Disney's frustrating journey

[May Point Network] Disney's global expansion is quite unsatisfactory. A few days ago, the annual financial report released by Hong Kong Disneyland showed that in the fiscal year ended October 3 last year, the revenue was 2.54 billion ports...

[May Point Network] Disney's global expansion is quite unsatisfactory. A few days ago, the annual financial report released by Hong Kong Disneyland showed that in the fiscal year ended October 3 last year, the revenue was HK$2.54 billion and the net loss was HK$1.315 billion. The Secretary for Commerce and Economic Development of the Hong Kong Special Administrative Region, Mrs Lau Wah Wai-lam, said that the SAR Government is not satisfied with the financial situation of the park. It will strengthen the daily operation of the monitoring park and urge the shareholders to do cost control and enhance operational efficiency.

In fact, in 1992, shortly after the opening of the European Disneyland, Disney found that it could not achieve the expected revenue target. It was just in time to catch up with the severe economic recession in Europe. European tourists are far more economical than American tourists. Many people bring their own meals and don't live in Disney hotels. A visitor named Ke Lin from southern France is a typical “do not spend” representative. After three days of playing with her husband and three children in the park, she said: “This is a bottomless pit. Whenever we visit When there is a place, the child always has to worry about buying something."

Unachievable expectations

Investors' thinking logic and inference may be right, but their expectations are simply not realized. They believe that no matter what the price, there will be people to patronize. The European Disneyland adult ticket price is $42.25, which is more expensive than the US. At the Disney Hotel flagship store at the entrance of the park, a room costs $340 a night, which is equivalent to the price of a top hotel in Paris. Disney soon discovered that the average occupancy rate of the Paradise Hotel fell to 50%. Guests are reluctant to spend more time and spend more money on these expensive goods and services.

Disney’s management soon realized that it had made a calculation error. Visitors to Disneyland, Florida, which have 3 theme parks, usually stay for more than 4 days. In contrast, visitors to Europe Disneyland, which has only one theme park, usually only stay for 2 days. Many tourists come to the park early in the morning and go to check out the next morning.

Despite the early criticism of European Disneyland, the main problem is not the low level of public acceptance. Europeans love this paradise. Since its opening, it has attracted nearly 1 million visitors every month and quickly reached its original goal. The patronage of the tourists has made the European Disneyland the most expensive and attractive place in Europe. But a large number of thrifty tourists did not allow Disney to achieve its profit and profit targets, nor could it make up for its ever-expanding management expenses.

Other misconducts and expected errors have also brought harm to Disney, the most important of which is cultural factors. A rule that does not allow drinking in the park makes Europeans very unhappy because it has become a habit to drink at lunch and dinner. Disney also found that there were peaks and troughs in the number of tourists, and the number of visitors per day during the peak period was 10 times higher than that in the trough. Therefore, in the off-season, the company will lay off a certain number of employees, which in turn violates France's strict labor laws.

There is another unpleasant thing related to breakfast. “We heard that Europeans don’t eat breakfast, so they have reduced the size of the restaurant,” recalls one manager. “What’s the result? Everyone has to eat breakfast, we have to work hard in a restaurant with only 350 seats. Breakfast for 2,500 people.” In the fiscal year ending September 30, 1993, the loss of the park has reached 960 million US dollars, and the company is full of doubts about the prospects of the park. Walt Disney Company was still raising $175 million in the spring of the following year to save the European Disneyland. This difficult paradise is also burdened with a heavy interest burden.

Rescue action

In the first fiscal year, Euro Disney lost more than $2.5 million a day. But the situation is not as terrible as the statistics show. In fact, the European Disneyland still generates operating profits, but non-operating costs have caused it to have a large deficit.

It took the European Disneyland 20 months to calm down the storms and adjust the various miscalculations, mainly based on the demand for hotel rooms and how much money Europeans spend, accommodation, and the willingness to buy Disney goods. The operation of the park. It has also been gradually improved.

By the beginning of 1994, the European Disneyland became more acceptable to people. Some hotel rooms have been reduced in price, for example, from $76 a day to $51. A $10 one-piece T-shirt and a $5 set of crayons replaced expensive jewelry. The luxury à la carte restaurant has been transformed into a self-service restaurant. Tickets during the off-season fell from $38 to $30. And because of the implementation of the pipeline operation and the reduction of more than 900 jobs, the operating costs have also been reduced by 7%.

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