In addition, the Walt Disney Company provided only 50 restroom facilities for bus drivers and on peak days there would be 2,000 drivers. A final example of the operational errors made by Euro Disneyland involved the computer stations at the hotels. Euro Disneyland executives assumed guests would stay at the park for several days. This in fact did not happen. Many guests arrived early in the morning, spent the day at the park, checked into the hotel late that night, and then checked out early the next morning before heading back to the park. Since there were so many guests checking-in and checking-out, additional computer stations had to be installed at the hotels in order to decrease the amount of time the guests stood in line. Labor Costs Before the opening of Euro Disneyland executives had estimated labor cost would be 13% of their revenues. This was another area where the executives were wrong in their assumptions. In 1992 the true figure was 24% and in 1993 it increased to a whopping 40%... Staffing and Training Euro Disneyland recruited through job fairs, a popular European recruiting technique. In two days, 1,000 applied. However, since the Walt Disney Company's requirements for employment are so high, for every 10 candidates interviewed only one was hired. To complicate the hiring process, there were language requirements since the official languages of Euro Disneyland are French and English. Preferences were given to trilingual applicants because it was hoped that the park would draw guests from all over Europe, The success to Disney parks' repeat guest visits is the employee-customer rapport. Thus, the largest challenge Euro Disneyland encountered was implanting a "have a nice day" mentality and teaching 12,000 European employees to smile the "Disney smile" all day. Throughout training and employment ALL Cast Members learn they must adhere to the company's strict 13 page manual of dress codes, known to Cast Members as the "Disney Look." The Europeans did not understand this "Disney Look". The "Disney Look" is a rigid code of Cast Member appearance that imposes a well-scrubbed, all-American look. It details the size of earrings to the size of finger nails to the no tolerance rule regarding facial hair and dyed hair. It is difficult for the Europeans to adhere to an "American look" since they are not American and they believe this requirement has stripped them of their "individualism". In December 1994 Euro Disneyland was taken to French court contesting the Walt Disney Company's strict dress code. The Europeans believed the dress code violated French labor law. As a result Euro Disneyland restructured their French dress code. However, the French believed that the Walt Disney Company just instituted a new policy not as a result of being taken to court but in an attempt to patch up the rocky labor relations at the theme park. Cultural Issues An example of cultural issues was Walt Disney Company's policy of serving no alcohol in its parks in California, Florida, and Tokyo which it extended to France. This caused astonishment and rebellion in France where a glass of wine for lunch is a given. After much consideration, in May 1993, the Walt Disney Company changed its policy and allowed wine and beer in the Euro Disneyland theme park. Another example is the Walt Disney Company's belief that it understood European breakfast norms. Disney was told Europeans did not eat sit-down breakfasts. This resulted in Disney downsizing their restaurants before Euro Disneyland opened. Once it opened the restaurants were bombarded with breakfast eaters. In fact, they were trying to serve 2,500 breakfasts in a 350-seat restaurant at some of the hotels." Further, guests wanted bacon and eggs rather than just coffee and croissants. Disney reacted quickly with prepackaged breakfasts delivered to rooms and satellite locations. In much the same vein, the Walt Disney Company had difficulty realizing that the Europeans were accustomed to eat at a set time every day. Where Americans are content to wander around the parks with lunch in their hands, a large majority of the European guests would converge on the restaurants at 12:30 p.m. expecting to be seated for a leisurely lunch. This caused the lines to be very long. To complicate matters further, once the Europeans reached the front of the line they were told they could not have wine or beer with their lunch. Thus, the Europeans did not have a positive "Disney experience" while eating their meals. In addition, it was difficult for Euro Disneyland's managers to staff for these one or two hour "rush hours." A final example of a cultural error is the Europeans approach to vacation time. The Europeans are reluctant to take their children from school for a vacation in mid-session whereas Americans do it frequently. Also, the Europeans prefer a few longer holidays rather than several short breaks. The Walt Disney Company was convinced that it would be able to "Americanize" the European habits. Unfortunately for the Walt Disney Company, this was not the case. Per-capita Spending There also were miscalculations made by the executives regarding the per-capita spending of the guests at Euro Disneyland. The Walt Disney Company had assumed that guests visiting Euro Disneyland would spend large amounts of money as they did in the United States and Tokyo. More specifically, the Walt Disney Company calculated that each guest would buy $33 worth of food and souvenirs per day. This did not happen. In fact, spending was about 12% less than predicted. European guests came to the theme park paying the steep entry fees ($43 for adults and $30 for children), but spent less per-capita on food and merchandise than Americans. This may be due in part to the fact that many guests spend as much time on the rides as possible because of the high admission price (30% more than Disney World in Florida) and less time shopping for souvenirs. American and Japanese consumers do not leave the theme parks empty handed, whereas Europeans do. This resulted in lower- than-expected revenue by Euro Disneyland. Interest Rates The total construction cost of Euro Disneyland was $4 billion. Disney put in just $170 million in equity capital, while public shareholders, who own 51% of the shares put in $1 billion in equity capital. Thus, the remaining $2.9 billion was borrowed, at high rates running as much as 11%. "Thus, from the start, the project was highly leveraged," there was an additional necessity to borrow more money. This second set of loans increased the amount of money owed handcuffed Euro Disney. With high interest rates, large loans, and lower than expected revenue Euro Disneyland was in financial trouble. Marketing Euro Disneyland was marketed with the assumption that it was "a complete vacation destination that offers enough to keep a family happily occupied for a week." Instead of marketing the park in the American-style appeal of "...bigness and extravagance", Euro Disneyland should have concentrated on the emotional aspect, marketing that guests would have a unique, extraordinary family experience they would never forget. The American-style bigness approach insulted Europeans. Euro Disneyland made a huge mistake not considering the views of the French when developing their marketing strategies. The Walt Disney Company agrees there may have been marketing mistakes, but it blames the mistakes to lack of data on how Europeans would react to the "Disney Magic." Additionally, communication with the media has been very poor by the Euro Disneyland executives. Those managers who dealt with the media would not return phone calls, much less answer questions. Realizing they made a huge error, it has become Euro Disneyland executives' goal to improve their reputation with the media. Convention Business According to Turner & Coleman (1994), one of the few pieces of good news about Euro Disneyland is that its convention business exceeded expectations from the beginning. In fact, convention space at Euro Disneyland's themed New York Hotel, located adjacent to the park, was overbooked and more capacity was needed. Euro Disneyland did not anticipate the success of its convention facilities. Had it done so, it could have increased its conference groups and revenue. Euro Disneyland frantically tried to increase its convention facilities. THE RESOLUTIONS Disney's Financial Rescue Package On March 14, 1994, Walt Disney Company developed a restructuring "rescue" plan which would decrease the amount of Euro Disneyland's debt and increase profit. Name Change Euro Disneyland unofficially changed its name in September 1994 to Disneyland Paris in order to adapt to "... European tastes and turn around continued losses and reported slumping attendance". Through the emphasis on the name recognization of Paris, Disney executives hoped to capitalize on its proximity to the French capital. It was hoped that this would result in increased attendance and revenues. Downsizing and Price Breaks In order for Euro Disneyland to hold down costs and increase revenues it has cut 950 administrative posts, or 8.6% of its overall work force In addition, responding to complaints regarding high entrance fees and hotel prices, Euro Disneyland has broken a Walt Disney Company taboo by introducing cut-rate entry and room rates for the off-season Another first is that it is offering a lower-priced 'After 5' evening entrance ticket. Marketing Changes The Walt Disney Company is changing its marketing philosophy in order to expand its efforts to countries such as Israel and Africa. In addition, rather than market Euro Disneyland as vacation destination for a period of time, the Walt Disney Company decided to market it as one of many stops on a month-long European itinerary. Labor Disputes To end numerous labor disputes over long-hours and poor pay, Euro Disneyland has "...shifted away from imported American working practices and towards a more French approach." This new approach set a maximum working week and annualized hourly work schedules. In addition, it reclassified jobs using the French method which allowed French citizens the ability to recognize their standard French job classifications. As a result, Euro Disneyland won greater acceptance and willingness to be flexible from its work force. CONCLUSION Euro Disneyland a theme park comprised of an updated, state of the art Disney's Magic Kingdom, is a subsidiary of the Walt Disney Company located outside Paris, France, and has experienced numerous complications from its inception. Because the Walt Disney Company executives were determined to adhere to American philosophies, they did not thoroughly investigate all aspects of the European environment. This failure to do adequate research caused the Walt Disney Company executives and visionaries to construct their American dream theme park on foreign soil with little if any regard for the practical reality of the physical, financial, and/or cultural environment of their chosen site. More specifically, the Walt Disney Company's "...biggest mistakes were its overambitious plans to develop the site, plus Euro Disneyland's financial structure itself, which depended on a highly optimistic financial scenario with little room for glitches." These massive oversights were contributing factors to the problems faced at Euro Disneyland. 1. Explain the reasons why Disney executives were so confident that Euro Disney (Disneyland Paris) would be a great success. 2. Based on your understanding of the case, define the most important target market for Euro/Paris Disney - use all of the segmentation variables. 3. What are some of the main cultural differences between the US and France (list and explain at least 4)? 4. List and explain four specific key issues that created problems in the first few years after the opening of the park. Which were of the most concern? 5. What specifically could Disney have done differently to make the construction, staffing, and opening of Euro Disneyland go smoother? - Explain 5 major changes that would have made a significant difference. 6. What other parks does Disney have world-wide? List, give the year established, and give the most recent attendance figures for each. 7. Overall, was Euro Disneyland a good idea for France and for Disney? Why or why not? Give in-depth reasoning for your answer. 8. Research and describe changes at Disneyland Paris since the case study was written. Specifically, describe changes to the park, updated attendance figures (for 2014, 2015, 2016 and 2017) and a brief overview of their current financial status and any future expansion plans.

Answer rating: 100% (QA)

1 Disney land executives thought that the Paris location will be a great success for the following reasons Because of Tokyo Japans Disney land instant gain of popularity within few days of the opening ... View the full answer