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Disney Case Study
Disney Case Study
In August 2006, the company behind Disneyland Resort Paris reported a 13 per cent
rise in revenues, saying that it was making encouraging progress with new rides aimed
at getting more visitors. ‘I am pleased with year-to-date revenues and especially with third
quarter’s, as well as with the success of the opening of Buzz Lightyear Laser Blast, the first
step of our multi-year investment programme. These results reflect the group’s strategy of
increasing growth through innovative marketing and sales efforts as well as a multi-year
investment programme. This performance is encouraging as we enter into the important
summer months’, said Chairman and Chief Executive Karl L. Holz. Revenue for the
quarter ending 30 June rose to €286.6 million ($362 million) from €254 million a year
earlier. The results helped to boost overall profits at Disney Company, and the com-
pany’s stock price soared.
Yet, it hadn’t always been like that. The fourteen-year history of Disneyland
Paris had more ups and downs than any of its rollercoasters. The company had
hauled itself back from what some commentators had claimed was the brink of
bankruptcy in 2005. In fact, from 12 April 1992 when Euro Disney opened through
to this more optimistic report, the resort had been subject simultaneously to both
wildly optimistic forecasts and widespread criticism and ridicule. An essay on one
critical internet site (called ‘An Ugly American in Paris’) summarised the whole
venture in this way:
‘When Disney decided to expand its hugely successful theme park operations to Europe, it
brought American management styles, American cultural tastes, American labor practices,
and American marketing pizzazz to Europe. Then, when the French stayed away in droves,
it accused them of cultural snobbery.’
Source: This case was prepared by Nigel Slack of Warwick Business School, Warwick University, United
Kingdom, using published sources of information. It does not reflect the views of the Walt Disney
Company, who should not be held responsible for the accuracy or interpretation of the information
or views contained in this case. It is not intended to illustrate either good or bad management practice.
Copyright © 2006 Nigel Slack.
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In the Parks and Resorts division, according to the company’s description, cus-
tomers could experience the ‘magic of Disney’s beloved characters’. It was founded in
1952, when Walt Disney formed what is now known as ‘Walt Disney Imagineering’
to build Disneyland in Anaheim, California. By 2006, Walt Disney Parks and Resorts
operated or licensed 11 theme parks at five Disney destinations around the world.
They were Disneyland Resort, California, Walt Disney World Resort, Florida, Tokyo
Disney Resort, Disneyland Resort Paris and their latest park, Hong Kong Disneyland.
In addition, the division operated 35 resort hotels, two luxury cruise ships and a
wide variety of other entertainment offerings. But in the history of the Walt Disney
Company, perhaps none of its ventures had proved to be as challenging as its Paris
resort.
●● Visitors (guests) were seen as having a role within the park. They were not merely
spectators or passengers on the rides, they were considered to be participants in a
play. Their needs and desires were analysed and met through frequent interactions
with staff (cast members). In this way they could be drawn into the illusion that
they were actually part of the fantasy.
●● Disney’s stated goal was to exceed its customers’ expectations every day.
●● Service delivery was mapped and continuously refined in the light of customer
feedback.
●● The staff induction programme emphasised the company’s quality assurance pro-
cedures and service standards. These were based on the four principles of safety,
courtesy, show and efficiency.
●● Parks were kept fanatically clean.
●● The same Disney character never appears twice within sight – how could there be
two Mickeys?
●● Staff were taught that customer perceptions are both the key to customer delight,
but also are extremely fragile. Negative perceptions can be established after only
one negative experience.
●● Disney University was the company’s in-house development and learning facility
with departments in each of the company’s sites. The university trained Disney’s
employees in its strict service standards as well as providing the skills to operate new
rides as they were developed.
●● Staff recognition programmes attempted to identify outstanding service delivery
performance as well as ‘energy, enthusiasm, commitment, and pride’.
●● All parks contained phones connected to a central question hot-line for employees
to find the answer to any question posed by customers.
Tokyo Disneyland
Tokyo Disneyland was owned and operated by the Oriental Land Company. Disney
had designed the park and advised on how it should be run. In return, they received
10 per cent of all admissions revenues, and 5 per cent of food and souvenir revenues.
The Tokyo project was considered a great success. Japanese customers revealed a
significant appetite for American themes and American brands, and already had a
good knowledge of Disney characters. Feedback from visitors at the Tokyo park was
extremely positive. Visitors commented on the cleanliness of the park, the efficiency
of staff members and the courtesy with which they were treated. Visitors also appre-
ciated the Disney souvenirs (a wider range than in the American parks) because
giving gifts is deeply embedded in the Japanese culture. Although the Tokyo park
was almost identical to Disney’s Californian park, there had been no complaints
about the dilution of Japanese culture by so strong an American-themed entertain-
ment. The Japanese operators had added many new attractions since its opening.
Many signs were written in English, as were cast members’ name badges. Similarly,
many of the live shows and attractions were conducted in English and although
almost all visitors to the park were Japanese, only one out of its thirty restaurants
sold Japanese food.
368 case study 2 • D i s n e y l a nD R e s o RT PaRi s
The success of the Tokyo park was explained by one American living in Japan:
‘Young Japanese are very clean-cut. They respond well to Disney’s clean-cut image, and I
am sure they had no trouble filling positions. Also, young Japanese are generally comfort-
able wearing uniforms, obeying their bosses, and being part of a team. These are part of
the Disney formula. Also, Tokyo is very crowded and Japanese here are used to crowds
and waiting in line. They are very patient. And above all, Japanese are always very polite
to strangers.’
Disneyland Tokyo had opened in 1982. Because Disney was wary of losing money
on the Japanese venture it decided not to own the Tokyo site – a decision it came to
regret. Disney also regretted allowing hotels owned by other companies to be built
at its earlier US Disneyland parks, to the extent that Disney only owned about 25 per
cent of hotels in the vicinity. It decided that it would take full control of Euro Disney
and all its hotels.
Disneyland Paris
By 2006 Disneyland Paris consisted of three parks: the Disney village, Disneyland
Paris itself and the Disney Studio Park. The village was comprised of stores and
restaurants; Disneyland Paris was the main theme park; and Disney Studio Park
had a more general moviemaking theme. Yet, the idea of a European park was not
new. Because many of Walt Disney’s most successful animations were taken from
European literature, he had always wanted to build a park in Europe. In the event,
his wish wasn’t completed until 25 years after his death. But when the Walt Disney
Company planned its European venture, its reputation was riding high and it was
confident of success. At the time of the European park’s opening, more than two
million Europeans visited the US Disney parks, accounting for 5 per cent of the total
visitors. The company’s brand was strong and it had over half a century of trans-
lating the Disney brand into reality. The name ‘Disney’ had become synonymous
with wholesome family entertainment that combined childhood innocence with
hightech ‘imagineering’.
Alternative locations
Formal plans to build a European Disney Park were first considered as early as 1975.
Initially, as well as France, Germany, Britain, Italy and Spain were all considered as
possible locations, though Germany, Britain and Italy were soon discarded from
the list of potential sites. The decision soon came to a straight contest between the
Alicante area of Spain, which had a similar climate to Florida for a large part of the
year, and the Marne-la-Vallée area just outside Paris. Certainly, winning the contest
to host the new park was important for all the potential host countries. The new park
promised to generate more than 30,000 jobs.
It was the French location that eventually won out, partly because of the close
proximity to the large population of the Paris conurbation and the city’s attrac-
tion as a tourist centre. Also, its central positioning within Western Europe was
thought to be crucial too if it was to attract sufficient visitors. Early concerns
that the park would not have the same sunny, happy feel in a cooler climate
c a s e s t u dy 2 • Di s n e y l a nD R e s o RT Pa R i s 369
immediately after the park opened. Some leavers blamed Disney’s apparent difficulty
in understanding ‘how Europeans work’. ‘We can’t just be told what to do, we ask ques-
tions and don’t all think the same.’ Some visitors who had experience of the American
parks commented that the standards of service were noticeably below what would
be acceptable in America. There were reports that some cast members were failing to
meet Disney’s normal service standard:
‘. . . even on opening weekend some clearly couldn’t care less . . . My overwhelming impres-
sion . . . was that they were out of their depth. There is much more to being a cast member
than endlessly saying “Bonjour”. Apart from having a detailed knowledge of the site,
Euro Disney staff have the anxiety of not knowing in what language they are going to be
addressed . . . Many were struggling.’
It was also noticeable that different nationalities exhibited different types of behav-
iour when visiting the park. Some nationalities always used the waste bins while
others were more likely to drop litter. Most noticeable were differences in queueing
behaviour. Northern Europeans tend to be disciplined and content to wait for rides in
an orderly manner. By contrast, some southern European visitors ‘seem to have made
an Olympic event out of getting to the ticket taker first’.
The press in a number of countries debated whether Euro Disney really knew what
it was trying to be. Is it an American theme park in Europe? Is it a theme park that
exploits the European heritage of Disney characters? Had the park any connection at
all with France, its host country? Is there a fundamental difference between Europeans
and Americans in the type of entertainment that they appreciate? Is it even possible
to devise a theme park that can please so many different nationalities and cultures?
Others claimed that the nature of the European work force was such that they could
never achieve the US standards of Disney service:
‘The Disney style of service is one with which Americans have grown up. There are several
styles of service (or lack of it) in Europe; unbridled enthusiasm is not a marked feature
of them.’
Nevertheless, not all reactions were negative. European newspapers also quoted
plenty of positive reaction from visitors, especially children. Euro Disney was so dif-
ferent from the existing European theme parks, with immediately recognisable char-
acters and a wide variety of attractions. Families who could not afford to travel to the
United States could now interact with Disney characters and ‘sample the experience at
far less cost’.
The first phase of development (the theme park, hotel complex and golf course)
had gone massively over budget. And attendance figures failed to improve much (by
May the park was only attracting around 25,000 visitors a day instead of the pre-
dicted 60,000). Moreover it appeared that only three in every 10 visitors were native
French. Seven weeks after the opening of the park, visitor attendance was reported
at 1.5 million, a disappointment for the park which had expected 11 million visi-
tors in its first year, and when Euro Disney announced its first quarter revenues of
$489,000,000, it also said that it would make a loss in its first financial year. Again,
the loss was blamed on disappointing attendance figures. Nevertheless, the company
pointed out that Disney’s other theme parks had made comparable losses in their
first year of operation, and anyway, it was foolish to try to predict future attendance
so early in the park’s history. However, the Euro Disney company stock price started
a slow downward spiral, rapidly losing almost a third of its value.
c a s e s t u dy 2 • Di s n e y l a nD R e s o RT Pa R i s 373
1995 saw the opening of the new roller coaster, not after all to be called ‘Discovery
Mountain’ but ‘Space Mountain de la Terre à la lune’, because it was decided that the
new name was more exciting. Unlike its counterparts in Tokyo, Florida and California,
it was not housed in a big white dome, but in a very ornate Victorian futuristic style
dome. Intensive marketing of Space Mountain on television channels all over Europe
and the release of the popular movie Pocahontas contributed to an improvement in
the resort’s financial results. In fact, the Euro Disney resort complex did announce
its first annual operating profit in November 1995, helped by the opening of Space
Mountain in June.
In 1997 the five-year celebrations included a new parade with Quasimodo and all
the characters from the latest Disney blockbusting classic, The Hunchback of Notre
Dame, the ‘Year To Be Here’ marketing campaign, the resort’s first Hallowe’en celebra-
tion and a new Christmas parade.
A new attraction was added in 1999, ‘Honey I Shrunk The Audience’, making the
audience the size of a bug while being invited to Inventor of the Year Award Ceremony.
This was the more modern replacement to the ageing 3D movie Captain EO. However,
the planned Christmas and New Year celebrations were disrupted when a freak storm
caused havoc, destroying the Mickey Mouse glass statue that had just been installed
for the Lighting Ceremony and many other attractions. Also damaged were trees next
to the castle, the top of which developed a pronounced lean, as did many street signs
and lamp posts.
Disney’s ‘Fastpass’ system was introduced in 2000. This was a new service that
allowed guests to use their entry passes to gain a ticket at certain attractions and return
at the time stated and gain direct entry to the attraction without queueing. Two new
attractions were opened, ‘Indians Jones et le temple du péril’ and ‘Tarzan le recontre’
starring a cast of acrobats along with Tarzan, Jane and all their jungle friends with
music from the movie in different European languages.
In 2001 the ‘ImagiNations Parade’ was replaced by the ‘Wonderful World of Disney
Parade’, which received some criticism for being ‘less than spectacular’ with only eight
parade floats. Also Disney’s ‘California Adventure’ was opened in California.
The resort’s tenth Anniversary saw the opening of the new Walt Disney Studios Park
attraction. The Disney-MGM Studios at the Walt Disney World Resort, Florida, had
already proved to be a major success and the original concept for the Paris studios had
first been studied in 1992, shortly before the park opened. The concept, which was
based on the world of cinema, seemed perfectly adaptable to the expectations of a
European audience so development for the new park was started in 1997 when a small
team of Disney Imagineers were asked to design it. In parallel to this, opinion leaders
from the worlds of French and European cinema, culture and media were consulted
about the project. R. Julienne, the famous French stunt designer, was among the first
Europeans to work with Disney on the new theme park’s concept. Also in this year,
Disneyland Paris was renamed Disneyland Resort Paris and the original park was also
renamed Disneyland Park to accommodate the new Walt Disney Studios.
André Lacroix from Burger King was appointed as CEO of Disneyland Resort Paris
in 2003, to ‘take on the challenge of a failing Disney park in Europe and turn it around’.
Increasing investment, he refurbished whole sections of the park, increased the num-
bers of dancers to the ageing ‘Wonderful World of Disney Parade’ and introduced the
Jungle Book Carnival in February to increase attendance during the slow months.
By 2004, attendance had increased but the company announced that it was still
losing money. It again renegotiated its €2.4 billion debt to the Walt Disney Company
c a s e s t u dy 2 • Di s n e y l a nD R e s o RT Pa R i s 375
and French financial institutions. Losses were attributed partly to the costs of opening
Walt Disney Studios two years earlier, just as the world theme park business slumped
in the wake of the American terrorist attacks. New hotels were opened (not owned
by Disney) close to the park, which meant increased competition for the park’s own
hotels.
The positive news of 2006 was well received. As one commentator put it:
‘[W]ould Disney, the stockholders, the banks, or even the French government make the
same decision to go ahead if they could wind the clock back to 1987? Is this a story of a
fundamentally flawed concept, or was it just mishandled?’
Questions
1 What markets are the Disney resorts and parks aiming for?
2 Was Disney’s choice of the Paris site a mistake?
3 What aspects of its parks’ design did Disney change when it constructed Euro
Disney?
4 What did Disney not change when it constructed Euro Disney?
5 What were Disney’s main mistakes from the conception of the Paris resort through
to 2006?