Visitors lift Euro Disney by 55%

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The Independent Online
A sharp increase in visitor numbers to Disneyland Paris, better occupancy rates at the theme park's hotels and higher spending per head helped Euro Disney to a 55 per cent rise in underlying profits in the year to September.

The debt-laden leisure company admitted, however, that the interest costs on its borrowings are set to rise rapidly over the next few years, forcing it to run hard simply to stand still in profit terms.

Philippe Bourguignon, chairman and chief executive, said: "We are proud of what has been accomplished in a difficult economic environment, particularly for the tourism industry. Persistent weakness in the economy, constant pressure on our prices and the strong increase in financial charges constitute several real challenges for the future, particularly in 1997."

Attendances rose by 9 per cent to 11.7 million visitors in the year to September, the second full-year period since a financial restructuring in 1994 rescued Euro Disney. Numbers were boosted by the opening of the Space Mountain ride, the introduction of lower winter prices in October 1995 and the completion of high-speed direct train links with western France and London.

Occupancy rates in the park's seven hotels increased to 72 per cent, up 4 percentage points, and spend per room increased by 3 per cent to just over Fr1,000. Those trends helped operating revenues increase 9 per cent to Fr4.97bn (pounds 584m) and after a smaller 3 per cent rise in costs underlying profits emerged at Fr724m, up from Fr467m in 1995.

That more than made up for a Fr103m increase in finance costs due to the partial unwinding of the interest and royalty holidays negotiated in 1994, leaving income before exceptional items of Fr156m (Fr2m).

Projections of interest payments, however, show that profits will have to continue to grow sharply simply to meet the higher charges. By 1998, interest payments will be running Fr430m higher than in 1995 and the following year royalties and a management charge to Walt Disney begin a progressive rise.

Despite its persistent financial worries Euro Disney is planning an extravagant year-long celebration of its fifth birthday this year and has ambitious plans for the 1300 hectares of its 2000 hectare site that remain undeveloped.

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