Disneyland Paris conjures up bumper profits despite strikes

Disneyland Paris conjures up bumper profits despite strikes

Disney’s Parisian theme park complex has delivered a welcome boost to the embattled Hollywood giant, generating $343.4m (€317m) in profits and royalties despite a wave of strikes last summer.

Sales at Disneyland Paris – Europe’s most-visited tourist destination – were driven to record levels by higher room rates and the opening of a site built around Marvel’s hit Avengers movies.

It caps a bumper year for the entertainment group’s profitable parks arm, which has been shoring up the wider business amid weaker box office returns and losses generated by its Disney+ streaming platform.

Disney and Bob Iger, its CEO, are set to face a showdown this week as the activist investor Nelson Peltz campaigns for a strategy overhaul and seats on the company’s board. Investors will vote on his demands at its annual meeting on Wednesday.

While Disney does not itemize the earnings of individual parks in its quarterly filings, the performance of Disneyland Paris is detailed in the accounts of Euro Disney Associés, its French parent company, and a wholly owned subsidiary of Disney.

Revenue rose 23.5% to an all-time high of $3.1bn (€2.9bn) in the year to 30 September 2023.

Net profits hit $174.4m (€161m) – from a $50.9m (€47m) loss the previous year – as room rates at its pricey on-site hotels surged. On top of this, Disneyland Paris also paid Disney royalties of $169m (€156m) in return for using its brands and characters.

Last year’s profit boost was driven by the resort’s entertainment district, as well as its hotels, which are themed to regions of the US. These were behind 21.7% of total revenue, but generated 56.6% of the operating profit.

The bulk of the revenue comes from its flagship Disneyland Park and the neighboring movie-themed Walt Disney Studios, which, according to data from the infrastructure analysts AECOM, attracted 15.3 million guests in 2022.

Disneyland Paris has had a rollercoaster ride since its ornate iron gates swung open for the first time in 1992, having been rocked by resistance from French workers, recessions and the onset of Covid-19. It has only posted a net profit 11 times.

Prices have soared since Disneyland Paris reopened after the pandemic with rates at its four-star Hotel New York more than doubling, according to data from Disney.

The resort is famous for its fairytale atmosphere, but that was interrupted last May and June by chants and whistles as hundreds of staff repeatedly marched on strike through the parks.

Workers – known as cast members due to their playful roles in the park – were dealing with the economic cost of runaway inflation in France, where the cost of electricity had risen almost fourfold since Russia invaded Ukraine.

The strikers wanted a monthly wage rise of $217 (€200), as well as improvements to the bonus given to long-serving staff and increased pay for working on Sundays. A dark spell was cast over the Magic Kingdom, as protesters blocked the Victorian-themed Main Street at the heart of the Disneyland Park and waved placards.

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“Aladdin [in] need of a pay rise” was scrawled on one. Another said: “Coralie, who has been with the company for 14 years, isn’t on strike today because one day away from work would put her in the red.”

The crescendo came when the strikers caused the cancellation of the nightly fireworks show in the Disneyland Park. Staff were eventually granted a 5.5% pay rise at the end of September.

Industrial action didn’t stop visitors streaming through the turnstiles. Disneyland Paris is home to Europe’s only theme park based on Marvel’s Avengers movies, and 2023 was its first full year of operation. The glitzy opening ceremony was attended by the Oscar winner Brie Larson, who plays the super-powered Captain Marvel in the movies.

The Avengers Campus is part of a $2.1bn expansion, with the next stage a land based on the wildly popular animated film Frozen. The accounts reveal that the value of the assets under construction at Disneyland Paris nearly doubled to $754m (€696m) last year which “mainly reflects the investment linked to the development plan for the Walt Disney Studios park and the renovation work of the Disneyland Hotel”.

The palatial pink hotel at the entrance to the Disneyland Park reopened in January, with its prices reportedly stretching up to £9,000 per night for the Frozen-inspired royal suite.

Grey clouds continue to loom over the resort, however. Disney recently announced a decrease in attendance at Disneyland Paris during the first quarter of 2024, along with “higher costs, primarily attributable to increased operations support costs and inflation”.

Source: theguardian.com