Walt Disney Parks and Resorts

Euro Disney

In 1992, Walt Disney Parks and Resorts opened a theme park just outside Paris called “Euro Disney”. Disney was hoping to continue on its previous success in its other parks in Los Angeles, Florida, and Tokyo, Japan with the opening of another in France. However, Disney overlooked many factors in opening the Euro Disney resort and the park initially became one of the largest and most expensive business flops in history.

The forecasted revenues were too high and the forecasted costs associated with building the French park were too low. The most relevant factor in planning that was not considered was the aspect of the French culture. Disney simply thought that they could take the successful concept of the California Disneyland and move it to Europe; however, they ignored many factors of opening an American-based theme park in Paris. Many France natives feared that an American based theme park would damage their culture, so many did not visit the park. Disney predicted that 500,000 people would enter the park on its opening day, however, only around 50,000 showed up and only 1 in 3 patrons of the park were natives of France. In addition to the badly forecasted revenues, the costs of the park were badly forecasted as costs for the park went well over budget. The park cost approximately 22 billion French francs or 4.2 billion U.S. dollars to complete.

There is a lot of evidence in Euro Disney’s poor initial attendance with numbers well below initial forecasts. Disney anticipated 500,000 visitors on the first day of the park’s opening and ended up with 50,000. Soon after, the park was only getting 25,000 visitors instead of the anticipated 60,000. These badly forecasted revenues and overspending on costs of the park are definite indicators of poor financial performance. The major cause of this was Disney failing to acknowledge certain factors of establishing a theme park in France, such as the culture barrier between the U.S. and France.

The park opened in March of 1992, and by then the European economy was stable. However, the economy hit a huge recession towards the end of the year, and this caused property prices to drop rapidly. The dollar became very cheap compared to the French franc and this caused many people to go on U.S. vacations to Disney World in Florida instead of expensive vacations to Euro Disney in France.