Third Quarter 2009: Dip but no dive, despite economy

Monday, 3rd August 2009 at 22:14

ImageEuro Disney S.C.A., operating company of Disneyland Paris, made its Third Quarter revenues announcement this past Thursday, 30th July 2009. Whilst the resort has far from stayed buoyant during the tough economic times across Europe, its drop appears to have been carefully managed.,

The big figure is this: 7% – the drop in revenues during both the Third Quarter (April, May, June) and now the entire nine months of the financial year so far.

It’s interesting to point out that this quarter was the first when the new events of Mickey’s Magical Party took effect, and important to note that — unlike last year — it includes revenues from the Easter school holiday period, which came later this year. A fact that the company made pains to point out in the First Half Announcement (PDF), when revenues fell by 7.3%, but has been entirely left out of this report.

Let’s take a look at a few key figures:

• 1% Increase in park attendance in Third Quarter

Unless the fourth quarter proves disastrous, the resort still looks set for yet another record-breaking year, despite the awful trading conditions — if only by a tiny amount. Attendance in the First Half rose from 7 million to 7.1 million. The number keeps being pushed up to levels we could have only dreamed of back in the first half of this decade, but is it all show?

• 4% Decrease in park spending, room spending for past nine months

More people visiting from close to Paris, and France and Belgium, with fewer from further afield (Spain, UK, Netherlands) makes good attendance numbers but bad spending numbers — guests from nearby are less likely to load up on merchandise, less likely to spend big on meals and less likely to stay on-site. As a result…

• 3.8 Percentage point decrease in hotel room occupancy

Perhaps that 8th Disney Hotel can wait after all. If 3.8% over the year seems like bad news, the figure for the Third Quarter alone was 6.1 percentage points. Fewer corporate events and fewer guests from Spain and the UK have apparently taken their toll on hotel figures.

Let’s not forget that the UK in particular has been shovelled an almost endless slate of huge booking discounts and drastic offers this year, with 40% sliced off bookings for months in a row. Is it a good sign that the revenues above weren’t entirely disastrous despite this cut in income, or a bad sign that — even with 40% off — visits from the UK dwindled for the first time in years?

Such a dramatic fall in the previous quarter does call up questions on the pricing of Disney Hotels, whether they provide value for money and whether guests will pay that steep premium. The news from Q3 is looking rather negative. It’s nice to think that the hotels could return to sane pricing and suddenly attract more bookings to offset that lower income, but perhaps the turnaround wouldn’t be so quick.

The big cheese Philippe Gas, CEO of Euro Disney S.A.S. gives unusual mention of “closely managing costs” and curtailing “certain capital spending” in his comment, as well as weirdly-veiled hint towards Toy Story Playland opening in 2010:

“Consistent with the broader tourism industry in Europe, our revenues have been impacted by the challenging economic environment and consumer spending behavior. At the onset of the economic down turn, we implemented promotional offers to which our proximity markets in particular have responded. This decision has succeeded in driving attendance to Disneyland Paris, confirming the strong affinity for quality Disney entertainment, while at the same time impacting guest spending and margins.

We are closely managing our costs and have curtailed certain capital spending in this current environment. However, in line with our long-term growth strategy we continue to invest in the resort and are developing new attractions to open next year.”

You can read the full report here (PDF).

Overall, it’s nowhere near as disastrous as it could have been — luckily the economic crisis hit just as Disneyland Paris was coming out of its wildly popular 15th Anniversary Celebration and the two most successful years in its history. Creating this limited-time cause to visit is obviously still paying off, though the follow-up of Mickey’s Magical Party doesn’t appear to be looking quite so tempting. Whether the resort will still be able to draw record numbers with simply renamed theme years and a redressed Disney Characters’ Express each year doesn’t look so certain.

The fall in theme park revenues is disappointing because of the reason behind it: reported to be caused by admissions and merchandise. With the citizens of Paris being almost constantly flogged ridiculous €1 tickets and even €1 Francilien annual passports, this heavy-handed price-cutting doesn’t seem too clever, at least to an outsider. As for merchandise, the years of diminishing imagination, design and manufacture and all-too-well-known overpricing appears to have caught up with the resort.

People do still have money to spend — especially those without children — the economic whatever-we’re-calling-it-now serving only as a giant wake up call to past over-spending. With every purchase we now ask ourselves– “Do I really need this? Is it worth the price?”. Unfortunately, with the generally uninspiring and child-orientated ranges pushed to the front of each boutique, the answer is often “no”. Guests take their extra Euros home with them.

The report ends with a bit of humour, at least: “In the coming months, the Company will be sharing details of new attractions that have begun construction and will be opened next year.”

Such mystery!

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