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Tokyo Disneyland was the first international theme park by Walt Disney Company outside of the United States. Built on a reclamated land east of Tokyo Bay, unlike Euro Disney, it was a phenomenal success. Opening of the park coincided with the introduction of five-day work week in Japan and a strong, growing economy. Culturally, the Japanese were spending more time on leisure activities. Tokyo Disneyland became the symbol of a new a Japanese lifestyle enjoying free time with friends and family rather than constantly working. Disney cartoons and films were extremely popular in Japan and 200,000 Japanese visited Disneyland each year. Tokyo Disneyland made it possible for Japanese to visit the park without traveling to California. In addition, the fortunate location was accessible for 35 million Japanese within 90 minutes of driving distance. Contrary to Europeans, Japanese vacations were short, which made Tokyo Disneyland a successful tourist destination. Tokyo Disneyland was designed for adults, particularly young couples. Prices were steep ($40 for adults), but the families sacrificed other activities. Enormous revenue generation paid off the debt in three years. Through the first ten years of operation, Tokyo Disneylands sales and attendance figures rose steadily. What can be done to make Euro Disney a more profitable park? Sales and Marketing. A growth strategy for the park would only be successful if it provides substantial increases in revenue. Pro forma statements from 1995 to 1999 (see attached) show the park must double revenue to approach profitability. To do this, Euro Disney should modify the sales strategy to suit Europeans. At the time, individuals relied on travel agents and tour operators, which Disney had largely neglected. The company must actively cultivate relationships with tour operators to increase sales. In addition, marketing strategies must encourage tourists from neighboring countries to visit Euro Disney. Recent surveys indicate the German market accounts for 8% of visitors, 40% from France, 18% from Benelux (Belgium, Netherlands, and Luxembourg) countries and 15% from Britain (Ref. 1). The increase in visitors does not translate into profits; however, more foreign visitors will lengthen the average stay. Increasing length of on-site stay does translate into more auxiliary revenue: meals, rooms and Mickey Mouse ears. Profit doesn't come from the theme parks but from high-margin businesses such as hotels, restaurants and shops. Increasing marketing and sales is a highly risky strategy. Recent gross margin is about 30% (see Normalized Income Statement), and the most recent figures show the net loss to be greater than the total revenue. Any impact on the top line carries greater costs in sales, general, and administrative, and will reduce gross margin. Capital infusion / Walk away. Walt Disney could provide a capital infusion for Euro Disney. This action will not find approval from the shareholders of the Walt Disney Company; which essentially would prop up a separate legal entity, Euro Disney. Walt Disney Companys cultural norm is a shareholder approach, but Euro Disney exists in a stakeholder environment. The French government, a syndicate of European banks, the French economy, and among others are stakeholders. This stakeholder approach eliminates Walt Disneys ability to allow the park to go into receivership.
Coasting. A third alternative is allowing the park to generate a breakeven revenue. We termed this approach coasting. It saves face for the Walt Disney Company; hence, preventing the image of Walt Disney from being hurt internationally. To default on the park or continued failed expansions will damage the reliability of the company, and prevent future international endeavors in the BRIC (Brazil, India China) economies.