Operations Management (250 words)
Operations Management (250 words)
(A-Y) Operations Management (250 words)
“Which aspects of operations management does Disneyland Paris need to improve for its future success?”
Essential Textbook/Resource:
Operations Management, by Slack, N, Chambers, S, & Johnston, R (2010), 6th Edition, Financial Times Prentice Hall
Case Study: Disneyland Paris Resort
Introduction
In August 2006, the company behind Disneyland Resort Paris reported a 13 per cent rise in revenues, saying that it was making encouraging progress with new rides aimed at getting more visitors. ‘I am pleased with year-to-date revenues and especially with third quarter’s, as well as with the success of the opening of Buzz Lightyear Laser Blast, the first step of our multi-year investment programme. These results reflect the group’s strategy of increasing growth through innovative marketing and sales efforts as well as a multi-year investment programme. This performance is encouraging as we enter into the important summer months’, said Chairman and Chief Executive Karl L. Holz.
Revenue for the quarter ending 30 June rose to Euro 286.6 million ($362 million) from Euro 254 million a year earlier. The results helped to boost overall profits at Disney Company, and the company’s stock price soared. Yet, it hadn’t always been like that. The fourteen-year history of Disneyland Paris had more ups and downs than any of its roller-coasters. The company had hauled itself back from what some commentators had claimed was the brink of bankruptcy in 2005. In fact, from 12 April 1992 when Euro Disney opened through to this more optimistic report, the resort had been subject simultaneously to both wildly optimistic forecasts and widespread criticism and ridicule. An essay on one critical internet site (called ‘An Ugly American in Paris’) summarised the whole venture in this way:
‘When Disney decided to expand its hugely successful theme park operations to Europe, it brought American management styles, American cultural tastes, American labor practices, and American marketing pizzazz to Europe. Then, when the French stayed away in droves, it accused them of cultural snobbery.’
The ‘magic’ of Disney
Since its founding in 1923, The Walt Disney Company had striven to remain faithful in its commitment to ‘producing unparalleled entertainment experiences based on its rich legacy of quality creative content and exceptional storytelling’. It did this through four major business divisions: Studio Entertainment, Parks and Resorts, Consumer Products, and Media Networks. Each segment consists of integrated businesses that worked together to ‘maximise exposure and growth worldwide’.
In the Parks and Resorts division, according to the company’s description, customers could experience the ‘magic of Disney’s beloved characters’. It was founded in 1952, when Walt Disney formed what is now known as ‘Walt Disney Imagineering’ to build Disneyland in Anaheim, California. By 2006, Walt Disney Parks and Resorts operated or licensed 11 theme parks at five Disney destinations around the world. They were, Disneyland Resort, California, Walt Disney World Resort, Florida, Tokyo Disney Resort, Disneyland Resort Paris, and their latest park, Hong Kong Disneyland. In addition, the division operated 35 resort hotels, two luxury cruise ships and a wide variety of other entertainment offerings. But in the history of the Walt Disney Company, perhaps none of its ventures had proved to be as challenging as its Paris Resort.
Service delivery at Disney resorts and parks
The core values of the Disney Company and, arguably, the reason for its success, originated in the views and personality of Walt Disney, the Company’s founder. He had what some called an obsessive focus on creating images, products and experiences for customers that epitomised fun, imagination and service. Through the ‘magic’ of legendary fairytale and story characters, customers could escape the cares of the real world. Different areas of each Disney Park are themed, often around various ‘lands’ such as Frontierland, Fantasyland, Tomorrowland and Adventureland. Each land contains attractions and rides, most of which are designed to be acceptable to a wide range of ages. Very few rides are ‘scary’ when compared to many other entertainment parks. The architectural styles, decor, food, souvenirs, and cast costumes were all designed to reflect the theme of the ‘land’, as were the films and shows.
Although there were some regional differences, all the theme parks followed the same basic setup. Over the years, Disney had built up a reputation for imaginative rides. Its ‘imagineers’ had years of experience in using ‘auto animatronics’ to help recreate and reinforce the essence of the theme. The terminology used by the company reinforced its philosophy of consistent entertainment. Employees, even those working ‘back stage’, were called cast members. They did not wear uniforms but ‘costumes’, and rather than being given a job they were ‘cast in a role’. All park visitors were called ‘guests’. Disney employees were generally relatively young, often of school or college age. Most were paid hourly on tasks that could be repetitive even though they usually involved constant contact with customers. Yet, employees were still expected to maintain a high level of courtesy and work performance. All cast members were expected to conform to strict dress and grooming standards. Applicants to become cast members were screened for qualities such as how well they responded to questions, how well they listened to their peers, how they smiled and used body language, and whether they had an ‘appropriate attitude’. All Disney parks had gained a reputation for their focus (some would say obsession) with delivering a high level of service and experience through attention to operations detail. To ensure that their strict service standards were met they had developed a number of specific operations policies:
? All parks employed effective queue management techniques such as providing information and entertainment for visitors.
? Visitors (guests) were seen as having a role within the park. They were not merely spectators or passengers on the rides, they were considered to be participants in a play. Their needs and desires were analysed and met through frequent interactions with staff (cast members). In this way they could be drawn into the illusion that they were actually part of the fantasy.
? Disney’s stated goal was to exceed their customers’ expectations every day.
? Service delivery was mapped and continuously refined in the light of customer feedback.
? The staff induction programme emphasised the company’s quality assurance procedures and service standards. These were based on the four principles of safety, courtesy, show and efficiency.
? Parks were kept fanatically clean.
? The same Disney character never appears twice within sight – how could there be two Mickeys?
? Staff were taught that customer perceptions are both the key to customer delight, but also are extremely fragile. Negative perceptions can be established after only one negative experience.
? Disney University was the company’s in-house development and learning facility with departments in each of the company’s sites. The University trained Disney’s employees in its strict service standards as well as providing the skills to operate new rides as they were developed.
? Staff recognition programmes attempted to identify outstanding service delivery performance as well as ‘energy, enthusiasm, commitment, and pride’.
? All parks contained phones connected to a central question hot-line for employees to find the answer to any question posed by customers.
Tokyo Disneyland
Tokyo Disneyland was owned and operated by the Oriental Land Company. Disney had designed the park and advised on how it should be run. In return, they received 10 per cent of all admissions revenues, and 5 per cent of food and souvenir revenues. The Tokyo project was considered a great success. Japanese customers revealed a significant appetite for American themes, American brands, and already had a good knowledge of Disney characters. Feedback from visitors at the Tokyo Park was extremely positive. Visitors commented on the cleanliness of the park, the efficiency of staff members, and the courtesy with which they were treated. Visitors also appreciated the Disney souvenirs (a wider range than in the American parks) because giving gifts is deeply embedded in the Japanese culture. Although the Tokyo park was almost identical to Disney’s Californian park, there had been no complaints about the dilution of Japanese culture by so strong an American themed entertainment. The Japanese operators had added many new attractions since its opening. Many signs were written in English as were cast members’ name badges. Similarly, many of the live shows and attractions were conducted in English and although almost all visitors to the park were Japanese, only one out of its thirty restaurants sold Japanese food. The success of the Tokyo Park was explained by one American living in Japan:
‘Young Japanese are very clean-cut. They respond well to Disney’s clean-cut image, and I am sure they had no trouble filling positions. Also, young Japanese are generally comfortable wearing uniforms, obeying their bosses, and being part of a team. These are part of the Disney formula. Also, Tokyo is very crowded and Japanese here are used to crowds and waiting in line. They are very patient. And above all, Japanese are always very polite to strangers.’
Disneyland Tokyo had opened in 1982. Because Disney was wary of losing money on the Japanese venture it decided not to own the Tokyo site – a decision it came to regret. Disney also regretted allowing hotels owned by other companies to be built at its earlier US Disneyland parks, to the extent that Disney only owned about 25 per cent of hotels in the vicinity. It decided that it would take full control of Euro Disney and all its hotels.
Disneyland Paris
By 2006 Disneyland Paris consisted of three parks: the Disney village, Disneyland Paris itself and the Disney Studio Park. The village was comprised of stores and restaurants; Disneyland Paris was the main theme park; and Disney Studio Park has a more general moviemaking theme. Yet, the idea of a European park was not new. Because many of Walt Disney’s most successful animations were taken from European literature, he had always wanted to build a park in Europe. In the event, his wish wasn’t completed until 25 years after his death. But when the Walt Disney Company planned its European venture, its reputation was riding high and it was confident of success. At the time of the European park’s opening, more than two million Europeans visited the US Disney parks, accounting for 5 per cent of the total visitors. The company’s brand was strong and it had over half a century of translating the Disney brand into reality. The name ‘Disney’ had become synonymous with wholesome family entertainment that combined childhood innocence with hightech ‘imagineering’.
Alternative locations
Formal plans to build a European Disney Park were first considered as early as 1975. Initially, as well as France, Germany, Britain, Italy and Spain were all considered as possible locations, though Germany, Britain and Italy were soon discarded from the list of potential sites. The decision soon came to a straight contest between the Alicante area of Spain, which had a similar climate to Florida for a large part of the year and the Marne-la-Vallée area just outside Paris. Certainly, winning the contest to host the new park was important for all the potential host countries. The new park promised to generate more than 30,000 jobs. It was the French location that eventually won out, partly because of the close proximity to the large population of the Paris conurbation and the city’s attraction as a tourist centre. Also its central positioning within Western Europe was though to be crucial to if it was to attract sufficient visitors. Early concerns that the park would not have the same sunny, happy feel in a cooler climate than Florida were allayed by the spectacular success of Disneyland Tokyo in a location with a similar climate to Paris. The first letter of agreement was signed with the French government in December 1985, and started to draw up the financial contracts during the following spring. Robert Fitzpatrick, a key organiser of the 1984 Los Angeles Olympics, was appointed as the Euro Disney President, and construction started on the 2,000 hectare site in August 1988.
But from the announcement that the park would be built in France, it was subject to a wave of criticism. One critic called the project a ‘cultural Chernobyl’ because of how it might affect French cultural values. Another described it as ‘a horror made of cardboard, plastic, and appalling colours; a construction of hardened chewing-gum and idiot folk lore taken straight out of comic books written for obese Americans’. However, as some commentators noted, the cultural arguments and anti-Americanism of the French intellectual elite did not seem to reflect the behaviour of most French people, who ‘eat at McDonalds, wear Gap clothing, and flock to American movies’. The major advantage of locating in Spain was the weather. However, the eventual decision to locate near Paris was thought to have been driven by a number of factors that weighed more heavily with Disney executives. These included the following:
? There was a site available just outside Paris which was both large enough and flat enough to accommodate the park.
? The proposed location put the park within a two-hour drive for 17 million people, a four-hour drive for 68 million people, a six-hour drive for 110 million people and a two-hour flight for a further 310 million or so.
? The site also had potentially good transport links. The Euro Tunnel that was to connect England with France was due to open in 1994. In addition, the French autoroutes network and the high-speed TGV network could both be extended to connect the site with the rest of Europe.
? Paris was already a highly attractive vacation destination and France generally attracted around 50,000,000 tourists each year.
? Europeans generally take significantly more holidays each year than Americans (five weeks of vacation as opposed to two or three weeks).
? Market research indicated that 85 per cent of people in France would welcome a Disney park in their country.
Both national and local government in France were prepared to give significant financial incentives (as were the Spanish authorities) including an offer to invest in local infrastructure, reduce the rate of value added tax on goods sold in the park, provide subsidised loans, and value the land artificially low to help reduce taxes. Moreover, the French government were prepared to expropriate land from local farmers to smooth the planning and construction process. The resort was to be 49 per cent owned by the Walt Disney Company and 51 per cent owned by a company called Euro Disney SCA which was quoted on the French stock exchange. Initially all shares were offered to European investors. The Walt Disney Company was to receive management fees and royalty fees based on the park’s revenues as well as an incentive-based management fee calculated on the park’s cash flow.
Designing Disney Land Resort Paris
Phase 1 of the Euro Disney Park was designed to have 29 rides and attractions as well as six hotels with over 5,000 rooms in total. In addition, the park had a championship golf course together with many restaurants, shops, live shows, and parades. Although the park was designed to fit in with Disney’s traditional appearance and values, a number of changes were made to accommodate what was thought to be the preferences of European visitors. For example, market research indicated that Europeans would respond to a ‘wild west’ image of America. Therefore, both rides and hotel designs were made to emphasise this theme. Disney was also keen to diffuse criticism, especially from French left-wing intellectuals and politicians, that the design of the park would be too ‘Americanised’ and would become a vehicle for American ‘cultural imperialism’. To counter charges of American imperialism, Disney gave the park a flavour that stressed the European heritage of many of the Disney characters, and increased the sense of beauty and fantasy. They were, after all, competing against Paris’s exuberant architecture and sights. For example, Discoveryland featured storylines from Jules Verne, the French author. Snow White (and her dwarfs) was located in a Bavarian village. Cinderella was located in a French inn. Even Peter Pan was made to appear more ‘English Edwardian’ than in the original US designs.
Disney conceded to the pressure for French to be the language of the park with English taking second place. The American actor, Vincent Price’s voice-over for the Phantom Manor, that was used initially, was replaced by a French actor. Only Price’s maniacal laugh remained. In keeping with their desire to make this park more ‘European’, even the story behind the Disneyland Paris Phantom Manor (named The Haunted Mansion in the US versions), although open to interpretation, was changed to include bits of The Phantom of the Opera and Great Expectations. Main Street USA, built in the idealised style of America at the beginning of the twentieth century, contained ornate shopping arcades one of which (diplomatically!) contains an exhibition telling the history behind the presentation of the Statue of Liberty by France to the USA in a spirit of friendship.
Because of concerns about the popularity of American ‘fast-food’, Euro Disney introduced more variety into its restaurants and snack bars, featuring foods from around the world. In a bold publicity move, Disney invited a number of top Paris chefs to visit and taste the food. Some anxiety was also expressed concerning the different ‘eating behaviour’ between Americans and Europeans. Whereas Americans preferred to ‘graze’, eating snacks and fast meals throughout the day, Europeans generally preferred to sit down and eat at traditional meal times. This would have a very significant impact on peak demand levels on dining facilities. A further concern was that in Europe (especially French) visitors would be intolerant of long queues. To overcome this, extra diversions such as films and entertainments were planned for visitors as they waited in line for a ride.
Discoveryland was new for a Disney park, it was based on the concept of the future based on past European Visionaries. Fantasyland was also new in that it had it’s own new ‘European’ attractions, along with a newly created castle especially for Euro Disney. Adventureland gained some extra new areas, again with a more authentic ‘European’ look than in previous parks. Before the opening of the park, Euro Disney had to recruit and train between 12,000 and 14,000 permanent and around 5,000 temporary employees. All these new employees were required to undergo extensive training in order to prepare them to achieve Disney’s high standard of customer service as well as understand operational routines and safety procedures.
Originally, the company’s objective was to hire 45 per cent of its employees from France, 30 per cent from other European countries, and 15 per cent from outside of Europe. However, this proved difficult and when the park opened around 70 per cent of employees were French. Most ‘cast members’ were paid around 15 per cent above the French minimum wage. Espace Euro Disney (an information centre) was opened in December 1990 to show the public what Disney was constructing. The ‘casting centre’ was opened on 1 September 1991 to recruit the cast members needed to staff the park’s attractions.
But the hiring process did not go smoothly. In particular, Disney’s grooming requirements that insisted on a ‘neat’ dress code, a ban on facial hair, set standards for hair and fingernails, and an insistence on ‘appropriate undergarments’ proved controversial. Both the French press and trade unions strongly objected to the grooming requirements, claiming they were excessive and much stricter than was generally held to be reasonable in France. Nevertheless, the company refused to modify its grooming standards. Accommodating staff also proved to be a problem, when the large influx of employees swamped the available housing in the area. Disney had to build its own apartments as well as rent rooms in local homes just to accommodate its employees. Notwithstanding all the difficulties, Disney did succeed in recruiting and training all its cast members before the opening.
The park opens
The park opened to employees, for testing during late March 1992, during which time the main sponsors and their families were invited to visit the new park. The formal press preview day was held on 11 April 1992, and the park finally opened to visitors on 12 April 1992. When opening the new resort, Roy Disney, nephew of Walt Disney, spoke of his ‘emotional homecoming for the Disney family, which traced its roots to the French town of Isigny-sur-Mer’. The opening was not helped by strikes on the commuter trains leading to the park, staff unrest, threatened security problems (a terrorist bomb had exploded the night before the opening) and protests in surrounding villages who demonstrated against the noise and disruption from the park. The opening day crowds, expected to be 500,000, failed to materialise, however, and at close of the first day only 50,000 people had passed through the gates. Disney had expected the French to make up a larger proportion of visiting guests than they did in the early days. This may have been partly due to protests from French locals who feared that their culture would be damaged by Euro Disney.
Also all Disney parks had traditionally been alcohol-free. To begin with Euro Disney was no different. However, this was extremely unpopular, particularly with French visitors who like to have a glass of wine or beer with their food. But whatever the cause, the low initial attendance was very disappointing for the Disney Company. It was reported that, in the first nine weeks of operation, approximately 1,000 employees left Euro Disney, about one half of whom ‘left voluntarily’. The reasons cited for leaving Disney’s employment varied. Some blamed the hectic pace of work and the long hours that Disney expected. Others mentioned the ‘chaotic’ conditions in the first few weeks. Even Disney conceded that conditions had been tough immediately after the park opened. Some leavers blamed Disney’s apparent difficulty in understanding ‘how Europeans work’. ‘We can’t just be told what to do, we ask questions and don’t all think the same’. Some visitors who had experience of the American parks commented that the standards of service were noticeably below what would be acceptable in America. There were reports that some cast members were failing to meet Disney’s normal service standard:
‘. . . even on opening weekend some clearly couldn’t care less . . . My overwhelming impression . . . was that they were out of their depth. There is much more to being a cast member than endlessly saying “Bonjour”. Apart from having a detailed knowledge of the site, Euro Disney staff have the anxiety of not knowing in what language they are going to be addressed [in] . . . Many were struggling.’
It was also noticeable that different nationalities exhibited different types of behaviour when visiting the park. Some nationalities always used the waste bins while others were more likely to drop litter. Most noticeable were differences in queueing behaviour. Northern Europeans tend to be disciplined and content to wait for rides in an orderly manner. By contrast, some southern European visitors ‘seem to have made an Olympic event out of getting to the ticket taker first’. The press in a number of countries debated whether Euro Disney really knew what it was trying to be. Is it an American theme park in Europe? Is it a theme park that exploits the European heritage of Disney characters? Had the park any connection at all with France, its host country? Is there a fundamental difference between Europeans and Americans in the type of entertainment that they appreciate? Is it even possible to devise a theme park that can please so many different nationalities and cultures? Others claimed that the nature of the European work force was such that they could never achieve the US standards of Disney service:
‘The Disney style of service is one with which Americans have grown up. There are several styles of service (or lack of it) in Europe; unbridled enthusiasm is not a marked feature of them.’
Nevertheless, not all reactions were negative. European newspapers also quoted plenty of positive reaction from visitors, especially children. Euro Disney was so different from the existing European theme parks, with immediately recognisable characters and a wide variety of attractions. Families who could not afford to travel to the United States could now interact with Disney characters and ‘sample the experience at far less cost’. The first phase of development (the theme park, hotel complex and golf course) had gone massively over budget. And attendance figures failed to improve much (by May the park was only attracting around 25,000 visitors a day instead of the predicted 60,000). Moreover it appeared that only three in every 10 visitors were native French. Seven weeks after the opening of the park, visitor attendance was reported at 1.5 million, a disappointment for the park which had expected 11 million visitors in its first year, and when Euro Disney announced its first quarter revenues of $489,000,000, it also said that it would make a loss in its first financial year. Again, the loss was blamed on disappointing attendance figures. Nevertheless, the company pointed out that Disney’s other theme parks had made comparable losses in their first year of operation, and anyway, it was foolish to try to predict future attendance so early in the park’s history. However, the Euro Disney company stock price started a slow downward spiral, rapidly losing almost a third of its value.
The next 15 years
By August 1992 estimates of annual attendance figures were being drastically cut from 11 million to just over 9 million. Euro Disney’s misfortunes were further compounded in late 1992 when a European recession caused property prices to drop sharply, and interest payments on the large start-up loans taken out by Euro Disney forced the company to admit serious financial difficulties. Also the cheap dollar resulted in more people taking their holidays in Florida at Walt Disney World. At the first anniversary of the park’s opening, in April 1993, Sleeping Beauty’s Castle was decorated as a giant birthday cake to celebrate the occasion, however, further problems were approaching. Criticised for having too few rides, the rollercoaster Indiana Jones and the Temple of Peril was opened in July. This was the first Disney roller coaster that included a 360-degree loop, but just a few weeks after opening emergency brakes locked during a ride, causing injuries to some guests. The ride was temporarily shut down for investigations. Also in 1993 the proposed Euro Disney phase 2 was shelved due to financial problems. Which meant Disney MGM Studios Europe and 13,000 hotel rooms would not be built to the original 1995 deadline originally agreed upon by The Walt Disney Company. However, Discovery Mountain, one of the planned phase 2 attractions, did get approval.
By the start of 1994, rumours were circulating that the park was on the verge of bankruptcy. Emergency crisis talks were held between the banks and backers with things coming to a head during March when Disney offered the banks an ultimatum. It would provide sufficient capital for the park to continue to operate until the end of the month, but unless the banks agreed to restructure the park’s $1 billion debt, the Walt Disney company would close the park, and walk away from the whole European venture, leaving the banks with a bankrupt theme park and a massive expanse of virtually worthless real estate. Disney then forced the bank’s hand by calling the annual stockholder meeting for 15 March. Shortly before the stockholder meeting, Michael Eisner, Disney’s CEO, announced that Disney was planning to pull the plug on the venture at the end of March 1994 unless the banks were prepared to restructure the loans. Faced with no alternative other than to announce that the park was about to close, just before the annual meeting the banks agreed to Disney’s demands. This effectively wrote off virtually all of the next two years’ worth of interest payments, and granted a three-year postponement of further loan repayments. In return, the Walt Disney Company wrote off $210 million in unpaid bills for services, and paid $540 million for a 49 per cent stake in the estimated value of the park, as well as restructuring its own loan arrangements for the $210 million worth of rides at the new park.
In May 1994, the connection between London and Marne-la-Vallée was completed, along with a TGV link, providing a connection between several major European cities. By August the park was starting to find its feet at last, and all of the park’s hotels were fully booked during the peak holiday season. Also, in October, the park’s name was officially changed from Euro Disney to ‘Disneyland Paris’, in order to, ‘show that the resort now was named much more like it’s counterparts in California and Tokyo’ and to link the park more closely with the romantic city of Paris. Some commentators noted that the name change would disassociate the resort in people’s minds with controversy, debts and politics. The end of year figures for 1994 showed encouraging signs despite a 10 per cent fall in attendance caused by the bad publicity over the earlier financial problems. And by the end of March 1995 Disney executives were predicting that Disneyland Paris might break even by the end of 1995. 1995 saw the opening of the new roller coaster, not after all to be called ‘Discovery Mountain’ but ‘Space Mountain de la Terre à la lune’, because it was decided that the new name was more exciting. Unlike its counterparts in Tokyo, Florida and California, it was not housed in a big white dome, but in a very ornate Victorian futuristic style dome. Intensive marketing of Space Mountain on television channels all over Europe and the release of the popular movie Pocahontas contributed to an improvement in the resort’s financial results. In fact, the Euro Disney resort complex did announce its first annual operating profit in November 1995, helped by the opening of Space Mountain in June.
In 1997 the five-year celebrations included, a new parade with Quasimodo and all the characters from the latest Disney blockbusting classic, The Hunchback of Notre Dame, the ‘Year To Be Here’ marketing campaign, the resort’s first Hallowe’en celebration and a new Christmas parade. A new attraction was added in 1999, ‘Honey I Shrunk the Audience’, making the audience the size of a bug while being invited to Inventor of the Year Award Ceremony. This was the more modern replacement to the ageing 3D movie Captain EO. However, the planned Christmas and New Year celebrations were disrupted when a freak storm caused havoc, destroying the Mickey Mouse glass statue that had just been installed for the Lighting Ceremony and many other attractions. Also damaged were trees next to the castle, the top of which developed a pronounced lean, as did many street signs and lamp posts. Disney’s ‘Fastpass’ system was introduced in 2000. This was a new service that allowed guests to use their entry passes to gain a ticket at certain attractions and return at the time stated and gain direct entry to the attraction without queueing. Two new attractions are opened, ‘Indians Jones et le temple du péril’ and ‘Tarzan le recontre’ starring a cast of acrobats along with Tarzan, Jane and all their Jungle friends with music from the movie in different European languages.
In 2001 the ‘ImagiNations Parade’ was replaced by the ‘Wonderful World of Disney Parade’ which received some criticism for being ‘less than spectacular’ with only eight parade floats. Also Disney’s ‘California Adventure’ was opened in California. The Resort’s tenth Anniversary (2002) saw the opening of the new Walt Disney Studios Park attraction. The Disney-MGM Studios at the Walt Disney World Resort, Florida, had already proved to be a major success and the original concept for the Paris studios had first been studied in 1992, shortly before the park opened. The concept, which was based on the world of cinema, seemed perfectly adaptable to the expectations of a European audience so development for the new park was started in 1997 when a small team of Disney Imagineers were asked to design it. In parallel to this, opinion leaders from the worlds of French and European cinema, culture and media were consulted about the project. R. Julienne, the famous French stunt designer, was among the first Europeans to work with Disney on the new Theme Park’s concept. Also, in this year, Disneyland Paris was renamed Disneyland Resort Paris, the original park was also renamed Disneyland Park to accommodate the new Walt Disney Studios. André Lacroix from Burger King was appointed as CEO of Disneyland Resort Paris in 2003, to ‘take on the challenge of a failing Disney park in Europe and turn it around’. Increasing investment, he refurbished whole sections of the park, increased the numbers of dancers to the ageing ‘Wonderful World of Disney Parade’ and introduced the Jungle Book Carnival in February to increase attendance during the slow months. By 2004, attendance had increased but the company announced that it was still losing money. It again renegotiated its Euro 2.4 billion debt to the Walt Disney Company and French financial institutions. Losses were attributed partly to the costs of opening Walt Disney Studios two years earlier, just as the world theme park business slumped in the wake of the American terrorist attacks. New hotels were opened (not owned by Disney) close to the park which meant increased competition for the park’s own hotels. The positive news of 2006 was well received. As one commentator put it:
‘Would Disney, the stockholders, the banks, or even the French government make the same decision to go ahead if they could wind the clock back to 1987? Is this a story of a fundamentally flawed concept, or was it just mishandled?’
Some events in overview of the history of Disneyland Resort Paris
1955 Disneyland, California opens
1971 Walt Disney World opens in Orlando, Florida
1982 Epcot Centre opens in Orlando, Florida
1984 Tokyo Disney opens
1987 The announcement that the resort on Marne-la-Vallée had been chosen as the place to build the newest Magic Kingdom (called Euro Disney then). Construction starts with a plan to complete in five years
1989 Disney-MGM Studios Theme Park opens in Orlando
1992 The grand opening of Euro Disney resort with a cast of thousands there to meet the demand that did not materialise
1993 The second year of Euro Disney’s operations. On the 12 April the castle was renamed from Le château de la belle au Bois dormant to the Le château du Gâteau
1994 Stand-off with French banks over taking away some of Euro Disney’s debt that had accumulated because of lower than expected revenues and the project due to going over budget. On 14 March agreement is reached with the French banks and Euro Disney stays open. The company would pay fewer royalties to the Walt Disney Company and more money from the Walt Disney Company would be invested into the resort
1995 Opening of the new roller coaster proves a great success
1996 Planet Hollywood was opened within the resort
1997 The Park is open for five years
1998 Disney’s Animal Kingdom opened in Orlando
1999 Storm disrupts the Park’s operations.
2000 Disney’s ‘Fastpass’ introduced
2001 Disney’s California Adventure opened in California
2002 The tenth Anniversary and Walt Disney Studio opened in Paris
2003 André Lacroix from Burger King is appointed as CEO of Disneyland Resort Paris
2004 The company announces that it is still losing money and again renegotiates its ?2.4 billion debt to the
Walt Disney Company and French financial institutions
2006 Rise in revenues reported
2012 20th anniversary celebrations
(A-Y) Operations Management (250 words)
“Which aspects of operations management does Disneyland Paris need to improve for its future success?”
Essential Textbook/Resource:
Operations Management, by Slack, N, Chambers, S, & Johnston, R (2010), 6th Edition, Financial Times Prentice Hall
Case Study: Disneyland Paris Resort
Introduction
In August 2006, the company behind Disneyland Resort Paris reported a 13 per cent rise in revenues, saying that it was making encouraging progress with new rides aimed at getting more visitors. ‘I am pleased with year-to-date revenues and especially with third quarter’s, as well as with the success of the opening of Buzz Lightyear Laser Blast, the first step of our multi-year investment programme. These results reflect the group’s strategy of increasing growth through innovative marketing and sales efforts as well as a multi-year investment programme. This performance is encouraging as we enter into the important summer months’, said Chairman and Chief Executive Karl L. Holz.
Revenue for the quarter ending 30 June rose to Euro 286.6 million ($362 million) from Euro 254 million a year earlier. The results helped to boost overall profits at Disney Company, and the company’s stock price soared. Yet, it hadn’t always been like that. The fourteen-year history of Disneyland Paris had more ups and downs than any of its roller-coasters. The company had hauled itself back from what some commentators had claimed was the brink of bankruptcy in 2005. In fact, from 12 April 1992 when Euro Disney opened through to this more optimistic report, the resort had been subject simultaneously to both wildly optimistic forecasts and widespread criticism and ridicule. An essay on one critical internet site (called ‘An Ugly American in Paris’) summarised the whole venture in this way:
‘When Disney decided to expand its hugely successful theme park operations to Europe, it brought American management styles, American cultural tastes, American labor practices, and American marketing pizzazz to Europe. Then, when the French stayed away in droves, it accused them of cultural snobbery.’
The ‘magic’ of Disney
Since its founding in 1923, The Walt Disney Company had striven to remain faithful in its commitment to ‘producing unparalleled entertainment experiences based on its rich legacy of quality creative content and exceptional storytelling’. It did this through four major business divisions: Studio Entertainment, Parks and Resorts, Consumer Products, and Media Networks. Each segment consists of integrated businesses that worked together to ‘maximise exposure and growth worldwide’.
In the Parks and Resorts division, according to the company’s description, customers could experience the ‘magic of Disney’s beloved characters’. It was founded in 1952, when Walt Disney formed what is now known as ‘Walt Disney Imagineering’ to build Disneyland in Anaheim, California. By 2006, Walt Disney Parks and Resorts operated or licensed 11 theme parks at five Disney destinations around the world. They were, Disneyland Resort, California, Walt Disney World Resort, Florida, Tokyo Disney Resort, Disneyland Resort Paris, and their latest park, Hong Kong Disneyland. In addition, the division operated 35 resort hotels, two luxury cruise ships and a wide variety of other entertainment offerings. But in the history of the Walt Disney Company, perhaps none of its ventures had proved to be as challenging as its Paris Resort.
Service delivery at Disney resorts and parks
The core values of the Disney Company and, arguably, the reason for its success, originated in the views and personality of Walt Disney, the Company’s founder. He had what some called an obsessive focus on creating images, products and experiences for customers that epitomised fun, imagination and service. Through the ‘magic’ of legendary fairytale and story characters, customers could escape the cares of the real world. Different areas of each Disney Park are themed, often around various ‘lands’ such as Frontierland, Fantasyland, Tomorrowland and Adventureland. Each land contains attractions and rides, most of which are designed to be acceptable to a wide range of ages. Very few rides are ‘scary’ when compared to many other entertainment parks. The architectural styles, decor, food, souvenirs, and cast costumes were all designed to reflect the theme of the ‘land’, as were the films and shows.
Although there were some regional differences, all the theme parks followed the same basic setup. Over the years, Disney had built up a reputation for imaginative rides. Its ‘imagineers’ had years of experience in using ‘auto animatronics’ to help recreate and reinforce the essence of the theme. The terminology used by the company reinforced its philosophy of consistent entertainment. Employees, even those working ‘back stage’, were called cast members. They did not wear uniforms but ‘costumes’, and rather than being given a job they were ‘cast in a role’. All park visitors were called ‘guests’. Disney employees were generally relatively young, often of school or college age. Most were paid hourly on tasks that could be repetitive even though they usually involved constant contact with customers. Yet, employees were still expected to maintain a high level of courtesy and work performance. All cast members were expected to conform to strict dress and grooming standards. Applicants to become cast members were screened for qualities such as how well they responded to questions, how well they listened to their peers, how they smiled and used body language, and whether they had an ‘appropriate attitude’. All Disney parks had gained a reputation for their focus (some would say obsession) with delivering a high level of service and experience through attention to operations detail. To ensure that their strict service standards were met they had developed a number of specific operations policies:
? All parks employed effective queue management techniques such as providing information and entertainment for visitors.
? Visitors (guests) were seen as having a role within the park. They were not merely spectators or passengers on the rides, they were considered to be participants in a play. Their needs and desires were analysed and met through frequent interactions with staff (cast members). In this way they could be drawn into the illusion that they were actually part of the fantasy.
? Disney’s stated goal was to exceed their customers’ expectations every day.
? Service delivery was mapped and continuously refined in the light of customer feedback.
? The staff induction programme emphasised the company’s quality assurance procedures and service standards. These were based on the four principles of safety, courtesy, show and efficiency.
? Parks were kept fanatically clean.
? The same Disney character never appears twice within sight – how could there be two Mickeys?
? Staff were taught that customer perceptions are both the key to customer delight, but also are extremely fragile. Negative perceptions can be established after only one negative experience.
? Disney University was the company’s in-house development and learning facility with departments in each of the company’s sites. The University trained Disney’s employees in its strict service standards as well as providing the skills to operate new rides as they were developed.
? Staff recognition programmes attempted to identify outstanding service delivery performance as well as ‘energy, enthusiasm, commitment, and pride’.
? All parks contained phones connected to a central question hot-line for employees to find the answer to any question posed by customers.
Tokyo Disneyland
Tokyo Disneyland was owned and operated by the Oriental Land Company. Disney had designed the park and advised on how it should be run. In return, they received 10 per cent of all admissions revenues, and 5 per cent of food and souvenir revenues. The Tokyo project was considered a great success. Japanese customers revealed a significant appetite for American themes, American brands, and already had a good knowledge of Disney characters. Feedback from visitors at the Tokyo Park was extremely positive. Visitors commented on the cleanliness of the park, the efficiency of staff members, and the courtesy with which they were treated. Visitors also appreciated the Disney souvenirs (a wider range than in the American parks) because giving gifts is deeply embedded in the Japanese culture. Although the Tokyo park was almost identical to Disney’s Californian park, there had been no complaints about the dilution of Japanese culture by so strong an American themed entertainment. The Japanese operators had added many new attractions since its opening. Many signs were written in English as were cast members’ name badges. Similarly, many of the live shows and attractions were conducted in English and although almost all visitors to the park were Japanese, only one out of its thirty restaurants sold Japanese food. The success of the Tokyo Park was explained by one American living in Japan:
‘Young Japanese are very clean-cut. They respond well to Disney’s clean-cut image, and I am sure they had no trouble filling positions. Also, young Japanese are generally comfortable wearing uniforms, obeying their bosses, and being part of a team. These are part of the Disney formula. Also, Tokyo is very crowded and Japanese here are used to crowds and waiting in line. They are very patient. And above all, Japanese are always very polite to strangers.’
Disneyland Tokyo had opened in 1982. Because Disney was wary of losing money on the Japanese venture it decided not to own the Tokyo site – a decision it came to regret. Disney also regretted allowing hotels owned by other companies to be built at its earlier US Disneyland parks, to the extent that Disney only owned about 25 per cent of hotels in the vicinity. It decided that it would take full control of Euro Disney and all its hotels.
Disneyland Paris
By 2006 Disneyland Paris consisted of three parks: the Disney village, Disneyland Paris itself and the Disney Studio Park. The village was comprised of stores and restaurants; Disneyland Paris was the main theme park; and Disney Studio Park has a more general moviemaking theme. Yet, the idea of a European park was not new. Because many of Walt Disney’s most successful animations were taken from European literature, he had always wanted to build a park in Europe. In the event, his wish wasn’t completed until 25 years after his death. But when the Walt Disney Company planned its European venture, its reputation was riding high and it was confident of success. At the time of the European park’s opening, more than two million Europeans visited the US Disney parks, accounting for 5 per cent of the total visitors. The company’s brand was strong and it had over half a century of translating the Disney brand into reality. The name ‘Disney’ had become synonymous with wholesome family entertainment that combined childhood innocence with hightech ‘imagineering’.
Alternative locations
Formal plans to build a European Disney Park were first considered as early as 1975. Initially, as well as France, Germany, Britain, Italy and Spain were all considered as possible locations, though Germany, Britain and Italy were soon discarded from the list of potential sites. The decision soon came to a straight contest between the Alicante area of Spain, which had a similar climate to Florida for a large part of the year and the Marne-la-Vallée area just outside Paris. Certainly, winning the contest to host the new park was important for all the potential host countries. The new park promised to generate more than 30,000 jobs. It was the French location that eventually won out, partly because of the close proximity to the large population of the Paris conurbation and the city’s attraction as a tourist centre. Also its central positioning within Western Europe was though to be crucial to if it was to attract sufficient visitors. Early concerns that the park would not have the same sunny, happy feel in a cooler climate than Florida were allayed by the spectacular success of Disneyland Tokyo in a location with a similar climate to Paris. The first letter of agreement was signed with the French government in December 1985, and started to draw up the financial contracts during the following spring. Robert Fitzpatrick, a key organiser of the 1984 Los Angeles Olympics, was appointed as the Euro Disney President, and construction started on the 2,000 hectare site in August 1988.
But from the announcement that the park would be built in France, it was subject to a wave of criticism. One critic called the project a ‘cultural Chernobyl’ because of how it might affect French cultural values. Another described it as ‘a horror made of cardboard, plastic, and appalling colours; a construction of hardened chewing-gum and idiot folk lore taken straight out of comic books written for obese Americans’. However, as some commentators noted, the cultural arguments and anti-Americanism of the French intellectual elite did not seem to reflect the behaviour of most French people, who ‘eat at McDonalds, wear Gap clothing, and flock to American movies’. The major advantage of locating in Spain was the weather. However, the eventual decision to locate near Paris was thought to have been driven by a number of factors that weighed more heavily with Disney executives. These included the following:
? There was a site available just outside Paris which was both large enough and flat enough to accommodate the park.
? The proposed location put the park within a two-hour drive for 17 million people, a four-hour drive for 68 million people, a six-hour drive for 110 million people and a two-hour flight for a further 310 million or so.
? The site also had potentially good transport links. The Euro Tunnel that was to connect England with France was due to open in 1994. In addition, the French autoroutes network and the high-speed TGV network could both be extended to connect the site with the rest of Europe.
? Paris was already a highly attractive vacation destination and France generally attracted around 50,000,000 tourists each year.
? Europeans generally take significantly more holidays each year than Americans (five weeks of vacation as opposed to two or three weeks).
? Market research indicated that 85 per cent of people in France would welcome a Disney park in their country.
Both national and local government in France were prepared to give significant financial incentives (as were the Spanish authorities) including an offer to invest in local infrastructure, reduce the rate of value added tax on goods sold in the park, provide subsidised loans, and value the land artificially low to help reduce taxes. Moreover, the French government were prepared to expropriate land from local farmers to smooth the planning and construction process. The resort was to be 49 per cent owned by the Walt Disney Company and 51 per cent owned by a company called Euro Disney SCA which was quoted on the French stock exchange. Initially all shares were offered to European investors. The Walt Disney Company was to receive management fees and royalty fees based on the park’s revenues as well as an incentive-based management fee calculated on the park’s cash flow.
Designing Disney Land Resort Paris
Phase 1 of the Euro Disney Park was designed to have 29 rides and attractions as well as six hotels with over 5,000 rooms in total. In addition, the park had a championship golf course together with many restaurants, shops, live shows, and parades. Although the park was designed to fit in with Disney’s traditional appearance and values, a number of changes were made to accommodate what was thought to be the preferences of European visitors. For example, market research indicated that Europeans would respond to a ‘wild west’ image of America. Therefore, both rides and hotel designs were made to emphasise this theme. Disney was also keen to diffuse criticism, especially from French left-wing intellectuals and politicians, that the design of the park would be too ‘Americanised’ and would become a vehicle for American ‘cultural imperialism’. To counter charges of American imperialism, Disney gave the park a flavour that stressed the European heritage of many of the Disney characters, and increased the sense of beauty and fantasy. They were, after all, competing against Paris’s exuberant architecture and sights. For example, Discoveryland featured storylines from Jules Verne, the French author. Snow White (and her dwarfs) was located in a Bavarian village. Cinderella was located in a French inn. Even Peter Pan was made to appear more ‘English Edwardian’ than in the original US designs.
Disney conceded to the pressure for French to be the language of the park with English taking second place. The American actor, Vincent Price’s voice-over for the Phantom Manor, that was used initially, was replaced by a French actor. Only Price’s maniacal laugh remained. In keeping with their desire to make this park more ‘European’, even the story behind the Disneyland Paris Phantom Manor (named The Haunted Mansion in the US versions), although open to interpretation, was changed to include bits of The Phantom of the Opera and Great Expectations. Main Street USA, built in the idealised style of America at the beginning of the twentieth century, contained ornate shopping arcades one of which (diplomatically!) contains an exhibition telling the history behind the presentation of the Statue of Liberty by France to the USA in a spirit of friendship.
Because of concerns about the popularity of American ‘fast-food’, Euro Disney introduced more variety into its restaurants and snack bars, featuring foods from around the world. In a bold publicity move, Disney invited a number of top Paris chefs to visit and taste the food. Some anxiety was also expressed concerning the different ‘eating behaviour’ between Americans and Europeans. Whereas Americans preferred to ‘graze’, eating snacks and fast meals throughout the day, Europeans generally preferred to sit down and eat at traditional meal times. This would have a very significant impact on peak demand levels on dining facilities. A further concern was that in Europe (especially French) visitors would be intolerant of long queues. To overcome this, extra diversions such as films and entertainments were planned for visitors as they waited in line for a ride.
Discoveryland was new for a Disney park, it was based on the concept of the future based on past European Visionaries. Fantasyland was also new in that it had it’s own new ‘European’ attractions, along with a newly created castle especially for Euro Disney. Adventureland gained some extra new areas, again with a more authentic ‘European’ look than in previous parks. Before the opening of the park, Euro Disney had to recruit and train between 12,000 and 14,000 permanent and around 5,000 temporary employees. All these new employees were required to undergo extensive training in order to prepare them to achieve Disney’s high standard of customer service as well as understand operational routines and safety procedures.
Originally, the company’s objective was to hire 45 per cent of its employees from France, 30 per cent from other European countries, and 15 per cent from outside of Europe. However, this proved difficult and when the park opened around 70 per cent of employees were French. Most ‘cast members’ were paid around 15 per cent above the French minimum wage. Espace Euro Disney (an information centre) was opened in December 1990 to show the public what Disney was constructing. The ‘casting centre’ was opened on 1 September 1991 to recruit the cast members needed to staff the park’s attractions.
But the hiring process did not go smoothly. In particular, Disney’s grooming requirements that insisted on a ‘neat’ dress code, a ban on facial hair, set standards for hair and fingernails, and an insistence on ‘appropriate undergarments’ proved controversial. Both the French press and trade unions strongly objected to the grooming requirements, claiming they were excessive and much stricter than was generally held to be reasonable in France. Nevertheless, the company refused to modify its grooming standards. Accommodating staff also proved to be a problem, when the large influx of employees swamped the available housing in the area. Disney had to build its own apartments as well as rent rooms in local homes just to accommodate its employees. Notwithstanding all the difficulties, Disney did succeed in recruiting and training all its cast members before the opening.
The park opens
The park opened to employees, for testing during late March 1992, during which time the main sponsors and their families were invited to visit the new park. The formal press preview day was held on 11 April 1992, and the park finally opened to visitors on 12 April 1992. When opening the new resort, Roy Disney, nephew of Walt Disney, spoke of his ‘emotional homecoming for the Disney family, which traced its roots to the French town of Isigny-sur-Mer’. The opening was not helped by strikes on the commuter trains leading to the park, staff unrest, threatened security problems (a terrorist bomb had exploded the night before the opening) and protests in surrounding villages who demonstrated against the noise and disruption from the park. The opening day crowds, expected to be 500,000, failed to materialise, however, and at close of the first day only 50,000 people had passed through the gates. Disney had expected the French to make up a larger proportion of visiting guests than they did in the early days. This may have been partly due to protests from French locals who feared that their culture would be damaged by Euro Disney.
Also all Disney parks had traditionally been alcohol-free. To begin with Euro Disney was no different. However, this was extremely unpopular, particularly with French visitors who like to have a glass of wine or beer with their food. But whatever the cause, the low initial attendance was very disappointing for the Disney Company. It was reported that, in the first nine weeks of operation, approximately 1,000 employees left Euro Disney, about one half of whom ‘left voluntarily’. The reasons cited for leaving Disney’s employment varied. Some blamed the hectic pace of work and the long hours that Disney expected. Others mentioned the ‘chaotic’ conditions in the first few weeks. Even Disney conceded that conditions had been tough immediately after the park opened. Some leavers blamed Disney’s apparent difficulty in understanding ‘how Europeans work’. ‘We can’t just be told what to do, we ask questions and don’t all think the same’. Some visitors who had experience of the American parks commented that the standards of service were noticeably below what would be acceptable in America. There were reports that some cast members were failing to meet Disney’s normal service standard:
‘. . . even on opening weekend some clearly couldn’t care less . . . My overwhelming impression . . . was that they were out of their depth. There is much more to being a cast member than endlessly saying “Bonjour”. Apart from having a detailed knowledge of the site, Euro Disney staff have the anxiety of not knowing in what language they are going to be addressed [in] . . . Many were struggling.’
It was also noticeable that different nationalities exhibited different types of behaviour when visiting the park. Some nationalities always used the waste bins while others were more likely to drop litter. Most noticeable were differences in queueing behaviour. Northern Europeans tend to be disciplined and content to wait for rides in an orderly manner. By contrast, some southern European visitors ‘seem to have made an Olympic event out of getting to the ticket taker first’. The press in a number of countries debated whether Euro Disney really knew what it was trying to be. Is it an American theme park in Europe? Is it a theme park that exploits the European heritage of Disney characters? Had the park any connection at all with France, its host country? Is there a fundamental difference between Europeans and Americans in the type of entertainment that they appreciate? Is it even possible to devise a theme park that can please so many different nationalities and cultures? Others claimed that the nature of the European work force was such that they could never achieve the US standards of Disney service:
‘The Disney style of service is one with which Americans have grown up. There are several styles of service (or lack of it) in Europe; unbridled enthusiasm is not a marked feature of them.’
Nevertheless, not all reactions were negative. European newspapers also quoted plenty of positive reaction from visitors, especially children. Euro Disney was so different from the existing European theme parks, with immediately recognisable characters and a wide variety of attractions. Families who could not afford to travel to the United States could now interact with Disney characters and ‘sample the experience at far less cost’. The first phase of development (the theme park, hotel complex and golf course) had gone massively over budget. And attendance figures failed to improve much (by May the park was only attracting around 25,000 visitors a day instead of the predicted 60,000). Moreover it appeared that only three in every 10 visitors were native French. Seven weeks after the opening of the park, visitor attendance was reported at 1.5 million, a disappointment for the park which had expected 11 million visitors in its first year, and when Euro Disney announced its first quarter revenues of $489,000,000, it also said that it would make a loss in its first financial year. Again, the loss was blamed on disappointing attendance figures. Nevertheless, the company pointed out that Disney’s other theme parks had made comparable losses in their first year of operation, and anyway, it was foolish to try to predict future attendance so early in the park’s history. However, the Euro Disney company stock price started a slow downward spiral, rapidly losing almost a third of its value.
The next 15 years
By August 1992 estimates of annual attendance figures were being drastically cut from 11 million to just over 9 million. Euro Disney’s misfortunes were further compounded in late 1992 when a European recession caused property prices to drop sharply, and interest payments on the large start-up loans taken out by Euro Disney forced the company to admit serious financial difficulties. Also the cheap dollar resulted in more people taking their holidays in Florida at Walt Disney World. At the first anniversary of the park’s opening, in April 1993, Sleeping Beauty’s Castle was decorated as a giant birthday cake to celebrate the occasion, however, further problems were approaching. Criticised for having too few rides, the rollercoaster Indiana Jones and the Temple of Peril was opened in July. This was the first Disney roller coaster that included a 360-degree loop, but just a few weeks after opening emergency brakes locked during a ride, causing injuries to some guests. The ride was temporarily shut down for investigations. Also in 1993 the proposed Euro Disney phase 2 was shelved due to financial problems. Which meant Disney MGM Studios Europe and 13,000 hotel rooms would not be built to the original 1995 deadline originally agreed upon by The Walt Disney Company. However, Discovery Mountain, one of the planned phase 2 attractions, did get approval.
By the start of 1994, rumours were circulating that the park was on the verge of bankruptcy. Emergency crisis talks were held between the banks and backers with things coming to a head during March when Disney offered the banks an ultimatum. It would provide sufficient capital for the park to continue to operate until the end of the month, but unless the banks agreed to restructure the park’s $1 billion debt, the Walt Disney company would close the park, and walk away from the whole European venture, leaving the banks with a bankrupt theme park and a massive expanse of virtually worthless real estate. Disney then forced the bank’s hand by calling the annual stockholder meeting for 15 March. Shortly before the stockholder meeting, Michael Eisner, Disney’s CEO, announced that Disney was planning to pull the plug on the venture at the end of March 1994 unless the banks were prepared to restructure the loans. Faced with no alternative other than to announce that the park was about to close, just before the annual meeting the banks agreed to Disney’s demands. This effectively wrote off virtually all of the next two years’ worth of interest payments, and granted a three-year postponement of further loan repayments. In return, the Walt Disney Company wrote off $210 million in unpaid bills for services, and paid $540 million for a 49 per cent stake in the estimated value of the park, as well as restructuring its own loan arrangements for the $210 million worth of rides at the new park.
In May 1994, the connection between London and Marne-la-Vallée was completed, along with a TGV link, providing a connection between several major European cities. By August the park was starting to find its feet at last, and all of the park’s hotels were fully booked during the peak holiday season. Also, in October, the park’s name was officially changed from Euro Disney to ‘Disneyland Paris’, in order to, ‘show that the resort now was named much more like it’s counterparts in California and Tokyo’ and to link the park more closely with the romantic city of Paris. Some commentators noted that the name change would disassociate the resort in people’s minds with controversy, debts and politics. The end of year figures for 1994 showed encouraging signs despite a 10 per cent fall in attendance caused by the bad publicity over the earlier financial problems. And by the end of March 1995 Disney executives were predicting that Disneyland Paris might break even by the end of 1995. 1995 saw the opening of the new roller coaster, not after all to be called ‘Discovery Mountain’ but ‘Space Mountain de la Terre à la lune’, because it was decided that the new name was more exciting. Unlike its counterparts in Tokyo, Florida and California, it was not housed in a big white dome, but in a very ornate Victorian futuristic style dome. Intensive marketing of Space Mountain on television channels all over Europe and the release of the popular movie Pocahontas contributed to an improvement in the resort’s financial results. In fact, the Euro Disney resort complex did announce its first annual operating profit in November 1995, helped by the opening of Space Mountain in June.
In 1997 the five-year celebrations included, a new parade with Quasimodo and all the characters from the latest Disney blockbusting classic, The Hunchback of Notre Dame, the ‘Year To Be Here’ marketing campaign, the resort’s first Hallowe’en celebration and a new Christmas parade. A new attraction was added in 1999, ‘Honey I Shrunk the Audience’, making the audience the size of a bug while being invited to Inventor of the Year Award Ceremony. This was the more modern replacement to the ageing 3D movie Captain EO. However, the planned Christmas and New Year celebrations were disrupted when a freak storm caused havoc, destroying the Mickey Mouse glass statue that had just been installed for the Lighting Ceremony and many other attractions. Also damaged were trees next to the castle, the top of which developed a pronounced lean, as did many street signs and lamp posts. Disney’s ‘Fastpass’ system was introduced in 2000. This was a new service that allowed guests to use their entry passes to gain a ticket at certain attractions and return at the time stated and gain direct entry to the attraction without queueing. Two new attractions are opened, ‘Indians Jones et le temple du péril’ and ‘Tarzan le recontre’ starring a cast of acrobats along with Tarzan, Jane and all their Jungle friends with music from the movie in different European languages.
In 2001 the ‘ImagiNations Parade’ was replaced by the ‘Wonderful World of Disney Parade’ which received some criticism for being ‘less than spectacular’ with only eight parade floats. Also Disney’s ‘California Adventure’ was opened in California. The Resort’s tenth Anniversary (2002) saw the opening of the new Walt Disney Studios Park attraction. The Disney-MGM Studios at the Walt Disney World Resort, Florida, had already proved to be a major success and the original concept for the Paris studios had first been studied in 1992, shortly before the park opened. The concept, which was based on the world of cinema, seemed perfectly adaptable to the expectations of a European audience so development for the new park was started in 1997 when a small team of Disney Imagineers were asked to design it. In parallel to this, opinion leaders from the worlds of French and European cinema, culture and media were consulted about the project. R. Julienne, the famous French stunt designer, was among the first Europeans to work with Disney on the new Theme Park’s concept. Also, in this year, Disneyland Paris was renamed Disneyland Resort Paris, the original park was also renamed Disneyland Park to accommodate the new Walt Disney Studios. André Lacroix from Burger King was appointed as CEO of Disneyland Resort Paris in 2003, to ‘take on the challenge of a failing Disney park in Europe and turn it around’. Increasing investment, he refurbished whole sections of the park, increased the numbers of dancers to the ageing ‘Wonderful World of Disney Parade’ and introduced the Jungle Book Carnival in February to increase attendance during the slow months. By 2004, attendance had increased but the company announced that it was still losing money. It again renegotiated its Euro 2.4 billion debt to the Walt Disney Company and French financial institutions. Losses were attributed partly to the costs of opening Walt Disney Studios two years earlier, just as the world theme park business slumped in the wake of the American terrorist attacks. New hotels were opened (not owned by Disney) close to the park which meant increased competition for the park’s own hotels. The positive news of 2006 was well received. As one commentator put it:
‘Would Disney, the stockholders, the banks, or even the French government make the same decision to go ahead if they could wind the clock back to 1987? Is this a story of a fundamentally flawed concept, or was it just mishandled?’
Some events in overview of the history of Disneyland Resort Paris
1955 Disneyland, California opens
1971 Walt Disney World opens in Orlando, Florida
1982 Epcot Centre opens in Orlando, Florida
1984 Tokyo Disney opens
1987 The announcement that the resort on Marne-la-Vallée had been chosen as the place to build the newest Magic Kingdom (called Euro Disney then). Construction starts with a plan to complete in five years
1989 Disney-MGM Studios Theme Park opens in Orlando
1992 The grand opening of Euro Disney resort with a cast of thousands there to meet the demand that did not materialise
1993 The second year of Euro Disney’s operations. On the 12 April the castle was renamed from Le château de la belle au Bois dormant to the Le château du Gâteau
1994 Stand-off with French banks over taking away some of Euro Disney’s debt that had accumulated because of lower than expected revenues and the project due to going over budget. On 14 March agreement is reached with the French banks and Euro Disney stays open. The company would pay fewer royalties to the Walt Disney Company and more money from the Walt Disney Company would be invested into the resort
1995 Opening of the new roller coaster proves a great success
1996 Planet Hollywood was opened within the resort
1997 The Park is open for five years
1998 Disney’s Animal Kingdom opened in Orlando
1999 Storm disrupts the Park’s operations.
2000 Disney’s ‘Fastpass’ introduced
2001 Disney’s California Adventure opened in California
2002 The tenth Anniversary and Walt Disney Studio opened in Paris
2003 André Lacroix from Burger King is appointed as CEO of Disneyland Resort Paris
2004 The company announces that it is still losing money and again renegotiates its ?2.4 billion debt to the
Walt Disney Company and French financial institutions
2006 Rise in revenues reported
2012 20th anniversary celebrations