More visitors but higher losses in 2011 Financial Results as Disneyland Paris invests in assets

Thursday, 10th November 2011 at 17:50 by
Anthony
14 Comments

Increased revenues from the Parks, Hotels and Disney Village failed to outweigh the extra investment pumped into maintaining those assets during the past year, Disneyland Paris has recorded in its Fiscal Year 2011 Results, leading to a net loss of €64 million. Though these Resort operating revenues rose by €60m to €1,275.2m, they couldn’t make up for an increase of €42.3m in direct operating costs to pull Euro Disney SCA, the operating group behind the resort, out of a net loss. As CEO Philippe Gas comments, “This past year we further invested in enhancing the overall guest experience, by introducing longer park operating hours, adding new entertainment and improving the appearance of our guest facing assets. Although these investments increase our costs, they are critical to maintain our long-term attractiveness as Europe’s number one tourist destination.”

Numbers are made to look worse, year-on-year, by the exceptional €47m sale of the land beneath the Val d’Europe shopping centre last year, which also affected Third Quarter 2011 results. Had this not taken place, rather than losing “just” €45.2m in 2010 the company would have seen a €92.2m net loss last year. Considering the heavy operational investment leading up to the 20th Anniversary and the lack of new attractions, the resort perhaps didn’t fare too badly in 2011. In fact, the figures which remain strikingly positive are those for visitor numbers. Park attendance rose to a new record of 15.6 million visitors, while hotel room occupancy grew back up to 87.1% from 85.4% last year (it was at 87.3% in 2009). Average spending per room also increased by around €10 to €219.74, no mean feat given the economic climate across Europe and continuous special offers.

But, as ever, the challenge for Disneyland Paris remains turning these strong numbers into a profit on the bottom line. €123 million in borrowings was reported to have been paid back this year, but if the resort can’t turn a profit on 15.6 million visitors, will it ever climb out of its estimated €2 billion debt? Was the heavy investment in refurbishments this year a one-off, or just the level of rolling investment the resort should be putting into its parks and resort all the time? And if visitor numbers rise again for the 20th Anniversary, will that translate into a profit, or will grand plans for the new nighttime spectacular (etc) — and the longer opening hours required to present it — outweigh the gains yet again?

Speaking of which, the report finally confirms: “In April 2012, Disneyland Paris will launch the celebrations of its 20th Anniversary. A number of brand new experiences await guests, including Dreams, a night-time show with classic Disney storytelling and the latest technical special effects.”

Perhaps the greatest special effect Dreams can pull next year is that, come November, Euro Disney SCA inches into a profit. That’ll take more than faith, trust and pixie dust.

FULL REPORT Euro Disney SCA Fiscal Year 2011 Results (PDF)

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Comments

  • After just coming back from DLand Paris I can say there a lot of changes that need to be made. Disney Studio is awesome. DLand has a lot to live up to (in my opinion) to be compared to its California sister. I’m glad I went but would say I would not return. I understand $$ flow (or lack thereof) and a different culture but I can honestly say there were times (we, my daughters 18, and 20, and I) didn’t feel safe, in Disneyland!! Also, the park was filthy. The restrooms smelt of urine which is something I definitely did not expect. I love Disney, go to Disneyland in Anaheim annually. I expected more exclusive products. This is Disneyland Paris. We don’t come here for the same things we can get in the states. And what about other characters. I could not even purchase a t-shirt with Winnie the Pooh on it for my mom who missed the trip (at the last minute). There are a number of misses with Disneyland Paris. I can honestly see why the park loses money. Trying to make up the $$ with a $60 chicken nugget dinner for 3 just doesn’t cut it. Sorry, I won’t be back!

  • So if there was no debt to be repaid, they would be making a profit? It makes you wish the Walt Disney Company would hault the repayments until the resort is able to make a profit and pay it back.

  • what is a Castle is has a Return Colours since 1998

  • Josh T., I could be wrong, but I’m 99% sure that Euro Disney SCA is NOT making debt repayments to the Walt Disney Company. They are repaying debts held by banks and bond holders.

  • Well, I have to say that I honestly love the Resort and I am so sorry that each year they seem to loose money… I m a fan since day one and miss the overall atmosphere of the 1990s, when everything seemed cohesive and more meaningful. I miss the old Festival Disney, which was a fabulous high quality setting, I miss the level of detail put into everything… And i cannot understand why so much money is put into entertainment when most of the people really want to do the rides. In my opinion, the disney company should really turn euro disney into the european holiday destination it was meant to be. it is a shame that germany makes only 3% of the guests visiting with its 80 million residents. what is marketing doing here? this resort has so much potential, I would say nowhere else in the world could a disney resort have more potential than where disney decided to create one back in the 1980s… this is the very heart of europe and I really cannot understand why they still are in this financial mess… I believe that Euro Disney is the greatest themed resort in the world but it is not living to its full potential because of wrong management and wrong decisions.

  • @ Will:

    Disney isn’t doing any advertising of DLRP in the German speaking countries (Germany, Austria, Switzerland). I’m sure it would help to increase attendance. On the other hand Germany has some great themeparks with hotels on a higher standard than Disney for less money. Many of these parks surpased Disneyland Paris in terms of rides as well. There is just no need to go DLRP to do amazing attractions and the recent additions to DLRP are pretty cheap, except for TOT and Crush.

    I also enjoy DLRP and I wish that they would make any money, but it seems DLRP needs approximately 20 million guests to make a profit.

  • @ relax:
    Sure, we’ve some great parks here. Disney is different, though.

    Disney should get back on track with marketing DLRP as Europe’s leading resort for short term vacations. They used to have much higher numbers from Germany and the resort used to be heavily advertised here. They need to get more confident: they have such a great product out there, with the proximity to Paris and the great facilities down in Val d’Europe. It’s much more to do now than back in 1992. However, the marketing back then was much better and bold. I doubt that many people here in Germany know that there is a second gate now…

    I believe, DLRP can become a holiday destination for people from all over Europe, just as WDW became a destination for the entire USA, despite its location. The geography here is much better than in the USA. Disney’s success there has another reason. People travel across the entire continent to visit WDW because in the USA, such a visit is a tradition. Going to Disneyland there is a family tradition. And this sets Disney apart from every competitor: they create memories and emotions. In the USA there is a great campaign at the moment focussing exactly on this side of Disney.

    Disney needs to communicate that a visit to DLRP is part of growing up as a child. I liked the recent campaign where they showed children being told that they were going to Disneyland. A visit to Disneyland needs to become as ritualized in Europe as it is in the USA. This is what Disney has to do here in every European country as well.

  • 20 million vistiors is as lot Magic Kingdom in WDW got 16.97 million visits in 2011 which is a million more then Paris, and the cost for upkeep of attractions shouldn’t be a one off payment it should be a rolling cost. I dispair with what is happening at DLRP. Went to WDW in September last year, and the new rides and entertainment seems evrywhere, Dapper Dans and a BAND on main street…. The Disney Company can’t let this carry on at DLRP, when all the extra money is being put into DCA, Magic Kingdom, HKDL and the new Shanghi DL

  • I’ve recently come back from DLRP and go every year. In recent years tho i think its lost that wow factor that used to be a couple of years ago. The products in the stores for example, have become very boring and the same in every store in the park. Perhaps different ranges in different shops? Also there is to much focus on shows etc. I agree about people wanting to experience rides and new rides whenever possible. It amazing that on a 4/5 day visit myself and my party can spend upwards of £2000 and still the park is in so much debt… Also to pick up on the cleanliness… that has gone downhill too especially in the toilet areas. Overall I had a good time as always but there a lot of improvement to be made for the 20th Anniversary if they want guests to come back again and again after this celebration.

  • crashjordan2010  15th November 2011, 20:43

    I too must comment about the cleanliness of the parks, as well as the parks being quit busy most of the time in comparison to Walt Disney World. The French seem to be able to purchase an annual pass for next to nothing and therefore are totally dominating the parks!

  • The $2 billion of debt is mostly construction costs dating back from the late 80’s and early 90’s. This mess was caused by numerous problems in the early 90’s (mostly Michael Eisner’s fault, he was way to ambitious – “The Disney Decade”), they opened at the wrong time (recession of 92′), WAY too many hotels (7!! WDW opened with 2), cultural issues, etc. Perhaps the only way out, soon, would be if The Walt Disney Company was to take up full ownership of EDL S.C.A and pay off the debt via its some $4 billion annual profits. This would seriously affect the company’s financial image at the time (the share price would probably drop, a lot), but in the long run, if DLP can become prosperous again (well, for the first time), it could heavily lift TWDC’s overall income.

    Without this, Euro Disney S.C.A. has estimated that it would be in a solid, profit making position by 2030 (the 1987 Convention was extended until the period, and Philippe Gas said that a 3rd gate would happen around that time). It’s a long haul, but they’re trying.

  • My family and I have been 7 times and love the place. We visited the Magic Kingdom last Christmas and to be honest preferred DLRP (The Studios, Animal Kingdom were very good didn’t think much of EPCOT though, nor did the kids 10, 12, 17 & 19).

    DLRP has so many opportunities to improve, merchandise could defiantly be improved rather than duplicating the same stuff in every shop, and they missed a major opportunity with the new Toy Story rides. The shop is tiny, with limited stock and being as one of the most highly promoted Disney product, so much more stuff is available.

    Cleanliness is a slight issue, but with 1000’s of people attending every day, it is an on going process.

    So overal we love DLRP and are going back as annual pass holders, if they every sort out the prices for June 2012 and would go to Paris Disneyland over the MagicKingdom any day (but the rides at Universal, Sea World, Busch Gardens and even Animal Kingdom will pull us back to the USA in the future)

  • I have been to DLRP 14 times and I normally love it!! However, the last time we went we were very dissapointed in how tired and dirty everywhere was and how expensive it was. The meals were so expensive we got a bus and ate outside the area. People were complaining everywhere we went about the prices of everything and to be honest it has put us off going back! Disney really needs to think again about pricing because if they bring the prices down people will spend more. No-one likes being ripped off. It makes sense to make visiting a pleasure not a shock!

  • Marcos Valença  21st March 2012, 02:34

    Some have suggested more advertisement in Germany and all over Europe. Well, it’s not that simple. It costs a whole lot of money to advertise something in a continent with so many countries as Europe.

    Refurbishments are really necessary. Before my visit in May 2011, a piece of Big Thunder Mountain had follen and hurt someone. That must not happen in a Disney property.

    Does anybody know if DLP pays huge bonus to its CEOs and managers?

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