EURO DISNEY: THE FIRST 100 DAYS

(SERVICE OPERATIONS CONCEPTS)

Euro Disney: First 100 days of performance

Opened up in the farming community of Marme-le-Vallee, 20 miles west of Paris on 12 Apr 1992 Owned by The Walt Disney (49%) and Euro Disney S.C.A (51%) Phase I: Theme park + resort (Expenses- $4.4 billion) Target Visitors for first year: 11 Million

Report card

First 7 weeks: 1.5 Million visitors only inspite of peak season, low footfall expected in fall/winter, Attendance of French residents low (Walt Disney shares down by 5%) First 100 days: 3.6 million visitors, company announced poor quarterly results and expected year ending loss, Euro Disney S.C.A shares dropped 2.75%)

Why Walt Disney is a huge success in USA?

Walt Disney Comp. revenue streams

Theme parks (71%)

Hotel and resorts (21%) Filmed entertainment and consumer products licensing.

Two locations-Orlando (Florida) and LA (California) in USA Reasons for success

Sells myths and fantasies (core of American consciousness) Creativity- Turning imagination into reality Meticulous service delivery system- the experience which customers will not forget (90% repeat) Filming and Licensing Cartoon characters- infused into the psyche of American children

Why Walt Disney is a huge success in USA?

USP of Theme Parks

Theme parks broken into UNIQUE Lands.

Within boundaries of land, everything revolve around a THEME (Absolute FIT among rides, costumes of building architecture, food, souvenirs etc) Visitors were enveloped within its theme (cut off from real world) Appeal to all interests and tastes (Americas history, myths that shaped the cultural heritage, fascinating futuristic technologies) Cartoons come alive Visitors involvement- Active participation and frequent interaction Continuous updation

Service Delivery Model: Walt Disney USA

GOAL: Exceed its customers expectations everyday Integration of Quality Service, Park detailing and employee friendly HR policies
Park Detailing Dozen of phones connected centrally to assist visitors Friendly HR policies Peer interview, 45 minutes interview (focus on soft skills) Evaluation on energy,

Quality Service Disney University: For in-house personnel development Indoctrination of principles of

Focus on minutest details-

safety, courtesy, show and

small instructional garden to

enthusiasm, commitment and

pride, Recognition awards Mgmt operate on Christmas holidays Diverse and young population

efficiency during orientation/ trng resolve queries on flowers Mgmt priority to customer

All employees as "cast members"

feedback Active mystery shopping

How they conquered Tokyo!!!

Strong Japanese appetite for American-styled popular entertainment

Park was as American as the American park (No image dilution) English- signs, logos, badges, live shows Primarily US food

Quality service

Cleanliness-top priority Courteous staff members

Employees suited for Disney

Disney clean cut image (gels with young Japanese) Obedient, believe in teamwork and are comfortable with uniforms

Spoilt for Disney brand of entertainment

Souvenirs as gifts (Mickey Mouse)

Increasing trend in Japan toward leisure

Euro Disney: Facility Location Problem (France or Spain? Germany?)

Parameters FRANCE SPAIN Subtropical climate due to Mediterranean sea (similar to US locations) GERMANY Temperate climate with warm summer, rainfall, extreme winters

Climate

warm summer with extreme winters

Location

Central

Southern east

West France, Germany, Poland, Hungary, Czech, switzerland, Sweden, UK (277M)

Proximity to UK, Spain, France, population Germany, Italy (317M)

Spain, France, Italy (173 M)

Euro Disney: Facility Location Problem (France or Spain? Germany?)

key countries Spain UK France Germany Italy Poland Sweden Hungary Czech Population (in Million) 47 62 66 82 60 38 9 10 10

Euro Disney: What went wrong?

ANTI-AMERICAN SENTIMENTS

French-farmers protest against US policies Critics voiced it as Unhealthy American brand of consumerism

PARK DESIGN: Originality missing

Deviation from Disneys traditional American Design to accommodate European (especially french) requirements Characters, tales and attractions altered to meet French ideas Complex Western Americanized to suit Europeans Ride customized to French settings French as the first language Multi-cultural, confusing

Euro Disney: What went wrong?

SERVICE STANDARDS: Crew members were out of their depth

Crew members were 70% French (Visitors mix- 45% French, 30% other Europeans, 15%-outside Europe)
Quick hiring resulted in 1000 employees leaving within 9 wk 200 managers directly imported from other parks (not accustomed to French culture) Staff housing problem (late to react) Excessive grooming requirements (creativity lost) Communication problem between supervisors and workers

No communication beyond Bonjour

F&B issues

Wine not served in the park (did not go well with French) Projected as High quality European food (unlike Tokyo) Different eating habits

Difficult journey from USA to Europe

Europe is an heterogeneous area having different cultures, languages and nationalities.

Idea of Disney not in sync with French ppl as they love private, uncrowded places and also more intellectual entertainment

Unbridled enthusiasm is not a marked feature of European labour force

CULTURAL CHERNOBYL

Analysis: All 5 Gaps in Service Quality

Gap 1: Lack of emphasis on cultural differences during market research, poor upward communication, no segmentation, no recovery mechanism Gap 2: Resource constraints like poor training, lack of manpower

Gap 3: Poor HR policies leading to employees dissatisfaction, inadequate horizontal communication

Gap 4: Food quality

Developing a culture of Service QualityCues from Ritz-Carlton Hotel

Companies delivering quality service live and breadth the policy of H.E.A.R.T Hire the right people

With right attitude and spirit Give them respect Value each employee

Ritz Carlton motto Ladies and Gentlemen serving Ladies and Gentlemen 7 day countdown for new hires include 2 days devoted to orientation.

Educate and train them well

Excellent ongoing trng program Immerse them in the companys culture Daily Line up mtng From blame the person to blame discussion on 1 of 20 the process and fix it

principles

Developing a culture of Service Quality- Cues from Ritz Carlton Hotel

Allow them to fix anything

Empower the employees

Recognize and reward them regularly

Ritz Carlton employees informally allotted $2000 to spend on solving particular customers complaint Ritz-Carlton was a leader in developing databases. Guest file ready for repeat customers. Updation of file to include special request/fondness from guests.

Symbolic rather than material Reinforce culture with legends and symbols

Tell them everything, everyday

Communication is vital Access to all the information Suggestions from ppl closest to the customer

Euro Disney: Future concerns

How to raise the service system up to the standards and cost levels of the other Disney Parks?

How to market for achieving winter attendance targets?

Phase II expansion decision on level, timing, nature of investment

Euro Disney: Recommendations

Europe is very important for future success of company (Drivers: Huge

population (750M vs 320M USA), high per capita/income and 5 wks

vacations/year, tourist hub)

Extensive market research on French Culture, Behaviour, Spending pattern,

Food Habits, likings and dislikings (45% customers)

Brand Disney is known for traditional US culture (Originality) Robust HR policies for hiring-Employee welfare at core

Sound systems in place to recover from Service failures- measure the cost,
listen to the complaints, recovery plan, act fast, train employees, empower the frontliners and close the loop

Continuous investment in rides, attractions , live shows to create buzz and pull

Euro Disney: Recommendations

Winter Promotion

Attractive packages (Theme park+ resort) at reduced cost (perishable

services)

Bundle deal: Tie-up Euro Disney tour with other popular destinations

like Eiffel Tower, Palace of Versailles etc

Target countries and visitors having holidays/offs during fall or winter Further segment and target the population based on demographics

like age, gender, occupation (college-goers, girl gangs, couples etc) and
design exclusive marketing campaign

Euro Disney: Current status

Financial Summary 2013 Revenues Theme Parks Hotel and Disney Village Other Total Revenue Net Loss 1003.14 693.87 56.03 1753.04 106.35 1020.68 705.30 62.42 1788.40 136.27 Theme park attendance Avg spending/guest Hotel occupancy rate Avg spending/room 14.9 48.14 16 46.44 2012 Operating statistics 2013 2012

79.30% 84% 235.01 231.33

Euro Disney: Closing comments

CEO, Philippe gas stated "2013 was a challenging year for Europes tourism and leisure industry. We felt this in theme park attendance and hotel occupancy, notably with fewer guests coming from France and Southern Europe. However, despite the economic crisis, our continued enhancement of Resort offerings allowed us to again drive guest satisfaction and guest spending increases, which helped mitigate the impact of lower visitation.

In 2014 we will continue our strategy to invest in the quality of our Resort offerings and our guest experience. This includes our multi-year hotel renovation program with work commencing on our 1,100 room Disney's Newport Bay Club hotel. We will also continue to push the bounds of our imagination with the summer opening of a unique new family attraction based on the hit DisneyPixar movie Ratatouille, which will make 2014 an exciting year for us.

THANK YOU