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Whatever their differences, both parks had the same problem: they were built using overambitious projections of visitors, including the number of overnight stays in Disney hotels, which languished because many visitors arrived on day trips from Paris. "We built something that was too big for what the market could absorb," acknowledges the French company's chief financial officer, Mark Stead. The first park initially attracted 9 million visitors a year, rather than the 11 million expected, and hotel occupancy just breached 50%. When recession hit in 1992, some of the hotels were so underoccupied, they shut down for the winter. The company reached an agreement in 1994 with its lenders to restructure its finances and then had to go to them a second time in 2004, after lofty expectations about the second park's performance bumped into the harsh reality of a European recession. "History repeated itself," Stead says.
The Walt Disney Co. came out of these restructurings worse for the wear, having to waive or defer its royalties and management fees, invest in new rights issues that deepened its ownership stake in Euro Disney and extend lines of credit or new investment. Business picked up in the mid-2000s, helped by a 15th-anniversary celebration in 2007 and a new ride, the Twilight Zone Tower of Terror. But that upturn came to a halt with the financial crisis, which hurt parks not only in France but also worldwide.
Disney hopes this 20th anniversary will prove to be another "booster year," as Stead puts it, but so far, the results have been mixed. In the quarter that ended June 30, the anniversary high season, average spending at the park rose 3%, giving Euro Disney stock a boost, but hotel occupancy dropped. Certainly, European consumers are more skittish than ever and are looking for last-minute deals. Geography hasn't helped. Federico Gonzalez, head of marketing for Euro Disney, says that for people arriving from other European countries like Spain or the U.K., travel can account for up to half the price of a trip to Disneyland Paris. And when times get tougher, that cost can be prohibitive: from 2009 to 2010, Disney cut its ticket prices by as much as 40% for British visitors, but their attendance still dropped.
In Tokyo and Hong Kong, Disneyland visitors are mainly local, whereas Disneyland Paris has to draw customers from across Europe. So the company has been working with airlines and tour operators to provide attractive packages, including offers that allow children under 12 to travel for free. "The overall cost remains important, but what people are really looking for is a good deal," Gonzalez says.