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 (America’s 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

Quality Service Park Detailing Friendly HR policies

Disney University: For in-house personnel development

Dozen of phones connected centrally to assist visitors

Peer interview, 45 minutes interview (focus on soft skills)

Indoctrination of principles of safety, courtesy, show and efficiency during orientation/ trng

Focus on minutest details- small instructional garden to resolve queries on flowers

Evaluation on energy, enthusiasm, commitment and pride, Recognition awards

All employees as "cast members"

Mgmt priority to customer feedback

Mgmt operate on Christmas holidays

Active mystery shopping Diverse and young population

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 GERMANY

Climate warm summer with extreme winters

Subtropical climate due to Mediterranean sea (similar to US locations)

Temperate climate with warm summer, rainfall, extreme winters

Location Central Southern east West

Proximity to population

UK, Spain, France, Germany, Italy (317M)

Spain, France, Italy (173 M)

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

key countries

Population (in Million)

Spain 47UK 62France 66Germany 82Italy 60Poland 38Sweden 9Hungary 10Czech 10

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

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 Disney’s 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 QualityGap 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

Gap 5: Traditional Disney

Developing a culture of Service Quality- Cues 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

Educate and train them well Excellent ongoing trng program Immerse them in the company’s culture From “blame the person” to “blame

the process and fix it”

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

Daily Line up mtng discussion on 1 of “20 principles”

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

Allow them to fix anything Empower the employees

Recognize and reward themregularly 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

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

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 2012 Operating statistics 2013 2012

Revenues

Theme Parks 1003.14 1020.68 Theme park attendance 14.9 16

Hotel and Disney Village 693.87 705.30 Avg spending/guest 48.14 46.44

Other 56.03 62.42 Hotel occupancy rate 79.30% 84%

Total Revenue 1753.04 1788.40 Avg spending/room 235.01 231.33

Net Loss 106.35 136.27

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 Disney•Pixar movie Ratatouille, which will make 2014 an exciting year for us.

CEO, Philippe gas stated "2013 was a challenging year for Europe’s 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.

Euro Disney: Closing comments

THANK YOU