After a difficult two years blighted by difficult trading conditions and poor attendances, the “cast members” and executives who work for Euro Disney are hopeful the Paris theme-park operator is heading for a more stable future.
The group, which on Thursday reported a narrowing of first-half net losses from €108.9m to €80.9m ($104.5m), has finished a complex financial restructuring that has released funds for investment in new attractions.
The latest addition, Space Mountain 2, opened two weeks ago at the main Disneyland park. Like the Aerosmith Rock n' Rollercoaster in the adjoining Walt Disney Studios park, it has proved a big hit. But pleasing visitors who come to the group's two parks is not a big concern for André Lacroix, Euro Disney's chairman and chief executive, because first-time guests invariably leave happy, intent on returning. The problem is how to attract more guests in the first place.
“If you look at our core target market, it is made up of about 122m Europeans. Out of this core market, less than a third have made the trip here,” he said.
Walt Disney, which owns 39.7 per cent of Euro Disney, has found it easier to attract visitors to its US parks although Mr Lacroix said this was because the US was a mature theme-park market.
“We have been operating for 13 years, but in the US they have been operating for 50 years. We are at the beginning of the life cycle for this product and establishing a new concept [like Euro Disney] takes time.”
Changing holiday trends in Europe could work in the group's favour he added. “People are taking more holidays that are shorter in length, which suits us. There is an opportunity to grow by increasing penetration to first-timers in every country.”
Euro Disney's problems came to a head in the summer of 2003. “We had a difficult time and revenues had declined by 11 per cent that summer because of the Iraq war. We put a new team in place and found a way to stop the revenue decline.”
New initiatives such as themed “seasons” that run in traditionally quiet trading periods have been introduced and a new ride will be added every year until 2009. Yesterday's results show a slight improvement in visitor numbers, with 5.7m coming to Euro Disney's two parks in the six months to the end of March, up from 5.6m in the same period last year. However, the group has enjoyed more success in increasing visitor spending, and lifting the occupancy rates at its hotels, helping to lift turnover to a record €494.1m from €471.1m.
Increased labour costs, reflecting the impact of the French minimum wage and the ending of subsidies relating to the group's adoption of a 35-hour working week for its employees prevented a further narrowing of net losses. “These are mandatory law changes that we can't do anything about,” said Jeff Speed, finance director.
He added that the group had not set a deadline for a return to profitability but said that “significant investment” had been committed for new attractions until 2009.