EuroDisney SCA opened in April 1992 its doors to the European public which was located 20 miles from Paris. This specific location was selected over 200 potential sites in Europe (Greece, Italy, Spain, Portugal, and France). Spain was threw out the selection period the most likely place to be chosen but due to the insufficient acreage of the land around Barcelona area as opposed to France government was generous with incentives and showed impressive regional demographics which ultimately France was chosen to be the new location for which would be the biggest and most lavishing theme park that Disney had built around the world.
Disney Management thought that because they had successfully opened Disneyland-Tokyo and surpassed their expectations, the European market was expected to succeed with the same business model and projected to generate over $100 million during the first year of operation which became a loss of $900 million by the summer of 1994. EuroDisney failed to attract the expected number of European visitors’ especially French visitors because they saw it as an American imperialism. Disney executives failed to understand that the European population differs from Japanese population and may simply resent the ads directed at foreign cartoon characters seeing it as a threat to their national identity. If there had been a better market research they would have found out that vacation pattern, pricing of hotel rooms and European meal habits differs much more than they American market or Japanese market. They were confident that whatever project the Disney CEO and President took on would be an instant success because they were credited to having turned the Disney Corporation in to a multibillion dollar company.
Different problems were encountered requiring extensive adaptation of both strategy and tactics by EuroDisney’s management. Eventually the parent company, The Walt Disney Company had to step in to organize a financial bail-out.
Some main issues were:
•Construction costs that surpassed the initial budgeted amount. •Planners failed to foresee external factors for example European recession, the Gulf War effect on vacationing, high interest rates and devaluation of other currency against the Franc.
•The loss of $ 900 million from 1992-1994.
•French cartoon themed parks.
•Failure to study the European culture and behaviors (wine drinking among French with meals, imposing strict grooming rules)
1 International Marketing – Philip Cateora & John Graham (13th Edition) Case 2-1 p.614. Case Questions and Answers
1. What factors contributed to EuroDisney’s poor performance during its first year of operation? A .Visitors to the park was reluctant to spend $280.00 a day to enjoy the park attractions. Its hotel rooms were much more expensive than top hotels in Paris. B .Airfares was cheaper to Disneyworld in Orlando Florida compared to Paris. The weather was also much better in sunny Florida. C .French visitors stayed away because of the historical animosity between the French and Americans. D .Disney executives failed to see the approaching recession at the end of the 1980s and the halt on planned vacations after the Gulf War in 1991. E .There was high interest rates and the devaluation of several currencies against the franc. F .They competed against the World Fair in Seville and the 1992Barcelona Olympics. G .They banned alcohol in a wine loving culture.
H .Disney executives also did not invite investors to a share in the project. They wanted to design and build themselves with a view to selling at a profit. They were influenced by their experience in Tokyo Disneyland when they licensed its name and image to another company who raked in all profits and left the parent company with a meager share. I .They downsized breakfast service because they were erroneously informed that Europeans don’t eat breakfast. 2,500 customers showed up...