Disney Magic Is Finally Starting to Work at French Theme Park

On a cold, gray winter’s morning recently, the entrance to the Magic Kingdom was humming. Workers bundled in Snow White-like woolen capes were cheerily welcoming visitors with a bonjour and feeding plastic tickets into purring, clicking turnstiles.

“When you’re here, you have the impression that you’re somewhere else. Not in France, but in another world,” marveled Isabelle Lefloch, 32, of Paris, a regular visitor with two young children in tow. “It’s wonderful for the kids, of course. But for adults, it’s like we can become children again.”

That, of course, is the golden Disney formula. And although it worked bottom-line wonders for Disney parks in America and Japan, it had created only red ink in France. But now, as the park prepares to celebrate its fourth birthday, it is, in fits and starts, making a comeback. As Lefloch and other visitors suggest, the Disney magic is beginning to work.

Last month, Euro Disney, the company that runs Disneyland Paris, reported a 17% increase in operating revenue in the first financial quarter. And although it sustained a net loss of $10 million, that was half the loss posted in the same quarter the previous year.

Those results came on the heels of the company’s first annual operating profit, posted for 1995, a year in which attendance rose to 10.7 million from 8.8 million the year before, and hotel occupancy rose to nearly 69% from 60%.

“This is a new start for us,” said Jacques-Henri Eyraud, director of international communications. “The 1995 results have proved that our approach is right. But we still have a lot of work to do.”

Indeed, it is still too early to predict a happy ending for Walt Disney Co.’s European adventure, particularly in light of France’s continued economic woes.

Much of the 1995 profit was due to agreements by the 63 banks who hold most of Euro Disney’s debt to suspend interest payments and by the Disney parent to postpone royalty and management fees. Interest payments on the $3-billion debt have now resumed and will be phased in over the next three years. Royalty payments are due to resume in 1999, though at half the initial rate.

*

Moreover, the park’s surge in attendance was mainly achieved with across-the-board price cuts--in entrance fees, hotel rates, restaurant prices and more.

Although Euro Disney is performing better than expected, it will need large increases in revenue to make a profit in the future, said Nigel Reed, a leisure industry analyst with Paribas Securities in Paris and London. “A lot of these costs are now coming back into the accounting,” he said in an interview.

Asked if the company can survive, he said: “France is in an economic depression, unemployment stands at 13% and the government’s strong-franc policy is discouraging visitors from certain countries. What do you think the prospects are?”

Euro Disney’s problem has never been the Paris park itself, which continues to appeal to more consumers, but rather the high cost of building it in 1992 and the bad luck to launch it into the teeth of a recession. Disney’s technicians may have been able to make an elephant fly, but paying off an estimated $3 billion of loans has been a bigger task. As Reed put it, “If you spend too much building anything and don’t have enough revenue, you’re going to have a problem.”

Still, the company’s recovery thus far has been remarkable and spirits are up at the Euro Disney complex, about 20 miles east of Paris.

“We are firmly back on our feet,” Philippe Bourguignon, chairman and chief executive of the company, declared recently, “and well-placed to face the challenges ahead. It’s easy in hindsight to say you got it wrong. But we opened on time, with high quality, and we’ve maintained that quality. Sure, we’ve made mistakes. But we’ve got it right now.”

Euro Disney owes its life to the broad restructuring plan that rescued it from bankruptcy just 18 months ago. The company has used that financial breathing space to change its marketing strategy, which has increased revenue and brought more visitors to its park, hotels and restaurants.

Euro Disney remains one of the more important businesses in Europe, and its future has broad ramifications for the continent and, in particular, France.

*

Despite its financial woes, Disneyland Paris has become the top tourist attraction in France and the leading European short-break destination. Visitors to Euro Disney’s park, hotels and restaurants pumped $1.4 billion into the French economy last year.

Its six hotels put it among the 10 largest hotel groups in France, with 5,800 rooms, more even than the French Mediterranean resort of Cannes. Euro Disney’s 1,000-room New York Hotel had more convention business than any hotel in France last year. The company also ranks among the top 10 restaurant chains, with 40 restaurants at the park, in the hotels and at the still-expanding Festival Disney area, which links the hotels and the park.

Disneyland Paris also has helped fuel a boom in all European theme parks, where visitor numbers have jumped from an estimated 45 million to 60 million annually since Disney’s arrival.

Last May, the $400-million Port Aventura theme park opened south of Barcelona, Spain. Not far from Disneyland Paris, Parc Asterix, a smaller park based on a Gallic comic-book character, has posted two consecutive years of record attendance. Both those parks operate only in the summer.

Euro Disney, 39% of which is owned by Walt Disney Co., attributes its recovery thus far to its financial rescue plan, but also to radical operational changes that have helped it adapt the New World theme park concept to an Old World home. Company managers, realizing that most visitors stayed only two or three days, threw out their original plans to concentrate on long stays and began catering to shorter visits with special package deals.

Even the name was changed from Euro Disney to Disneyland Paris, a reminder of the park’s proximity to the French capital. And growing numbers of visitors, especially from Germany, Britain and Scandinavia, now are stopping at Disneyland Paris on vacation journeys to Italy or Spain.

To further increase attendance, especially among Parisians, entrance fees were lowered 20% last spring, to $40 for adults in peak season and $30 in the off-season. Hotel prices were cut an average of 10%; food and souvenir prices, once notoriously high, were slashed.

Meanwhile, Disney’s creative forces have continued to add to park attractions.

A new, $123-million Space Mountain roller coaster, which “launches” riders to the moon, then whisks them on a 70-mph journey past asteroids in the darkness of space, opened in June. Since 1992, the number of attractions has grown from 29 to 40. Space Mountain can carry 25,000 riders a day, which has helped reduce, though not eliminate, long lines during peak periods.

Euro Disney is still battling to reduce what it calls “seasonality.” More than 60% of its visitors come in the four months of summer. In winter, the park is packed on holidays, weekends and school vacations but is nearly empty on other days.

Peak periods in winter, when the park closes at 6 p.m. and the weather is reliably cold and wet, can be particularly unpleasant. Gilles Margerit, a French company director who organized a New Year’s Eve trip for his business associates and their families, found the long lines and cold weather “just terrible.”

“When you wait an hour in line for Dumbo and it’s freezing outside, it’s not that much fun,” Margerit said. “Next time, we’ll try to go on an ordinary day.”

To lure more overnight visitors in off-peak periods and give them more to do, the company has been adding to Festival Disney, the collection of restaurants and nightclubs just outside the park entrance.

*

One of the most popular Festival Disney attractions has been the Buffalo Bill Wild West Show, which has drawn 2 million visitors and recently marked its 2,000th performance. The company recently signed a deal for a Planet Hollywood restaurant at Festival Disney. And a new cinema complex now under construction will feature Europe’s largest permanent screen.

A subtle but important challenge for the company in the last four years has been to win acceptance for a theme park built around all-American Disney characters. That has turned out to be a sensitive issue in France, which accounts for 40% of the park’s visitors. (Most of the remainder come from neighboring European countries.)

Many French enjoy products of America’s cultural machine, from “Aladdin” to “Die Hard” and “Seinfeld” to “Baywatch.” But they also are concerned that imported American culture has begun to take the place of France’s own.

When Euro Disney opened its park here, it made an initial effort to Europeanize its attractions and products. More table-service restaurants were created, for example, on the theory that Europeans enjoy a leisurely, sit-down lunch.

*

As it turned out, the French, and to a lesser extent other Europeans, were coming to the park for an American experience. Frontierland turned out to be every bit as popular as Discoveryland. “There’s just no exception,” a Disney executive said. “The Europeans like cowboys and Indians.”

Visitor surveys also found that the French didn’t want gastronomic cuisine. Although wine was added to menus of table-service eateries, one of those restaurants was converted into a fast-food spot. And these days brownies and stuffed potatoes are among the most popular food items in the park.

“When people go to a Disney park they want to rush,” international communications director Eyraud said. “They don’t want to sit down for a meal.”

A similar phenomenon was discovered in souvenir shops. Euro Disney had its sweatshirts designed with small, discreet Disney logos. They were very European but didn’t sell. Only when the company began producing sweatshirts with huge letters and big pictures of Mickey Mouse did they become a hit.

Although Mickey doesn’t wear a beret or carry a baguette, the park has tried to put its European links more subtly on display. Main Street U.S.A. was festooned over Christmas, for example, with a wall of lights in the Italian holiday tradition.

“The challenge,” Eyraud said, “is to be very Disney, because that’s what people want, but at the same time to be unique.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

A Semi-Magic Kingdom

It took four years for Disney’s theme park near Paris to reach its first-year attendance target, and the forbearance of investors to keep the venture--now called Disneyland Paris--afloat. A look at the park’s financial performance and attendance since its opening:

(please see newspaper for full chart information)

REVENUE

In millions of dollars:

1994-95: $914.4

EARNINGS (LOSSES)

In millions of dollars:

1994-95: $22.8

ATTENDANCE

In millions:

1995: 10.7

Source: Euro Disney