Jay Rasulo, 44, became Euro Disney's CEO following the resignation of his predecessor, Gilles Pélisson, last May. He joined Euro Disney in 1998 as chief operating officer after 15 years as a strategic exec at U.S. headquarters and then as senior vice-president for corporate alliances worldwide.
In the coming years, Rasulo will face the challenge of making Euro Disney profitable. Indeed, the company is currently $2.2 billion in debt. The resumption of licensing and management fees to Walt Disney Co. after a five-year moratorium caused net income to drop 46% in 1999 to $21.5 million.
But since opening in 1993, Disneyland Paris has become Europe's top tourist attraction, drawing 12.5 million visitors annually. Now, the theme park's operator, Euro Disney, is ready for another growth spurt. The company is currently developing housing and a business center in the new town of Val d'Europe, just a five-minute drive from the Disneyland theme park.
A 75,000-square-meter international shopping mall will also be opening there this autumn. And in 2002, Euro Disney plans to open a second, $556 million theme park adjacent to Disneyland Paris. Called Disney Studios, it will focus on film and special effects. Euro Disney officials expect this park to attract roughly 5 million more visitors annually. Rasulo recently sat down with Business Week's Inka Resch to discuss Euro Disney's future. Here are edited excerpts of their conversation:
Q: What's your strategy for making Euro Disney profitable?
A: The vision for the company is to grow by taking advantage of underlying European trends, of higher spending on leisure, more leisure time, growth of the short-break destination leisure market.
Q: How do you plan to do that?
A: The theme-park business is one in which initial investment is very high, and so we are a company that has a lot of debt. We took on debt to establish our base, and when we negotiated our second park, we were able to greatly reduce our debt burden, by reducing the interest rate on that debt. So, this is one step. But suffice it to say, this is a long-term project.
Q: What is the percentage of your royalty payments to Walt Disney Co.?
A: It's 2% of gross revenues. The licensing fee is the royalty, and then there is the management fee, which is 1%. You can think of the royalties as what Disney is best known for, the intellectual property. That is, the characters, but also unlimited access to future Disney characters and theme-park-specific themes that are developed in the U.S., such as the Fast Pass System. Then the management fee is for the savoir faire, and the sharing and access to information.
Q: How will the second park improve your prospects?
A: You raise revenue either by increasing volume or, more importantly in terms of profit, by increasing visitor spending at the park. As we expand our entertainment offering, we expand two things: length of stay from the existing base, but also attracting new guests. In the business we are in, you get to capitalize on all of the infrastructure. With the opening of the second park, we will go from 12.5 million to 17 million attendance, which is certainly within our expectation. So, if you ask, is the second park going to change the profit curve? Absolutely. This is where we start to see the future.
Q: Any plans for a third park?
A: Yes. I am sure we will have a third park. If you ask me when, I cannot say exactly when.
Q: What countries do you draw the most visitors from?
A: France, Benelux, and in the southern part of England. For me, the opportunity is now to take the rest of Europe and to bring it up to that same level. So, that's Germany, that's Northern Europe, Scandinavia, that's other parts of the U.K., Spain, Italy, where we certainly have guests. We have guests from all over Europe. But there are places where we could do better.
Q: How do you plan on doing that?
A: First is to rely even more strongly on the Disney heritage, to reinforce in our communications that first and foremost Disneyland Paris is about Disney's characters and stories. No. 2, by being diligent in the translation of that emotion in our communications to each country in Europe. Thirdly, travel alliances and partnerships. In terms of our partners -- which are airlines, railroads, as well as tour operators -- there is a very big consolidation going on. You will see us aligning ourselves so that we are best positioned to be served in every country by trusted, on-the-ground, close-to-home tour operators.
And lastly, to be a strong player on the Internet. This is the newest aspect of attracting guests and reaching them in the most comfortable place in the world for them, which is at home in front of their PC, with an attractive Internet site that has what people expect of Disney.
Looking and getting information and touching a little of the magic electronically through the Internet. It is the fundamentals of our marketing strategy. This interactive site is under development. I would hope that by the end of the calendar year, we will be in a position to sell directly on the Web.
Q: Any other projects in the works?
A: Just as we've talked about the second Disney park making Disneyland Paris as a destination more appealing, you can be sure that the international mall, which will open this fall, will reinforce this impact. Recreational retailing is an essential part of most people's holiday plans. We are aggressively seeking partnerships in the development of additional hotel rooms around the site. This will continue to enhance ease and comfort for visitors, by enhancing their ability to stay very close to the park.
http://www.businessweek.com/bwdaily/dnflash/sep2000/nf20000915_970.htm
In the coming years, Rasulo will face the challenge of making Euro Disney profitable. Indeed, the company is currently $2.2 billion in debt. The resumption of licensing and management fees to Walt Disney Co. after a five-year moratorium caused net income to drop 46% in 1999 to $21.5 million.
But since opening in 1993, Disneyland Paris has become Europe's top tourist attraction, drawing 12.5 million visitors annually. Now, the theme park's operator, Euro Disney, is ready for another growth spurt. The company is currently developing housing and a business center in the new town of Val d'Europe, just a five-minute drive from the Disneyland theme park.
A 75,000-square-meter international shopping mall will also be opening there this autumn. And in 2002, Euro Disney plans to open a second, $556 million theme park adjacent to Disneyland Paris. Called Disney Studios, it will focus on film and special effects. Euro Disney officials expect this park to attract roughly 5 million more visitors annually. Rasulo recently sat down with Business Week's Inka Resch to discuss Euro Disney's future. Here are edited excerpts of their conversation:
Q: What's your strategy for making Euro Disney profitable?
A: The vision for the company is to grow by taking advantage of underlying European trends, of higher spending on leisure, more leisure time, growth of the short-break destination leisure market.
Q: How do you plan to do that?
A: The theme-park business is one in which initial investment is very high, and so we are a company that has a lot of debt. We took on debt to establish our base, and when we negotiated our second park, we were able to greatly reduce our debt burden, by reducing the interest rate on that debt. So, this is one step. But suffice it to say, this is a long-term project.
Q: What is the percentage of your royalty payments to Walt Disney Co.?
A: It's 2% of gross revenues. The licensing fee is the royalty, and then there is the management fee, which is 1%. You can think of the royalties as what Disney is best known for, the intellectual property. That is, the characters, but also unlimited access to future Disney characters and theme-park-specific themes that are developed in the U.S., such as the Fast Pass System. Then the management fee is for the savoir faire, and the sharing and access to information.
Q: How will the second park improve your prospects?
A: You raise revenue either by increasing volume or, more importantly in terms of profit, by increasing visitor spending at the park. As we expand our entertainment offering, we expand two things: length of stay from the existing base, but also attracting new guests. In the business we are in, you get to capitalize on all of the infrastructure. With the opening of the second park, we will go from 12.5 million to 17 million attendance, which is certainly within our expectation. So, if you ask, is the second park going to change the profit curve? Absolutely. This is where we start to see the future.
Q: Any plans for a third park?
A: Yes. I am sure we will have a third park. If you ask me when, I cannot say exactly when.
Q: What countries do you draw the most visitors from?
A: France, Benelux, and in the southern part of England. For me, the opportunity is now to take the rest of Europe and to bring it up to that same level. So, that's Germany, that's Northern Europe, Scandinavia, that's other parts of the U.K., Spain, Italy, where we certainly have guests. We have guests from all over Europe. But there are places where we could do better.
Q: How do you plan on doing that?
A: First is to rely even more strongly on the Disney heritage, to reinforce in our communications that first and foremost Disneyland Paris is about Disney's characters and stories. No. 2, by being diligent in the translation of that emotion in our communications to each country in Europe. Thirdly, travel alliances and partnerships. In terms of our partners -- which are airlines, railroads, as well as tour operators -- there is a very big consolidation going on. You will see us aligning ourselves so that we are best positioned to be served in every country by trusted, on-the-ground, close-to-home tour operators.
And lastly, to be a strong player on the Internet. This is the newest aspect of attracting guests and reaching them in the most comfortable place in the world for them, which is at home in front of their PC, with an attractive Internet site that has what people expect of Disney.
Looking and getting information and touching a little of the magic electronically through the Internet. It is the fundamentals of our marketing strategy. This interactive site is under development. I would hope that by the end of the calendar year, we will be in a position to sell directly on the Web.
Q: Any other projects in the works?
A: Just as we've talked about the second Disney park making Disneyland Paris as a destination more appealing, you can be sure that the international mall, which will open this fall, will reinforce this impact. Recreational retailing is an essential part of most people's holiday plans. We are aggressively seeking partnerships in the development of additional hotel rooms around the site. This will continue to enhance ease and comfort for visitors, by enhancing their ability to stay very close to the park.
http://www.businessweek.com/bwdaily/dnflash/sep2000/nf20000915_970.htm