Research Paper on "Trace the Success and Failures of Disneyland in Paris and Tokyo"

Research Paper 5 pages (1990 words) Sources: 5

[EXCERPT] . . . .

Management

The Success and Failures of Disneyland in Paris and Tokyo Disneyland

Tokyo Disneyland was the first Disney resort to be opened outside of America. The park is not only the magic kingdom but the American kingdom as well. The owners tried being independent of American influences both corporate and social and nearly went bankrupt before realizing they needed a unique product that other Japanese theme parks couldn't match. Today, it has a distinct American feel. Many cast members are from abroad and most restaurants serve American food. Good American classics like curry flavored popcorn and pork cutlet burgers are sold in the park.

Tokyo Disneyland first opened to the public on April 15, 1983. This was twelve years following the Magic Kingdom opening at Walt Disney World, and twenty eight years after the original Magic Kingdom theme park opened in California. After the significant success of Disneyland, and later the Walt Disney World resort in Florida, the Disney Company was approached by various countries, all who were eager to share in the tourist industry the Disney theme parks had created. In Japan, the Oriental Land Company owned a large piece of land that had been reclaimed from Tokyo Bay, which was to be used for recreational purposes. This area also satisfied the other key requirements that Disney had in the fact that it had a large local population within a 30-mile radius. The Japanese were frequent visitors to Disneyland, and subsequently to Walt Disney World, and so it was decided that it would make an ideal location for a third Disney theme park, which would be built along the same lines as the previous two existing Disney theme parks, rather than building a park with a distinct Oriental theme.

The weather in the Tokyo Bay area however is far more variable than in Anaheim or Orlando, so the Disney Imagineers planned a glass-roofed World Bazaar area instead of the usual Main Street to greet visitors when they first entered the new park. The attractions were also planned with more covered areas than at the other Disney parks. One of the exclusive things about Tokyo Disneyland is that the various lands are not gotten to by way of the central hub, but instead by a series of paths that branch off of the Main Street. The one main concession to the fact that it was Disney's first major theme park outside of the U.S.A. is the "Meet the World" attraction that uses Audio Animatronics to deal with Japanese History. The now standard attractions of Big Thunder Mountain Railroad, Star Tours, and Splash Mountain have all been added to the park since it was initially opened, and as a result Tokyo Disneyland regularly attracts more than 10 million guests each year.

Euro Disney first 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 official press preview day was on April11, 1992 and the park opened to visitors the next day. The crowds on opening, which were expected to be around 500,000 visitors, failed to appear, and at close of the first day barely 50,000 people had passed through the gates. This was thought to be in part because of the protests from French locals who were afraid that their culture would be damaged by Euro Disney. But whatever the cause the low opening attendance was very inadequate for Disney.

The first phase of development which included the theme park, hotel complex and golf course had gone extremely over budget, and had eventually cost 22 billion French Francs in order to complete. Over the next few months the attendance levels failed to improve much, and by May the park was only drawing around 25,000 visitors a day, instead of the predicted 60,000. Because of the fact that only three in every ten visitors were native French, the Euro Disney company stock price started a slow downward spiral, rapidly losing almost a third of its value.

In August of 1992 estimates of annual attendance figures were being radically reduced from 11 million to just over 9 million. EuroDisney's hardship were further compounded in late 1992 when a European recession caused property prices to drop sharply, and the massive interest payments on the startup loans taken out by EuroDisney forced the company into severe financial difficulties. The situation was made worse by the fact that the cheap dollar was influenced more and more people to forego Europe in favor of holidays in Florida at Walt Disney World.

EuroDisney was also over-populated with hotels, especially for a park that can be reasonably well explored within a full day. Because of the high prices for food and souvenirs, the EuroDisney Company began closing hotels during the winter months, due to lack of business. The first anniversary of the park's opening came around and Sleeping Beauty's Castle was decorated as a giant birthday cake to celebrate the occasion, but more problems were just around the corner.

In the summer 1993 the new Indiana Jones roller-coaster ride opened, which was supposed to be the beginning of good things, but disaster struck just a few weeks after opening when the emergency brakes locked on during a ride, causing some guest injuries. Because of this the ride was temporarily shut down for investigations. By the beginning of 1994, with the company in severe financial difficulties, and rumors circulating that the park was on the verge of bankruptcy a series of emergency disaster talks were held between the banks and backers.

Everything came to a head during March 1994 when Team Disney offered the banks an ultimatum, that Disney would provide sufficient capital investment for the park to continue to operate until the end of the month, but unless the banks agreed to restructure the $1bn debt that the park's construction and operation had run up, 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. EuroDisney then forced the bank's hand by calling the annual stock-holder meeting for March 15th. Faced with very few options other than to announce to the stock holders that the park was about to close the banks started looking for new ways to refinance and restructure the huge debts. Then to further increase the pressure on the banks, Michael Eisner, Disney's CEO went public shortly before the stock-holder meeting and announced that Disney were planning to pull the plug on the venture at the end of March 1994 unless the banks were prepared to restructure the loans.

Just ahead of the annual meeting the banks gave in and agreed to Disney's demands, in effect writing off virtually all of the next two years worth of interest payments, and a three-year postponement of further loan repayments. In return the Walt Disney Company wrote off $210m in unpaid bills for services, and paid $540m for a 49% stake in the estimated value of the park, as well as restructuring its own loan arrangements for the $210m worth of rides at the new park.

By August of 1994 the park was starting to turn upwards, and all of the park's hotels were fully booked during the peak holiday season. In October 1994 the park's name was officially changed from EuroDisney to "Disneyland Paris," in order to more closely link the park with the romantic city of Paris, and to disassociate itself with the poor reputation that has become linked with the phrase "Euro Disney." The end of year figures for 1994 showed encouraging signs as the previous year's UKP 650 million in losses was reduced to around 200 million, despite a 10% fall in attendance caused by bad publicity over the earlier financial problems.

By the end of March 1995, Walt Disney executives were forecasting that DisneyLand Paris might break-even by the end of the year. Helped by the opening of Space Mountain on June 1st 1995 in August 1995 Disneyland Paris and the Euro Disney resort complex announce a 22m GBP profit, followed by the first annual operating profit announced in November 1995.

The confidence that Disney had when opening EuroDisney was based on the number of Europeans that were visiting the U.S. Disney parks. What they failed to realize was that Europeans would visit the U.S. parks because they were in America, but they were not visiting America particularly to go to the parks. The U.S. Disney parks were seen as part of the American experience not as a complete holiday destination on their own.

All attendance forecasts were based on the parks in the U.S. And Japan which is also quite Americanized. These calculations treated Europe as a general mass of people instead of many individual countries.

Their strategy that Disney used was very greedy in buying all the surrounding land so no one else could benefit from the project. This did not promote any… READ MORE

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