McGraw-Hill © 2000 The McGraw-Hill Companies 1 S M Euro-Disney: The First 100 Days.

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Presentation transcript:

McGraw-Hill © 2000 The McGraw-Hill Companies 1 S M Euro-Disney: The First 100 Days

McGraw-Hill © 2000 The McGraw-Hill Companies 2 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 3 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 4 S M Tokyo Disneyland--A Successful Transfer

McGraw-Hill © 2000 The McGraw-Hill Companies 5 S M Euro Disney--A Success?

McGraw-Hill © 2000 The McGraw-Hill Companies 6 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 7 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 8 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 9 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 10 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 11 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 12 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 13 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 14 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 15 S M Labor Unrest 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 16 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 17 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