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Disneyland Paris falls well short of infinity

Even Buzz Lightyear and Woody will have trouble dragging the the French resort out of the red. Christian Sylt reports

Sunday 22 August 2010 00:00 BST
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There's a huge boot print embedded in the tarmac, a balsa wood aeroplane of lifelike proportions sitting beside it and, up ahead, a giant U-shaped piece of Hot Wheels track which brings back fond memories of childhood.

It sounds like a scene from Gulliver's Travels but the screams from riders hurtling up and down the track in a roller-coaster car give the game away. This is, in fact, a theme park ride based on the hit Toy Story movies and it is one of three new attractions which opened last week at the Disneyland resort on the outskirts of Paris.

Disneyland Paris is 39.8 per cent owned by the Walt Disney Company which has thrown its weight behind the new openings. Disney's designers have flown over from California to brief media about how the new attractions were created, and the company sent publicity staff from its European headquarters in London to Paris for the entire week to ensure everything went to plan. The company isn't leaving anything to chance; these rides are seen as key to Disneyland Paris's economic future.

Disneyland Paris has had a torrid 12 months. As the economic downturn began to bite in 2009 the company announced that it would freeze the pay of its staff, who are known as cast members because of the role they play on a themed set. They delivered a one-of-a-kind performance in response.

On 23 December 2009, one of the busiest days of the year for the resort, cast members waving flags and placards stormed the cinema-themed Studios park, leading to the cancellation of its daily parade of cuddly Disney characters. The same scenes were repeated later in the day in the neighbouring fairy-tale-inspired Disneyland park. As its parade was cancelled, the huge crowd of holidaymakers booed and hissed. Embarrassingly for Disney, the strike was caught on several guests' camcorders and the footage was soon posted on the internet, generating thousands of hits on YouTube.

The black clouds continued to hang over the resort long after the strikes had finished. Since then, two Disneyland Paris employees have committed suicide. One was a chef who wrote on a suicide note that he did "not want to return to working for Mickey", and his relatives claimed he was depressed by staff cuts and a policy switch away from freshly made food to frozen produce. The other employee, also a cook, killed himself after what a trade union insists was "humiliating" treatment at work.

According to one of the unions, the number of jobs in Disneyland Paris's restaurants and hotels has been slashed and fewer seasonal workers are being hired, leading to staff working longer hours.

The reason Disneyland Paris needs to make swingeing cost cuts stretches back to when its ornate gates swung open in 1992 and recession loomed. It soon teetered close to bankruptcy due to a bottom line which is still weighed down by repaying €1.9bn of the debt used to fund the park's construction. Its gates were kept open by the debt being restructured twice and a bailout from a real-life white knight, Saudi billionaire Prince Alwaleed, who injected €263m in 1993. It gave the park capital to open new attractions and enjoy a period of profit.

In fairy-tale land as in real life, lightning can strike twice, and in March 2002, Disneyland Paris opened the Studios park just as the post-11 September tourism downturn began to bite. This time, its saviour came in the form of a €250m rights issue in 2005, with Prince Alwaleed again riding to the rescue by personally putting in €25m. It left 10 per cent of Disneyland Paris's shares in his hands with 50.2 per cent floated on the Paris Euronext market and the remainder held by the Walt Disney Company.

The majority of the rights issue was used to build several blockbuster attractions including a freefall ride inside a 180ft Art Deco tower which opened in April 2008. However, it wasn't enough to bring a sparkle to Disneyland Paris's finances. In 2009, 14 per cent of its 15.4 million guests came from the UK – more than any other country except for France – and their purse strings have been under immense pressure.

"The big issue for me is the prices," says one analyst. A two-day entrance ticket to Disneyland Paris costs £107, compared with £37.60 at Staffordshire's Alton Towers, the UK's most visited theme park.

To combat the worsening exchange rate, in January last year Disneyland Paris introduced "sterling packages" which allow UK guests to make all their purchases in the park in pounds. Even this magic touch was not enough to put the company in the black. It made a €26.4m operating profit on revenue of €1.2bn in the year ending 30 September 2009, but paying €89.2m of financial charges on the debt left it with a €63m net loss.

Britons are still steering clear of Disneyland Paris. In the nine months to the end of June this year, its theme park revenues were down 2.8 per cent to €468.5m due to a 5 per cent decrease in attendance as demand from the UK slumped. Likewise, its hotel revenues were down 2.1 per cent to €334.3m and the company said that the lack of UK guests led to it selling 52,000 fewer room nights than in the same period the previous year.

Disneyland Paris now has its hopes pinned on the new ride openings which have been funded with the remains of the 2005 rights issue. David Minichiello, Disney's creative development director, says the budget is not the be-all and end-all. "You can do the same story at a lot of different budgets," he says. "The biggest thing is that the story is done well, that it's a clear message that the guests understand and enjoy. So the budget is not as big a focus as making sure that the right thing is out there." Early reaction to the new rides suggests Disneyland Paris may have missed the mark.

"When the concepts were shown at the [Disney fan] Expo last year, they even apparently drew audible boos," says Anthony Sheridan, editor of Disney fan site DLRP Magic. Reaction worsened when photos leaked out showing the new rides under construction. "'I've seen it with my own eyes today. It looks ugly, there is no excuse for this in the park," wrote one Disney fan on DLRP Magic. Another added that "it would have been better if the budget had been spent on one attraction instead of three quite standard funfair attractions".

The analyst says that the rides are opening too late to have a substantial effect on the 2010 results and she expects Disneyland Paris to finish the year with another loss. Its happy ending still seems far, far away.

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