Europe's most elaborate theme park is pouring on the marketing magic for the big job ahead: turning around the publicly traded company that posted a whopping loss of more than $900 million for the year ended Sept. 30. Euro Disney cost namesake Walt Disney Co, a 49% owner, a $514.7 million loss.
It's true that prices were so high that, at one point, a European could travel to Walt Disney World in Florida for about the same money as a trip to Euro Disney Resort. But many observers also say marketing was flawed in emphasizing glitz and size over attractions.
Disney Chairman-CEO Michael Eisner admitted disenchantment, calling Euro Disney "our first real financial disappointment."
Disney has threatened to close the attraction if a consortium of banks refuses to restructure debt by the end of March. The banks commissioned a study, which was to be discussed last week, to get a true picture of Euro Disney's finances, believing the facility was overstating its situation to wring more money from the institutions.
Plans for the future, though, indicate the threat of closure is simply a bargaining ploy. Euro Disney is not only cutting costs by axing 950 administrative and management positions of the roughly 11,000 jobs at the park, but it is also investing in six new attractions. Four more, undisclosed attractions are to open by this summer and a still-secret thrill ride is planned for 1995.
It wasn't until last November that Euro Disney Resort, which opened in April 1992, began to publicly acknowledge its problems.
Within the past month, the company has begun focusing its $120 million ad budget on a new strategy, slashing astronomical hotel and admission prices, targeting its message and improving its relations with the media.
"The entire marketing strategy of Euro Disney was to blame for the fiasco," said Frank Merkel, chairman of WOB Marketing, a Viernheim, Germany, business-to-business agency.
For starters, Euro Disney insulted Europeans with its imagery of American-style bigness in marketing and advertising.
"What it really needs is downsizing," said Philip Turner, VP at Duell Corp., an international theme park designer. "It's too big, too elaborate and has too many hotels that they don't need."
Mr. Turner believes the park is overbuilt and will close some hotels; Disney said the hotels have averaged only 55% occupancy.
Bob Minick, president of J.R. Minick, a Dallas-based consultancy to theme parks, thinks the problem is not the park, Euro Disneyland, but the overdevelopment outside. "I visited [the park] and was very impressed," he said.
Euro Disney erred with its TV, print and radio advertising, which showcased the park's immense size but took little note of the exciting adventures and characters.
Dennis Speigel, president of consultants International Theme Park Services, Cincinnati, said the French see such efforts as "American imperialism-plastics at its worst ... It showed tremendous arrogance on [Disney's] part."
The original ads backed up that materialistic image with shots of Cinderella's castle and glitzy night-lit attractions giving the impression of the park's gigantic size.
"That ruined the magic," said a Paris-based agency executive. But starting late last year, the company did an about-face and started running ads featuring Zorro and Mary Poppins. "... they got back on track. But they could still do better," Mr. Speigel said.
A new spot uses Aladdin, star of the No. 1 film in Europe that racked up $100 million in sales as of Jan. 1. The TV spot broke in France, the U.K., Germany and the Netherlands last week and may be expanded to other countries later.
A print ad, running in consumer magazines last month in France, shows Cinderella's castle in the background as an animated Aladdin flies down on his carpet to shake the hand of a little girl, inviting her to a "magic vacation." The ad also promotes a special package-two days, one night and one breakfast at an unnamed Disney hotel-for $95 per adult and free for kids. Tagline is "The kingdom where all dreams come true."
But the ads are only the start of a bigger change of direction.
"We are positioning Euro Disney as the No. 1 European destination of short duration, one to three days," said a Euro Disney spokesman. Previously, the park had not aimed to hold guests for any particular length of stay but learned it had real difficulty keeping recession-pressed consumers for more than a few days.
Neither Disney nor its agency, Ogilvy & Mather, Paris, would discuss whether the park is re-evaluating its media plan to target children or different demographic groups than previously.
The theme park is pinpointing areas in major European countries with the most potential visitors.
"The idea is to get the message to our largest client sector without abandoning others," the spokesman said. "One of the primary messages is, after all, that Euro Disney is affordable to everyone."
That has not always been so. In fact, Alan Randall, head of sales and marketing at Thorpe Park, the U.K.'s first theme park about an hour's drive from London, noted a busload of 25 adults and 25 children would pay $450 admission at Thorpe, compared with more than $1,500 at Euro Disneyland.
When Martin Smith, deputy chairman of Bartle Bogle Hegarty, London, visited Euro Disney Resort with his wife and two children in 1992, he spent $4,000 on a four-day trip. He estimated it would have cost about the same to travel to the U.S. But since then the franc has dropped while the dollar has strengthened, changing the price equation somewhat.
Last year, Euro Disney scrambled to cut prices and introduce seasonal rates. While the overall entrance fee hasn't dropped, Disney is offering package rates that substantially lower prices when hotels and meals are included. The moves came only after word was out that the park was too expensive.
"Prices should have been flexible from the beginning," said WOB's Mr. Merkel. "There are very few families who can spend [for example] $600 for two days on four people ..."
Prices can still vary widely depending on the package selected. Some promotional rates are aimed at hiking attendance during France's cold winter months.
Euro Disney is also trying to improve its reputation with the media. Typically, even those responsible for dealing with the media would not return phone calls, much less answer questions. There has been some improvement.
In December, Euro Disney set a review for an expected spring relaunch of the park, asking D'Arcy Masius Benton & Bowles, Euro RSCG, TBWA de Plas, DDB Needham and incumbent O&M to pitch. Media buying, at Carat, is not up for review. Participants in the creative review say they have no idea when to expect a decision.
"It's typical of Disney-they give you an order and leave you in the dark," said an agency executive involved in the pitch. "Then, if you win the budget, they call you in to tell you what their internal [ad] team has decided to let you do. An agency can't work like that. They must decide to do it themselves or trust the expert."
Stephen Downer and Dagmar Mussey contributed to this story.