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Business

Disneyland Paris gets green light to expand

Euro Disney is planning to expand its amusement parks near Paris. Europe’s largest tourist attraction struggled for 16 years to make a profit, and nearly went bankrupt. Is now the right time to invest in new attractions?

A show at Disneyland Paris

Disneyland Paris was unpopular with locals when it opened

Euro Disney, the company that manages Disneyland Paris, signed an agreement with French authorities this week, giving it 13 additional years to operate and expand its theme parks. After staring down insolvency in 2004, the company now says it has a foothold despite a slump in the tourism industry during 2009.

The new agreement will last until 2030 and gives Euro Disney the right to expand from 1,943 hectares to 2,230 hectares – about one-fifth the surface area of Paris – and build a third theme park within 20 years. The third theme park will be a sustainable tourism project called "Les Villages Nature de Val D'Europe" (Villages of Nature of the Valley of Europe) and will be developed in a joint venture with the travel group Pierre & Vacances.

Euro Disney spokesman Laurent Manologlou said the new agreement was necessary for the company to develop long-term plans. It could generate 8 billion euros ($10.3 billion) from various sources including 1.8 billion euros for the Villages of Nature. The expansion could create as many as 70,000 direct and indirect jobs.

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"Of course we are planning to develop the destination, but first it was important to renew this partnership with the French public parties," he told Deutsche Welle. "We have some time to develop these opportunities, double the capacity of the theme park, triple the capacity of the hotels and develop sustainable tourism with projects such as the Villages of Nature."

Manologlou said it was too early to know more details about the projects.

Park struggled for years

Disneyland Paris is Europe's most popular tourist attraction and has drawn 215 million visitors since it opened in 1992, with 15.4 million in 2009 alone. It initially failed to garner enthusiasm amongst the French public, which protested the park as an affront to French culture. In 2004 the company was losing millions and implemented a drastic restructuring plan to prevent it from defaulting on 2.43 billion euros of debt (then $2.87 billion). It only posted its first profit in 2008.

Manologlou dismissed the notion that popular sentiment in France is against Disneyland Paris, saying that many public authorities had signed off on the deal.

Frederic Dimanche teaches at the SKEMA business school and is vice president of the Travel and Tourism Research Association Europe. He says the cultural controversies surrounding Disneyland Paris calmed down long ago, with reports of employees fighting company dress regulations, codes of conduct and other restrictions no longer common.

"If they want to work and be successful with this company – and it does provide jobs – then they have to follow the company culture," he told Deutsche Welle. "We see so many examples of American influence on European culture, like Hollywood movies and fast food… That's part of the phenomenon of globalization... I'm not sure it's specific to Disney."

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Although there were significant slowdowns in tourism, revenues and long-haul travel during 2009, the industry has already returned to growth in 2010.

"Now that the economy is recovering and that tourism is coming back to its pre-crisis level, there's no reason for them to slow down," Dimanche said. "Keep in mind that usually expansion plans are strategic decisions that are made quite a bit in advance. They probably made those decisions before the crisis and now it's just a matter of implementing them."

New attractions needed

However, Didier Arino of the tourism consulting firm Protourisme says Disney has no choice but to grow.

"The economic model of amusement parks is to get tourists to come back, so they need to offer new attractions," he told AFP.

Disneyland Paris currently houses two parks – Disneyland Park and Walt Disney Studios Park – with 5,800 rooms in seven themed hotels, along with two convention centers and a golf course. They are located outside of Paris in Marne-la-Vallee and linked to the city by rail and road.

Author: Gerhard Schneibel
Editor: Sam Edmonds

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