Disneyland Park is one of the theme parks belonging to the Walt Disney Company. It is settled in Marne-la-Vallée, near Paris (France). The theme park opened on April 12th 1992 as Euro Disneyland. In 1994, it was renamed Disneyland Paris until 2002. It is now known as Disneyland Resort Paris. A few years ago, its creation had given rise to a general enthusiasm and to many expectations among the French people affected by a period of unemployment. There is an anecdote illustrating the importance of the project : Disneyland Park's CEO was asking by a journalist whether the building of the park would be late or not because the opening was planned on April 12th 1992 at 9 a.m. Smiling, he answered that the opening would be slightly late and that it would take place on the same date but at 9.01 a.m. The cost of the building operations reached 45 billion francs and the park presently covers more than 60 hectares.
Tags: Euro Disney case, Disney diversification, Euro Disney failure, Euro Disneyland case study, Euro Walt Disney case study
[...] In 1992, after only eight months, Euro Disney had lost 1.5 billion francs. At the end of 1993, the net losses reached 5 billion francs and the park was said to collapse. The Walt Disney Company had never undergone such a disastrous situation. The initial failure can be explained by various reasons but there are three major contributing factors : the European economic recession : just as Euro Disney opened, Europe was in the middle of an economic slump. Euro Disney felt that they could overcome this issue, however, Europeans had little spending power at this time. [...]
[...] It was a flop : the expected revenues of Euro Disney were down. There was an enormous amount of properties involved in the business such as hotels and park's attractions. But the real estate companies run the theme park. The park had to pay a lease to the real estate companies which had invested their money at the beginning. The initial investments of the park were split between the real estate companies and Euro Disney properties. By 2005, the estimated returns were pretty good because Euro Disney seemed to have reduced its losses. [...]
[...] The marketing failure : Euro Disney was marketing incorrectly to both the consumers and the media. The views of the French people were not considered when marketing startegies were created. The resort was marketed in the American style of bigness and extravagance. Instead, Euro Disney should have concentrated on the emotional aspect, marketing that visitors who have a unique, extraordinary experience they would not forget. Furthermore, a fundamental error was made in media relations. For instance, in an interview with a French magazine, one Disney executive declared that they were building something immortal like the pharaohs built the Sphinx The media captured these types of quote and placed them in publications throughout Europe. [...]
[...] Euro Disney also generated cash flows of 18.4 million euros during 2005. These cash flows were lower than the ones of 2004 due to the payment of loans interest . In 2006, there was a real increase in the exploiting cash flows due to huge provisions for depreciation. The important acquiring of fixed assets reduced the amount of the cash flows used for investment operations. Finally, the repayment of loans contributed to reduce the cash flows generated by financing operations. [...]
[...] III - Euro disney as a source of benefits Since the 1993 failure, Euro Disney has had to work a lot to put right the economic situation of the theme park. This wish to improve the situation led to various benefits for the clients and the staff. First of all, Euro Disney is located in Marne-la-Vallée which is an ideal location for the park since it is 32 kilometers due to east of the center of Paris and is halfway between the two international airports of Orly and Roissy Charles-De-Gaulle. [...]
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