McGraw-Hill © 2000 The McGraw-Hill Companies

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S M

Euro-Disney:

The First 100 Days

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M The Walt Disney Traditional

Formula

• Theme parks--core of attractions organized to an

identical set of themes

• Offerings for adults

• Offerings for children

• Offerings for different psychographic targets

• Stable of characters

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M The Walt Disney

Traditional Formula (cont’d)

• Commitment to always having something new and

different at parks

• Service delivery

• Concept of guest experience

• Attention to detail

• Disney University

– Qualifying potential hires

– Transmitting Disney values

– Training employees to be effective in jobs

– Grooming standards

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M Tokyo Disneyland--A Successful

Transfer

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M Euro Disney--A Success?

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M Services Marketing Problems

• Heterogeneous target market--multi-national,

local/traveling--makes strategy more difficult

• Pricing too high

• Poor market research

• Cold weather location

• Lack of consideration for local culture

• Service standards hard to implement

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M Criteria to Assess

First 100 Days

• 2/3 into initial 5 1/2 month operating

period, have 2/3 of projected revenues

• figure of 3.6 million visitors slightly

behind pace to achieve 7 million

projected, although summer months

remain

• Substantial cost problem

• Extra 5,000 workers needed

• Pre-opening and other costs

ATTENDANCE

COSTS

PROFITS

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M Criteria to Assess

First 100 Days

• Very high in beginning period

• No employee housing

• More because difficult role to perform

than in any other park due to language

• Appears to be ahead of other parks at

same point in time

EMPLOYEE

TURNOVER

OVERALL

PERFORMANCE

VS OTHER

PARKS

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M What Aspects Transferable/

Not Transferable?

TRANSFERABLE

• Theme park formula:

Values/quality/imaginat

ion

• Guest service

• Structure of parks

NOT TRANSFERABLE

• Service standards conflicted

with French labor unions

• Policy toward wine

• Waiting lines

• Management of local employees

by expatriates

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M

Considerations Before Extending Service Concept

Across Borders

• Adapting service itself

• Adapting promotion and distribution

• Adapting entry modes

• Adapting communication

• Adapting market research international

• Adapting work force management

– culture’s effect on employee behavior

– adapting service employee incentives

– adapting service standards for

international delivery

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M What Can Disney Do Now?

• Lower prices

• Build additional ride capacity

• Improve cast friendliness

• Coordinate marketing of parks with

release of films

• Change to local management team

• Aggressive cross-promotion

• Attract and retain high quality

employees

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M Update: March ‘93

• Loss of $40 million before deferral of $20 million

debt payment

• Underutilization of hotel rooms

• Bombarded with negative publicity

• Fitzpatrick stepped down as president

• Lowered admission prices by 25% for adults and

33% for kids

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M

Changes and Update 1998:

An Impressive Turnaround

• More than 11 million visitors per year--bigger than

Eiffel Tower or Louvre

• #1 short-stay tourist destination in Europe

• Higher hotel occupancy rate (64%) than Paris

hotels

• Profits 1997 rose 77%

• Renamed Disneyland Paris

• Added new Space Mountain Ride

• “Kids Go Free” promotions

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M Current Situation

Profitable for last 3 years

– 1997 income up 21.5% yr to yr; Costs up

8.3%

– 1998 1st quarter income up 16.6% over

1997

– 12.6 million in attendance in 1997

– 78% hotel occupancy in 1997

– Recovery due in part to “American” cost

controls

– Slight increase in average guest spending

– Emergence of major conference center

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M Labor Unrest

• 80-160 employees went on strike in July 1998

– Wanted classification as “artists” not “extras”

– Resentful that multiple skills were not rewarded

– Costumed strikers smiling, not confrontational

• Average striking worker making more than minimum

wage; artist classification would net $330 more per month

• Disgruntled employees returned to

work without government support

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M Future Plans

• Control 3,200 acres around current location

• Creating Val d’Europe - a “town” outside

Euro Disney

– 90,000 sq. meter shopping mall

– 1,610 housing units

– Office space

– International business park

McGraw-Hill © 2000 The McGraw-Hill Companies

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S M "Rejected New Names for

EuroDisney"

10. Euro Disaster

9. El Biggo Mistake-o

8. Never-Never-Profit Land

7. La Veal de Guys in Big Smelly Costumes

6. Gumpworld

5. Beaucoup de Crap Americain

4. Johnny Depp's Hotel of Destruction

3. Boutros Boutros-Goofy

2. Have-You-Forgotten-We-Saved-Your-Ass-

in-the-World-War-Two-Land

1. Ooh-La-Lame As presented on the 9/15/94 broadcast of LATE SHOW with DAVID LETTERMAN