Monday, May 7, 2012

DLP announces very bad first half fiscal year results: net loss widens, DLP may need cost cuts



Disneyland Paris announced EuroDisney financial results for the first part of its fiscal year - the last six months - and let's say it frankly, they are extremely bad. Losses have grown 22% due to higher wages and the cost of refurbishments made ahead of its 20th anniversary this year. EuroDisney lost 120.9m euros (£97.4m; $157.4m) in the first half of its financial year compared with a net loss of 99.5m euros in the same period a year earlier and the number of visitors to the parks also fell, but those who went spent more on average, helping revenues rise 1%.

I wish the result would have been better but that's the unfortunate reality. Will these have an affect on DLP future? It might be, as DLP warned "that if it was on a course to miss these targets it would have to reduce operating costs and some investment, and sell assets or seek help from parent company The Walt Disney Company or other parties". I don't think that the construction of the WDS Ratatouille ride will be stopped but we might see others projects delayed, if not cancelled.

These bad results are definitely no good news and i wonder how long it will take to Bob Iger to understand that DLP need - since years - a kind of "Marshall Plan" to resolve the problem once and for all. Iger did it for DCA, now that DCA is finished, think about DLP! Below, the AFP news release.



PARIS — The Euro Disney theme park near Paris reported a 22-percent increase in its net loss for the first half of its financial year on Monday and warned it might have to take cost-cutting action.
Euro Disney, the biggest amusement park in Europe and celebrating its 20th anniversary, reported a net loss of 100.8 million euros ($130.6 million), an increase of 21 million euros from the loss for the first half 12 months ago.
The company reported an increase in an operating loss of 38.0 percent to 84.7 million euros, and an 8.0-percent fall in sales to 552.4 million euros.
Euro Disney has debt of nearly 1.8 billion euros and has to meet pre-set objectives each year.
The firm warned that if it was on a course to miss these targets it would have to reduce operating costs and some investment, and sell assets or seek help from parent company The Walt Disney Company or other parties.
However, the management held that currently it had enough resources for the foreseeable future, including lines of credit from TWDC.
Another factor was a possibility to delay conditionally the payment of part of management and licence fees due and interest, the company said in a statement.
Euro Disney intends to repay loans of 72.1 million euros in the second half, in line with targets laid down.
The number of people visiting its attractions and its hotels fell, in a "difficult" context for the economy, but despite the hard time the average amount spent by each visitor rose.
The accounts were also burdened by big charges for renovation and for the launch of new attractions to mark the 20th anniversary of the creation of Euro Disney on a green field site east of Paris.
In its 20-year life, Euro Disney which involves important real estate interests, has encountered various severe financial difficulties.
Deputy chief executive Mark Stead, commenting on the latest figures, told AFP: "We have withstood the (economic) crisis very well."
He expected investment marking ther 20th anniversary to boost activity in the second half of the firm's financial year from April to September.
This period is usually the stronger part of the firm's year because it coincides with the summer holiday period in the northern hemisphere.
"We are already seeing encouraging signs for the second half with an increase of hotel reservations," he said.
The average amount spent by visitors rose by 2.0 percent to 44.11 euros per day in the parks and by 4.0 percent to 207.29 euros per room in the hotels, owing mainly to an increase in prices.
The number of visitors to the parks fell by 1.5 percent to 6.9 million and the rate of occupation in the hotels by 3.6 points to 79.8 percent.

Picture: copyright Disney

Text: copyright AFP

14 comments:

ThomasH said...

Thanks for your clear explaination!

Marco Antonio Garcia said...

That's the sad result of bad decisions such as making a very poor second park, and than having to invest most of the money on it because it's obviously a failure, to try to improve it, and as a consequence don't update the first park which is the one that is financially viable, making it less attractive as it becomes more outdated every year that passes. Besides, the European economic condition doesn't help much, and with the latest election results it's not likely to improve very soon. Parks like DSP are the cheap option that becomes the most expensive in the end, executives should learn that.

If they had, instead of build the DSP, built an E-Ticket attraction in each land in DLP with the money, like Indiana Jones in Adventureland, the Little Mermaid in Fantasyland (I know, that's not an E-Ticket), Journey to the centre of the earth in Discoveryland, and an original attraction in Frontierland, just to give a few examples, that park would have become the best park in the world, would attract much more people and have a lower operating cost than two parks.

But now that the mistake was already made, they need to make the same at DSP that they made on California Adventure, and have at least two new major new attractions in DLP, and in order to do that, obviously TWDC will have to invest a lot of money in the Resort, by putting more capital in it; allowing the European Resort to be caught in a financial disaster, become outdated and operating badly due to cost cuts is going to be terrible for their image.

However, I also think that the Resort is financially viable the way it is, if it didn't have to pay so much to TWDC for royalties and so much interest on its debt (I don't know the numebrs well, but I suppose).

And I think that I missed something "The accounts were also burdened by big charges for renovation and for the launch of new attractions to mark the 20th anniversary of the creation of Euro Disney on a green field site east of Paris". What new attractions did they launch???

Anonymous said...

I think the new attraction is Disney Dreams, although I personally don't think that they should call this wonderful show a "new attraction".

Well, at least there is one good thing about this very bad piece of news ... now they probably will cancel the plans to add TSMania in WDS (which were mentioned by DLP's CEO in a recent interview). In my opinion, better nothing new than an extremely overrated attraction that in reality is nothing more than a 'videogame on wheels'.

It's so unfortunate that in the late '90s DLP decided to build the crappy WDS, in stead of expanding Disneyland. For the money they spent on WDS they could have easily build Indy Adventure and Splash Mountain. Just imagine: the current Disneyland Park + Indy + Splash = perfection!!!
And now, it's almost certain that we'll never see these great attractions in Paris ... makes me very sad.

danielz6 said...

You're exactly right Marco...studios Parks(including the one in Florida) have no theme. I suspect the one in Florida was made as an answer to universal studios Orlando and I believe the only reason it has been successful is because so many people go to Orlando for weeks at a time that they visit it just because its there and its different from the other attractions in magic kingdom, universal, sea world etc..The same can be said for epcot imo. If the park was built on its own separate from the Disney resort it would be an utter failure. So the result is a park with miscellaneous (although some are very good) attractions that have no cohesive theme to tie them all together. Its like a really good carnival not to sound too harsh about it, but I think Walt would hate these Parks. Where's the enduring timeless themes? There are none! And Hollywood is not a theme. It's a neighborhood in Los Angeles.
Disney pioneered lands with themes that transport the guest to a different Place and a different Time. New Orleans in 1850, the old American west, a bright and optimistic future, fantasy fairy tales coming to life etc.. Disney studios doesn't accomplish that at all. The park needs a California adventure Makeover seriously but I agree with you that the money is better spent making a better magic kingdom park first. How is it that Disneyland(Anaheim) is the smallest magic kingdom park in the world yet has the most attractions?! Paris et al. should be able to blow away Anaheim cause they have so much room for great attractions. Its tragic really. Best of luck Disney Paris I hope to visit someday.

Marco Antonio Garcia said...

I also hate EPCOT Daniel, I think that the Theme of the park is terrible, half of it is an outdated futuristic theme and the other half is cheap looking pavilions to represent different countries, it's like a small cheap Las Vegas in my opinion. It has two excellent attractions, Mission Mars and Soaring, but Soaring has nothing to do with the park's theme, and a nice aquarium that was ruined by Nemo. If I were Disney CEO and could do whatever I wanted, I would explode EPCOT and do a nice original new park in its place.

DHS is not so bad, I agree with you in some points about it, but it's a nice park, 10X better than DSP.

I love Animal Kingdom, but I think that it would be a much better park with the Mythological animal lands and attractions that were envisioned for it, in fact I think that the money to build Avatar land would be much better spent in the Beastly Kingdom project; by the way, why does every new thing in the parks have to be based in a movie/franchise?

And I do think that the money to make DSP would be much better spent in Disneyland Park Paris, but now that they have already made the mistake they need to fix it, so there's no way out, they have to fix that park.

Marco Antonio Garcia said...

And Anonymous, I agree that Indy and Splash Mountain would greatly improve Disneyland Paris, even though the weather in Paris is not ideal for Splash, but with the money the have spent to build DSP, plus TOT, the terrible Toy Story Land and now the Ratatouille area, they could have built much more in DLP, like Indy, Western River Expedition instead of Splash Mountain, the Little Mermaid, Star Tours 2, and Journey to the Centre of the Earth from Disney Sea.

Can you imagine all those attractions in Disneyland Park Paris? It would be epic, the best park in the world without a doubt, it would have much more attendance than the two current parks combined and it would probably rival the Magic Kingdom in attendance. If only I could make those decisions...

And I agree with you about TSMania, but at least it's fun, unlike Buzz that it's just plain terrible!

Finally, I don't think that a Park's size matters much, for me is the quality of the attractions, theme and landscape that matters.

Mark B said...

We used to go to DLP but it's so expensive now. It's now £900 ($1400) for 3 nights, Tuesday to Thursday, at the cheapest onsite hotel.
That is a special offer, it's usually even more expensive than that. We now go to WDW instead.

Anonymous said...

Marco...you HATE Epcot? Thats strong words. I do agree there are a fair amount of people that don't like it as their favorite Disney Park. I think the icon of Spaceship Earth is great! I think it's a good park for eating some different types of food, I love to eat there!! Again, I do think it's a different kind of "park". I am one that can find anything I like about a park. I somewhat agree with you though on some of the "themeing". Soaring...at Epcot in Future World, but I agree with the pavilion its in. I think Epcot has some different type of issues maybe, but if improved somewhat more, it could be a very impressive park. Again, you might have to be in the mood for it.

Dean said...

Epcot is a great park. Its a shame no sees it for what it is. Also Disney messed up by making "Studios" Parks. Wescot would have been 10x better than DCA. Disney Studios Paris needs the Carsland to help it out of the hole. You also have to remember DLP is a young park. Especially comparing it to Disneyland and WDW. DPL has tons of time to grow.

Anonymous said...

Mark B

It's still cheap to visit DLP you just have to spend some time on the net. We bought 4 annual passes last August for 99 euros each, they do have some blockout dates but you plan around them. In August we stayed at the Hotel L'eysee in Val D'Europe for a week for about £70 a night, the hotel is right outside the shopping center so you can dine there without the Disney crowds for a fraction of the price, the hotel has a free shuttle to the park which takes about 5 minutes door to door.
We visited again last month for a weekend trip, passes still valid, £22 each way on the shuttle, one night at the L'Eysee £70 and approx £65 in petrol!
We are off again for a two night visit in July, £44 each way this time on the shuttle and £140 for the hotel for 2 nights, Thats 3 visits in a year for the whole family for far less than the price of one person visiting WDW (we've been to WDW 12 times before but recently it's got way too expensive for us to visit every year)

Stitch said...

Eeeeeek! That doesn't look good.

I massive overhaul like at DCA is probably unlikely but would be very much welcomed!

danielz6 said...

Ok so I have a great idea on how to fix the studio Parks. First the problem. The theme of the park is Hollywood and an active movie studio. So the problem is that themed lands like toy story or ratatoullie clash with the overall theme because those lands are make believe so how can they exist within a movie studio?
The solution. Those lands are no longer lands but instead they are movies that are or were being filmed right there in the movie studio. You are walking into a movie not a land! So how do you accomplish the immersion? Well there could be many ways but here's my idea.
You define a clear line between the real world(the movie studio) and the fantasy(movie being recreated toy story etc.) On the studio side you could have animatronics of the actual directors like john lasseter or sound designers artists whomever actively discussing and filming the movie right in front of you. Cameras and all set pieces pointed at the "land" as if its really being filmed for the movie. So the characters like buzz and woody are no longer cartoon characters but real things starring in a movie. They already play with this idea if you watch the outtakes during the credits they joke like they're actually stars in a movie as they make mistakes like real actors do! As the guests pass the real world of the studio and enter the land they're entering into a movie...the make believe creation of the real people outside. At that point the immersion is complete and you have not left the studio park into a different park, but instead you entered the movie that is being filmed there in the park!

danielz6 said...

Ok so I have a great idea on how to fix the studio Parks. First the problem. The theme of the park is Hollywood and an active movie studio. So the problem is that themed lands like toy story or ratatoullie clash with the overall theme because those lands are make believe so how can they exist within a movie studio?
The solution. Those lands are no longer lands but instead they are movies that are or were being filmed right there in the movie studio. You are walking into a movie not a land! So how do you accomplish the immersion? Well there could be many ways but here's my idea.
You define a clear line between the real world(the movie studio) and the fantasy(movie being recreated toy story etc.) On the studio side you could have animatronics of the actual directors like john lasseter or sound designers artists whomever actively discussing and filming the movie right in front of you. Cameras and all set pieces pointed at the "land" as if its really being filmed for the movie. So the characters like buzz and woody are no longer cartoon characters but real things starring in a movie. They already play with this idea if you watch the outtakes during the credits they joke like they're actually stars in a movie as they make mistakes like real actors do! As the guests pass the real world of the studio and enter the land they're entering into a movie...the make believe creation of the real people outside. At that point the immersion is complete and you have not left the studio park into a different park, but instead you entered the movie that is being filmed there in the studio.

Violaine said...

I might have a bad understating of financial shenanigans, but I thing these results simply reflect the fact that the park has been investing a lot, which won't be the case anymore for the next quarters, whereas guest attendance and consumption should remain at least correct - hopefully be boosted by the 20th anniversary.

So not a big deal?