Tuesday, April 26, 2011

" Squaring the Circle " or : What you need to know to understand DLP management



Since DLP Big Thunder Mountain accident last monday most of the comments whether on D&M or on other websites complain - or even accused - about DLP "supposed" bad maintenance of the park. The whole story is much more complicated than that and i'd like to take a minute or two to explain you why you shouldn't blame DLP management - specially before we know precisely the reason of the accident.

Let's begin by the beginning, i.e back almost 20 years ago, when the financial problems of the park began. When Disneyland Paris - at that time still called EuroDisney - opened, everyone celebrated the opening of a gorgeous Magic Kingdom. From the first year the park was a huge success and became instantly, not only the most visited place in France but also in Europe with more than 11M guests visiting the park. The park was so popular that DLP decided to build as quick as possible new rides.

However, in the next years problems on the financial situation of EuroDisney began and the good question is: why? Why a place which was the most visited place in Europe had this financial problem. The answer is in one word: Hotels. From day one DLP had seven hotels built on site, including the Davy Crockett Ranch. Right now the hotels are doing fine but at the beginning it was different. So, seven hotels from day one, not one or two, SEVEN! Many voices shouted "Fools!" to the management, knowing that there was so many hotels in Paris that building seven on-site hotels was going to be a financial failure.

So, why the WDC decided to build seven hotels on the site when they could have simply built only two, and more afterwards if necessary? Two words: Michael Eisner. You, see, Eisner, who was as we know WDC CEO at that time has always been a "wannabe architect". For those of you who don't understand what a "wannabe" is, it means that a person has always wished to be something that, sometime she succeed to be, or, most of the time, she never succeed to be. In the case of Eisner, he became the CEO of a big company, but never an architect.

So what did Michael when it was time to design hotels for the DLP project? He hired some of the best architects - and probably some of his favorites - and asked them to design great buildings for DLP hotels resort. The hotels section of the project was one on which he had the final cut and having them designed by the best architects was his way to live his "wannabe" dream to be an architect. And it would have not be a problem if Eisner had decided to build only two hotels, but instead seven hotels were built which means a huge maintenance cost, not to mention the salary cost of all the people working at the seven hotels.

Right now the hotels are doing really well, but back in 1992 it was not the case at all. And what had to happen happened: the hotels costs were a burden in DLP accounts and Michael Eisner's dream was finally responsible of the beginning of DLP financial problems. Eisner never admits his responsability but he was not the kind of guy to admit his faults, anyway.

So, first problem, too many hotels from day one. Again, the hotels are doing very well now, the mistake was only to have seven hotels operating from opening day. Then the park decided what was indeed the best thing to do to resolve the problem, i.e to build DLP second gate, the Walt Disney Studios. Good idea, if you have two parks, you necessarily will have more guests spending nights in the hotels. But it's a good idea if the park is just as good as the first one was. And when the WDS opened - and although WDI Imagineers did their absolute best with the money at their disposal - everyone complained, one about the lack of theming, another that it was a half day park, or that there was not enough attractions for young kids, etc...

Mind you, there was many other designs for the WDS but finally the WDC chosen the one we know, probably thinking that "the guests won't see the difference" which is probably the most stupid phrase that any executive can say as the guests always see the difference. And, talking about executives, guess who was WDC CEO at that time and had the final cut on the budget allowed for the WDS? That's right: Michael Eisner. Second mistake, and this one was going to cost a lot to the park. Since then, for all DLP's executives, ruling DLRP is like squaring the circle.

Those of you who have followed DLP financial news might say "wait a minute, i thought that the park had 400 M euros of cash flow at the bank?" That's right that's more or less the amount they have but what you don't know is that they can't use the money just like they want. Each time the park needs money for a new project whether it is, for instance, the new World of Disney Store, or a new attraction, or a big rehab program as they currently do, they need the bank agreement for the needed amount. Considering the park's debt i can understand that the banks wants to make sure that the money will be well spent, but, still, it doesn't make the job easier for DLP management.

So, as you probably understand now, the job of the park is, finally, to find the best way to manage a budget. They need money to build new attractions to have the guests coming back and increase parks, hotels and merchandise revenues AND they need money to transform the WDS in a full-day park AND in the same time they need money for the park maintenance AND they need money to reduce the park's debt to the banks. And it is more complex that we can think as, as we know, if they don't build new rides guests won't come back AND so the resort revenues will not get better AND so they will not have money to reduce the debt with the banks AND so the banks will not accept to give them money to build new rides, etc... As i've said it's almost like squaring the circle, and i can assure you that DLP management is doing absolutely their best, and it's not easy, considering they've inherited of these two major mistakes explained above, mistakes that they are not responsible of.

So, please keep in mind all the complexity of the situation when you'll write your comments, that will be fair for all the people doing their best at DLP.

13 comments:

Gerald said...

Thank you Alain.

You've put the words the way they were in my mind.

Dr Bitz said...

Well said, as always Alain! Thank you for the sensitivity.

Dr Bitz said...

Well said Alain, As always!

Will said...

One other major problem was that they expected to quickly sell expensive land to build offices, the mall and residential areas already in the mid 1990s. This real estate dimension has been the central factor in their original financial plan. This did not work out because of a real estate crisis in France at that time. Not a single parcel was sold until the late 1990s.

This then caused the hotel occupation problems: They built all these hotels because they knew there would be a second gate and a water park three years later, given the finances from the real estate projects came in. Nobody ever thought that these hotels would only cater for one park. Also, they believed that EDRP would be the headquarters for families discovering Europe/the region from there. So, they wanted to have all these rooms even if not all guests were at the parks. This however was an intercultural misunderstanding.

Things got better only slowly: the mall was built in 2000 and Val D'Europe developed much slower than WDC expected. The good thing is: the originally envisioned a bland suburban environment planned by a firm from O.C. California. However, as the years passed, there was a lot of influence from the New Urbanist movement in the USA towards Disney/Eisner. This resulted in the neotraditional layout of Val d'Europe, which otherwise would have been another subdivision. Val d'Europe was planned by the same firm as was Celebration, FL.

DGR said...

I'd say that two more factors contribute to the park's maintenance problems, compared to the other Disney parks: particularly harsh weather conditions and a good share of downright destructive guests. Both seem to cause more damage than the park's maintenance teams could ever keep up with.

Teevtee said...

Alain:

Again, I appreciate your clarifications but I also assure you that I fully understand the many complexities that DLP has faces and faces now. In fact your explaination is exceedingly simplistic in your description. I am sure you kept it this was to make a clear and concise point but the reality is much, much more complex than how you described it.

But yes, the many hotels were a massive mistake and yes, a small, poorly planned secodn gate ended up being more of a drag than help. had that money been put back into the main park to build Splash Mountain, Inday and a couple other attractions while also maintaning the exisiting attractions the reality today woudl be quite different.

But it is what it is, the parks and resort have evolved as they have and there is simply no excuse acceptable for allowing the park to fall into the condition it is now. it is not just the pirate ship (which is truly shocking) but many, many other aspects as well. Teh Nautilius is quickly headed towards the same condition as the pirate ship... and basic neglect for years has caused serious damage unlike we have ever seen in a Disney park.

I am not pionting fingers. I am not saying this person or that person is wrong or bad, I am just pointing out facts, facts I saw (and photographed) with my own eyes.

@DGR:

I do think Europeans in general have a much more casual and therefore destructive relationship with the parks than Americans and certainly the Japanese do. I saw many people casually toss garbage on the ground, run and jump all over the landscaping, climb fences and all sorts of things that you woudl never see in the U.S. It is a challenge for this park for sure. However the weather is something all the parks have to deal with and all do better than DLP. Tokyo has very similar weather as Paris does and those parks are literally like new... I mean PERFECT condition, and you cannot underestimate the damage of the relentless heat and sun that Florida has either.

The bottom line is that DLP has it's unique set of challanges just liek every other park does... but I am telling you, to allow the park to fall into disrepair in some areas and to simply never fix other things is unacceptable.

Alison said...

I believe lower than anticipated guest spending whilst inside the parks was another major factor in undermining DLPs finances.

Teevtee said...

I believe the core of the problem is as Alain said the over building of the hotels, the much lower than expected per customer spending on both products as well as dining and many other issues.

it is also very complex since the park was co-finacned, set up as an independant company, had governement obligations and so on.

But be clear, the issue at hand be it the Big Thunder accident or the general lack of upkeep has nothing to do with the initial financial success or failure of the park.

People have many imperceptions of how popular the park is and as Alain pointed it it was actually popular from the very start but that is really unrelated to properly maintaining a park.

How I wish they could go back in time and build the park with only 2 hotels... then expand the park to include several more major e-ticket rides... then build a much stronger second gate along with 2 more hotels a decade or more after the park established itself. but they cannot go back in time. What they CAN do is fix what they have.

If nothing else I hope they really learned from DLP when it comes to Shanghai. They are only building 2 hotels so that is good, and they are adapting the park to the local culture and customs... also good. I hope they have a plan for dealing with the average Chinese guest who really will have no concept of what standing in line is. I have been to China and they are very agressive and tend to culturally not understand the concept of standing in lines. It will make the Europeans seem like orderly Japanese by comparison.

Bruno said...

Great beggining, Alain. But your description (basically blamming Eisner for every mistake) just does not match with the "all the people doing their best at DLP" argumment. People who love Disney and it's legacy must be critical with what's wrong.
Will you publish this comment or may I leave Disney and more?

Juanpa said...

With all my respects, I understand the "Eisner" argument, but this man disappeared looooong ago. We can't just blame him and think everything's solved. WDS' trouble(for example) was not just a lack of initial investment, but is a total failure in terms of planning all over these years. And so on...

Teevtee said...

There would be no DLP for sure if not for Eisner... the good parts as well as the bad, it was Eisner who championed the very idea of building in Paris.

In fact, much as it is hard to say since Paris in simply an incredible city and one of the world's best... but Disney probably would have been better off building in Spain. Better weather, better location in terms of proximity to large populations... but Spain does not have the prestige that Paris does.

Sadly and ironically it was the initial failure of DLP that caused Eisner to change his entire stance on spending at the parks. Prior to DLP he was all about spending BIG on the parks (Splash Mountain, going big on DLP etc.) After DLP he became scared of spending on the parks and we got DCA and WDS...But I can't blame Eisner for any failure of DLP... the many hotels were actually NOT his idea, it was very thought out and tested and seemed sound. In retrospect it seems like an obvious mistake but at the time they had all the data in the world to back it up.

Bill Leics said...

Alain, you cannot place responsibility for today's operational safety on historic management. The cause of this accident is probably far less complicated then you imagine.

My wife, my two sons and I were in the final car of the train and we are only too well aware of what really happened on this ride.
Nobody should be in any doubt that DLP's first 'official' statement regarding the accident was complete nonsense as was their second 'official' statement. The faux boulder did not fall onto guests nor did it fall onto the track. What actually happened was that the boulder became wedged on the locomotive's chimney, increasing the locomotive's height by about half. Therefore, when the train entered the final tunnel there wasn't enough clearance and the faux boulder smashed through the tunnel's architrave and showered guests in flying debris from both the boulder and the architrave.

That something was very seriously wrong should have been apparent to operating staff before the train went into its final high speed descent, after all, they were visually monitoring the ride, weren't they? DLP can be thankful that nobody was killed, because having failed to safely halt the ride in a timely manner (and they could/should have), their first response was appalling.

Our train once halted in the final tunnel was left in the dark, and we listened petrified as the next train hurtled towards us; no attempt was made to reassure us via the PA system that this train would stop before it crashed into us.

Once staff did arrive on the scene they made some serious first aiding errors. Specifically, they attended to the first casualties they came across rather than checking the whole train, and they assumed that because some guests had managed to wriggle out of their seats everybody could, but many couldn't because they were trapped by the safety rail.

It seems to me that DLP did not have effective and rehearsed Accident Prevention or First on the Scene procedures in place for the BTM ride, and that can only be the responsibility of DLP's current management team.

By the way, the confusion regarding what did and didn't happen could be easily cleared up by releasing pertinent details of what the ride's video footage shows, but doing so will confirm what I have written here, and I wonder if DLP are willing to do that?

Bill Leics said...

Alain, it may be that you will not wish to publish my earlier comment, that is your decision to make, and I respect that. However, perhaps you have a contact at DLP you could forward my comment to, because maybe they really don't know what went wrong.

I can be contacted at billau2_10@hotmail.co.uk Cheers, Bill