McGraw-Hill © 2000 The McGraw-Hill Companies

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Euro-Disney:Euro-Disney:The First 100 DaysThe First 100 Days

McGraw-Hill © 2000 The McGraw-Hill Companies

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SMThe Walt Disney Traditional The Walt Disney Traditional

FormulaFormula

• 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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SMThe Walt Disney The Walt Disney

Traditional Formula (cont’d)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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SM Tokyo Disneyland--A Successful Tokyo Disneyland--A Successful TransferTransfer

McGraw-Hill © 2000 The McGraw-Hill Companies

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SM Euro Disney--A Success?Euro Disney--A Success?

McGraw-Hill © 2000 The McGraw-Hill Companies

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SM Services Marketing ProblemsServices 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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SMCriteria to Assess Criteria to Assess

First 100 DaysFirst 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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SMCriteria to Assess Criteria to Assess

First 100 DaysFirst 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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SMWhat Aspects Transferable/What Aspects Transferable/

Not Transferable?Not Transferable?

TRANSFERABLE

• Theme park formula: Values/quality/imagination

• 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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SMConsiderations Before Considerations Before

Extending Service Concept Extending Service Concept Across BordersAcross 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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SM What Can Disney Do Now?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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SM Update: March ‘93Update: 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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SMChanges and Update 1998:Changes and Update 1998:An Impressive TurnaroundAn 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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SM Current SituationCurrent 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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SM Labor UnrestLabor 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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SM Future PlansFuture 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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SM"Rejected New Names for "Rejected New Names for

EuroDisney"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-LameAs presented on the 9/15/94 broadcast of LATE SHOW with DAVID LETTERMAN