"Hot Dog!", Mickey must be exclaiming. The financial results for the Third Quarter 2007 are good, aren't they? No - they're really good. For a resort which last year published a revenue increase of 4.5% to now be on track for an 11% increase in 2007 is something of a dream for Euro Disney SCA. So, what's going on? And what could this boost in business mean for the future of Disneyland Resort Paris?,
Revenues up 12%, attendance up 9%, hotel occupancy up 4.7 percentage points… have they been assessing the correct Disney resort here?
A quite significant “boom” is clearly taking place within the berms of Disneyland Resort Paris, and yet these nine-month results only show three months of the year-long 15th Anniversary Celebration expected to boost revenues and attendance. Their hopeful new E-Ticket, The Twilight Zone Tower of Terror, is still five months away. Can we begin to hush an early “to infinity and beyond” ?
Revenues & Costs – The Balance
It seems wonderful to think that the resort has increased revenues by an incredible 12% in one single year, but as CEO Karl L. Holz warned in his statement accompanying the results, costs and expenses have also increased.
One look at this Summer’s activity — two new attractions, a new parade, new decorations, three nighttime shows, shows and streetmosphere at every angle, Molly Brown and other refurbishments, River Rogue Keelboats — proves the amount of money currently being spent by Euro Disney SCA on boosting their two parks. Not only the initial cost of creation, but the continual operational cost of two extra new attractions, a year-long castle ceremony, for example, must be a worry to the bean counters.
Factor in costs such as 15th Anniversary advertising (noted to be their largest ever), secondary campaigns for Crush’s Coaster and Cars Race Rally and a new website launch, and things begin to add up. But by how much? In 2006, costs and expenses rose by an agreable 1.6% — a long way from knocking down a 12% revenue increase. Things should be fairly sunny, unless the reopening of the Keelboats this Summer happens to be costing € 130m…
Attendance – Smashing the 14 million?!
We’re forever hearing of the impressive attendance Disneyland in California has been counting since its 50th Anniversary, so it’s refreshing, for once, that Disneyland Resort Paris has something in common. The attendance record in Paris is 13.1 million in 2002, the year of Walt Disney Studios Park‘s opening. Last year, in 2006, the two parks welcomed a pleasing 12.8 million guests, 500,000 (4.1%) up on 2005, when they actually fell by 1%.
No such disappointments this year. In First Half 2007 attendance rose by an unparalleled 10.9% to 6.1 million guests, and, proving that guests haven’t simply displaced their visits, Third Quarter saw an equally spectacular increase of 9%. Exact figures for the second half of the year aren’t released until the full annual report in November, but if you’re as committed as a few of the fans over at Disney Central Plaza, you can work out some of the maths for yourself.
Of its 12.8 million visitors last year, 7.3 million were in the second half. Should attendance increase by 9% in the fourth quarter as it has in the third, we would be looking at a 7,957,000 attendance for the second half and (plus 6.1 million for the first half) an astonishing 14.1 million for the year, one million higher than their previous record. Since Summer is already a busy season and less likely to see such growth, however, it’s understandable to hear that current attendance hopes are in the 13.5 to 13.8 million region.
So, that’s the state of the theme parks. What could this mean for the future? Such a strong increase in attendance would clearly mean their investment programme has been a success, and this time they seem far keener to keep the good times rolling rather than let them fizzle out, as the aftermath of Space Mountain…
Therefore, if advance reservations are strong enough for The Hollywood Tower Hotel’s opening season, an additional new attraction is apparently waiting in the wings, ready to be Soarin’ into the corner of Production Courtyard as early as 2009. The most popular attraction at Walt Disney World, and the one which Disney Executives are most keen to open up around the world in the manner of Buzz Lightyear Laser Blast, could begin construction as soon as Tower of Terror is completed, should the good news continue into the first quarter and first half of 2008.
Sleep in the heart of the magic? You’d better wish upon a star!
If the theme parks attendance is looking like a dream this year, you’d better ready yourself for the Hotels & Disney Village. It’s no secret that the real kick to the success of Euro Disney wasn’t so much overspending in the park but Michael Eisner’s desire to build no less than seven on-site hotels for opening, with the hope they’d instantly see the same success as the then-booming Walt Disney World hotels. Needless to say, the sheer quantity of rooms (5,200 upon opening) crippled the resort for a long time.
When ready to expand in the early 2000s, during a time when occupancy at the Disney Hotels had reached the lofty heights of 88.2% (2002 figure) and higher, the explosion of on-site parter hotels came — MyTravel’s Explorers Hotel, Hotel Kyriad, Holiday Inn, Pierre et Vacances, Dream Castle and Radisson SAS. By 2004, room occupancy had sunk to a modern low of 80.5%.
Following a 2.8 “percentage point” increase in 2006 to 83.5%, first half 2007 brought an almost doubled increase of 5 percentage points, followed up by 4.7 ppt in this third quarter. Should this continue for an average of 4.8 ppt over the entire year, the Disney Hotels would once again be up at 88.3% — a dream for most hoteliers. To put this into perspective, the resort reported a hotel room occupancy of just 68.5% in 1995, the year of Space Mountain’s opening.
The Hotels and Disney Village can also revel in revenue increases of no less than 15% for the first half and a truly incredible 21% for the third quarter, all the time the partner hotels and their 2,500+ rooms enjoying continued success in the background.
What does this mean for the future? On the continually confusing side of a real Disney Village expansion it’s hard to say, but the boom that began with Buzz Lightyear and has taken flight in 2007 can tell us one thing — that the real big news from 2007 won’t be new attractions like Soarin’. It will be that Michael Eisner’s seven babies may no longer be enough to meet demand. After 15 years, an eigth (and even a ninth) could finally now be on the drawing board.
But — yes, there will always a “but” at this resort — we still have to hope for one thing: that the boom in business at Disneyland Resort Paris hasn’t peaked yet, continues to soar a little further and remains steady.
Should we be hopeful? Euro Disney SCA are certainly hoping for “The Space Mountain Effect” with The Twilight Zone Tower of Terror. The Space Mountain Effect, incase you don’t remember, meant 2 million extra visitors in a single year…