Disneyworld Case

Group Work

Procter: Can Euro Disney continue to achieve with its same rate of success as it did in its opening months?

Jack: There is no way that Disneyland is going to be able to sustain it's initial success, not with the way things are running. For one thing, revenue projections have not been met after 1992, so how are we going to be able to cover the huge overhead non-operational costs? We can't put our prices higher, I mean, look what happened with our penetration-pricing, executives can't think demand will be there at any price.

Procter: What will lowering our prices do? Visitor numbers are not the problem for the park - 11 million visited in the first year?

Jack: Lowering our prices will encourage visitors to stay in our hotels for longer, making them more attractable to possible buyers and generating some cash, exactly what our plan was to do in the first place. No investor will ever buy our hotels at an occupancy rate of 50%. I think everyone is forgetting by 1993 Euro Disney had a loss $960 million US and a cumulative loss of $1.03 billion.

Procter: Has Euro Disney accommodated to the changing economy?

Jack: No, Euro Disney has not accommodated to the changing economy. We are in a period of instability, there is no way pouring more money into the theme park is a feasible idea.

Procter: Yes, but the economy could have an upturn?

Jack: It may have an upturn, but this will not contribute enough to fix our problems. This is especially concerning the heavy interest rate costs of 11%, which will continue to eat up our revenue. Also, France's inflexible labour schedule , France's collapsed real estate market at the moment will affect our future ability to sell the assets we were meant to and not to mention that 32% of Euro Disney is financed by debt, which is $2.9 billion we have to pay back. How can we afford that with more spending?

Procter: Has Euro Disney changed enough to include European values?

Jack: In some respects the park has changed enough to include European values. Yet the executive arrogance will always lead to incompatibility of Disney with the European market. Just from the example of not allowing wine at lunch in the opening in 1992 means that cultural miscalculations will continue to be present.

Procter: Don't worry about that there are always initial problems with businesses in the first two years, look at what was done to fix the problems.

Jack: Yes, but we're forgetting that the European market is highly frugal (spend-conscious). They have only been staying two-days at the park compared to five in the North American parks, with