Could seasonal opening be the way forward for Disneyland Paris?

attendance

Courtesy of DLPTODAY.com

Following the publication on Thursday of this years  financial results for Euro Disney S.C.A. who posted a record loss of €858 million, is it time for Disneyland Paris to reconsider its all year round operation?

Since the the resort opened in 1992 Disneyland Paris has generated  an average operating loss of over €100 million a year with an average attendance of 13 million visitors. Considering the resort is the largest visitor attraction in Europe after nearly 25 years Euro Disney  is still unable to operate the resort in a way to make a profit or break even.

In the last 24 years the resort has had to be rescued from bankruptcy several times, the most recent instance being just last year.  In its history Disneyland Paris has only made an operating profit once.

The Euro Disney Group  is in debt to the tune of €1.135 billion to The Walt Disney Company which rescued the park from closure last year with a Recapitalisation and Cash Tender Offer rescue plan.  Even after this rescue the Group still has to keep borrowing money from The Walt Disney Company (TWDC) to keep operational. This fiscal year they borrowed a further €130 million from the €350 million standby revolving credit facility granted to them by TWDC.  That is quite a large overdraft to have.

TWDC  has agreed to waive the payment of royalties and  management fees for the next two years in order to provide Disneyland Paris with more liquidity.  For fiscal years 2016 & 2015, royalties and management fees paid to TWDC  were €75 million and €83 million, respectively.

This years initiative of trying to increase revenue by charging for breakfast  at the resorts hotels has gone down like a lead balloon with their regular visitors. Increasing  the ticket prices and hotel room rates year on year is obviously not having the desired effect as the result appears to be the lowering of guest spending at the resort.

Disneyland Paris is just not attracting the number of visitors it needs to become a successful business. The terror attacks in France and Belgium, plus continued political uncertainty in the United Kingdom and throughout Europe are not helping to increase visitor numbers to  the parks to levels where the resort is financial secure and viable.

Maybe now is the time for the Euro Disney Group and The Walt Disney Company to seriously consider only opening the theme parks  in the spring, summer and autumn seasons once the 25th Anniversary celebrations are finished in 2018.

With the exception of December when the resorts popular Christmas celebrations are running, visitor numbers in these winter months are very poor. Resulting in huge costs in keep the theme parks and hotels open when very few guests visit the resort.

Closing the park in the poorly attended winter months of November, January, February and early March is a business model used by the other major theme park operators throughout northern Europe and it is very successful for them.

By closing both theme parks in the winter, operating costs would reduce and it would allow the resort to carryout maintenance and refurbishments to the attractions and theme parks when the resort is closed to the public.

Disneyland Paris needs to do something radical within the next nine years to increase its income and lower its operational costs to enable them to  repayment of the €1.135 billion loan from The Walt Disney Company or it will once again have to turn to the banks and financial institutions to borrow money on the open market forcing them to pay crippling interest rates to service  its debts.  Further increasing the resorts operational costs and risking  the threat of bankruptcy and closure once again.

Advertisements

About Salon Mickey

Salon Mickey The Disneyland Paris Shareholders Blog
This entry was posted in Disneyland Paris. Bookmark the permalink.

One Response to Could seasonal opening be the way forward for Disneyland Paris?

  1. A&S&O says:

    Interesting theory.

    I wonder how much money they would actually save by seasonal opening.
    Ride and park maintenance costs would be around the same.
    Senior management costs would be the same.

    Income would be lower (hotels, park tickets, merchandise).

    Would they attract enough seasonal staff, or would they have to pay them a retainer?

    It would be interesting to see a breakdown of expenditure – salaries, maintenance etc.

    I think a lot of money has been wasted in recent years on poor quality or unnecessary refurbs e.g. pirate ship, fantasia gardens, paddle steamer.

    Like

Comments are closed.