From: snopes%club33@stlth.enet.dec.com (snopes)
Subject: The Mouse Isn't Roaring
Keywords: Euro Disney
Organization: Just put everything on the floor; I can find it.
Date: 16 AUG 92 21:51:56    


BUSINESS WEEK/AUGUST 24, 1992


                            THE MOUSE ISN'T ROARING

    Euro Disneyland was prepared for a rocky start -- but nothing like this

   Vast and elegant, the Newport Bay Club is the largest of six hotels in Euro
Disneyland, and one of the biggest in Europe.  But come October, this posh
centerpiece of Walt Disney Co.'s four-month-old amusement park near Paris will
shutter its 1,100 rooms until spring -- even though the park itself will stay
open.  It's a "summer theme" hotel, park officials explain, not suitable for
winter.  Privately, however, Disney insiders admit they had planned to keep the
Newport open all year.  Why the change in plans?  Advance bookings for the
hotel are simply grim.
   It's enough to wipe the smile off Mickey's mug.  Every since its splashy
April opening, Disney's $4 billion European venture has been overwhelmed with
bad breaks.  Attendance is far below expectations: The park is on track to draw
9.6 million visitors this year, analysts say, vs. the 11 million Disney had
projected.
   Those who do come are underspending on food and souvenirs.  Disney figured
each visitor would buy $33 worth of the stuff every day, but analysts think
spending is running about 12% less.  Now, European tour operators, unable to
meet their commitments to fill the park's hotel rooms, are demanding that
Disney renegotiate their deals.
   Disney admits that the park will likely lose money in its fiscal year ending
Sept. 30.  Analysts think red ink will flow further into the future.  "We'll
have to wait two or three years before we see a profit," predicts Nigel Reed,
an analyst with Paribas Capital Markets in London.  Stock in Euro Disney --
49%-owned by Walt Disney and 51% by the public -- has plunged like a roller
coaster.
   It's not "cultural imperialism" that's doing Mickey in, but high prices.
"It's really quite expensive," complains Karen Gee, marketing manager of
Airtours PLC, a British travel agency.  Instead of heading for Paris,
Airtours' clients are flocking to Walt Disney World in Florida.  Because of a
cheap dollar and an Atlantic fare war, a London-Orlando package costs $115 a
day for plane, hotel, and park entry.  Brits must pay $200 a day for a similar
Euro Disney package.  "And Florida has sun and beaches," adds Gee.
   Lodging is the big difference.  Orlando's forest of cheap motels doesn't
exist at Euro Disneyland -- where rooms start at $110 and go to $380 at the
Newport.  Aliette Menard, who runs a government tourist office in the park
promoting trips to nearby chateaus and cathedrals, says people instead mainly
ask her how to find a cheap hotel.  Yet Parisians who don't need rooms also
find the park _cher_.  A Paris newspaper figures a family of four spends $280 a
day, including _les hamburgers_ and _les milkshakes_.  French visitors,
expected to be 50% of the market, are almost invisible.
   In true Mousketeer fashion, park officials deny they have a problem.
Nonetheless, they're taking steps to fix it.  They've cut rates up to 25% at
two hotels.  Restaurants are offering cheaper meals.  Disney is launching a
Paris ad blitz, with posters proclaiming: "California is only 20 miles from
Paris."  Euro Disney officials say they're getting results.  August crowds have
been heavy.  And hotel occupancy has been 100%.
   August is not the worry, however -- it's the rest of the year.  "On a foggy
February day, how appealing will this park be?" ask Airtours' Gee, who says
her winter bookings are dismal.
   To a degree, Euro Disney's U.S. parent is shielded from French troubles.
Its investment is less than $200 million, a fraction of the total.  And whether
or not there's a profit, Walt Disney gets 10% of ticket sales and 5% of
merchandise sales.
   Still, the French park's rocky start is a blow to Disney pride.  Insiders
blame Europe's sluggish economies, plus competition from Spain's World's Fair
and Olympics.  But they concede their market forecasts were too optimistic and
say they erred in building too much, too soon.  Disney has delayed plans for an
adjoining Disney MGM Studios Tour park, from 1995 to 1996.
   Many observers expect Disney to get its French park humming eventually.
Jean-Jacques Limage, an analyst with DLP James Capel in Paris, thinks
investors have overreacted and says Euro Disney stock is a buy.  Even Parisians
will patronize the park, once they return from August vacations, he says.  With
time, motels will pop up, joining the Novotel four miles from the park.  At $29
a night, it's not the Newport Bay.  And sticker-shocked Europeans are glad of
it.

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