Wed, 28 Feb 2001
I just got Euro Disney's 2000 FY report a few days ago and there were a lot
of interesting details "between the lines" in that report. Succintly,
Disney's European empire is gaining clout and growing. When the second
gate opens, it will be France's largest employer in terms of head count.
It is already Europe's most popular (in terms of attendance) vacation
Part of the business plan for Euro Disney has always been to view part of
the 5,000 acres as a real-estate development. Disney had hoped to recoup
costs by selling off or leasing parcels of the 5,000 acres. Hence, we have
Val d'Europe (Europe's first outlet mall), which is to be the cornerstone
of a new community in Marne, planned in conjunction with French and local
authorities. Homes, apartments, business parks, and the mall will be part
of Disney's new community and will basically be free money for Disney since
it bought the land at agricultural prices (i.e. much less than market
value). Development sound a little like Celebration? You betcha - but
Disney doesn't have 30,000 acres in Europe. In this regard, half the
strategy for Euro has always been seen solely as a real-estate venture.
Obviously quite unlike any of our other theme park ventures elsewhere,
although I guess you could argue that. Indeed, when Walt became obsessed
with plans for "Project Florida", many at the Studio (especially Animation)
quietly complained that the company had turned into nothing more than a
real-estate investment company.
Another interesting thing? Look at those climbing hotel occupancy rates!!
For the past few years, Euro Disney hotel occupancy rates have been
climbing fairly agressively. Healthy is considered in the 70's, but Euro
Disney's hotel occupancy has climbed to nearly 83%. Clearly, there is more
demand for hotel rooms at Euro Disney and that number shows there are peak
periods when there is no likely "no room at the inn". What was once
considered Disney's biggest mistake in Europe (6 hotels, including Camp
Davy Crockett (i.e. Fort Wilderness and actually came a year or so later),
for roughly 6,000 rooms) is now proving to be not enough. Is this yet
another example of the chicken and the egg? Since Disney's cash outlay for
the second gate will not allow it to build more of its own hotel rooms
(Euro's business plan is very tight), it has been scrambling to find a way
to fill that demand and keep people on Disney property. The article link
below talks about a recently announced partnership with hotel developers
(including the Bass group... interesting, eh?) to build what are
essentially Euro's first "official" hotels. I'm surprised Disney would
really want to do this since hotel rooms are a huge source of revenue for
Disney, but maybe it's the whole Tokyo Disney situation in miniature.
Interesting thing to note about that is, yes, Disney is outlaying cash for
Studios Europe, but how much would you think? Half-a-billion? A few
hundred million? Nope. Less than 200 million euros is what Disney itself
is putting up, around 160 million euros. I think the euro is around 90
cents to the dollar. That is about the cost of the Twilight Zone Tower of
Terror in Florida. The rest of the cost is being borne, once again, by
investors. But investors are singing a different tune this time. While
some European analysts are concerned that the second gate will eat into
revenue from Euro Disneyland Park (uuh, yeah, probably, but duh!), most are
now praising Disney's ability to squeeze more revenue out of Euro guests.
All the important numbers are up. While the Park's attendance actually
fell by 500,000 guests last year (that's not especially significant,
especially considering French weather last year), per-capita-guest-spending
was up, per-room-night-spending was up, occupancy was up, wait times were
down (they actually showed graphs for this) thanks to FastPass, Festival
Disney revenues were up, convention business was up, guest satisfaction was
up, and of couse, net income was up despite increased royalty payments to
Walt Disney Co and increased interest expenses.
Not bad for a Resort some predicted would close just a few years ago.
Steven Soria, Jr.