Published in today's Telegraph newspaper is an interview with Disneyland Paris chief Philippe Gas.
By Amanda Andrews.
In a rare interview, Mr Gas has highlighted that the group’s 'wealth creation strategy’ to keep spending on development despite its high level of debt is a sensible one.
The group has been criticised by some for building its Studios Park in 2002, a move which contributed to it sinking deeper into the red.
“A second park was necessary as you have to think about this project on a long-term basis,” said Mr Gas, who returned to run the park in April 2008 after a stint in the 1990s.
“You cannot think about Disneyland Paris as a five-year play or a 10-year play. We are looking at 2035. We’re not looking at tomorrow – so, looking at this strategically, investing in a second park was the right thing to do.”
Mr Gas said the group is committed to paying back 25pc of its current debt by 2013. He plans to significantly expand the Studios Park and is now talking about developing a third theme park on its Disneyland Paris site.
“Honestly, we have enough cash today to pay our debt, to finance our expansion and to pay for rehabilitation [of current attractions in the park],” highlighted Mr Gas, denying recent speculation that the company came close to breaching banking covenants.
He said that the company has deferred royalty payments to Disney, a 40pc shareholder, and deferred debt payments on occasions its biggest lender Caisse des Depots et Consignations, but it has not breached banking covenants.
“It [the ability to defer payments] is a good mechanism to preserve our flexibility and our cash when we need it. Because then you push back the payment to 20 years with limited levels of interest. Who would not want that,” he said. “We still have 26 years of payments, but I don’t think it matters to have everything paid off. I think you want to be able to look at the sustained profitability – for me, this is the goal.”
Euro Disney has simultaneously been in the spotlight in recent months over talk about the welfare of its employees and low wages.
In December 2009, at one of the busiest times of the year, staff went on strike as part of a protest over a pay freeze. Since then, two Euro Disney employees have committed suicide. One was a chef who wrote on a suicide note that he did “not want to return to working for Mickey.”
One union said the company was partly to blame for the suicide.
Mr Gas believes that press coverage of the two reported suicides has been “misleading”, saying that there is just one union out of seven that has blamed Disney’s treatment of its staff for the incidents.
“What was said by the union was not unfair. It was outrageous,” he said.
“We don’t pay minimum wage anymore. We pay above the minimum wage,” Mr Gas said, adding that staff have had an annual 3pc pay rise for the past two years.
However, he said that it is Euro Disney’s duty as a company to become more focused on these issues.
“When you think about the employees, it is their first job. They are very young. It is the first time they have left home. They are going to start to live on their own…They have an employer who also becomes the parent. And there’s an emotional connection to us as an employer that doesn’t exist with other companies. So, all of this makes it our duty as a company to become more responsible.”
High on Mr Gas’s agenda are the development of the Disney Studios, where he plans more attractions and restaurants with the intention of turning it into a “one-day experience”. New Disney characters he is keen to feature at the park include Disney’s Cars and Ratatouille.
“Ratatouille is perfect, as it is set in Paris,” he said, pointing to a large wall poster of the film in his office. Furthermore, there is the agreement to build homes as part of the development of Marne la Vallée, where Disneyland Paris is located, as well as a nature park that will be set up with French holiday company Pierre et Vacances.
Later down the line, the construction of a third theme park is also on the agenda.
The reason that development has come is stages is that, aside from the issue of development costs, the French government originally gave consent for Disneyland Paris to be built on the condition that Disney would only buy pockets of land in stages once previous plots had been developed.
It was France’s first regional development public-private partnership. In French government circles, it is viewed as a success -for every €1 invested by the Government, private investors have put in roughly €10.
Mr Gas said a decision to build the third theme park may not be made until 2020, though it may be brought forward if planned work on the existing Disney Studios Park is completed.
Having endured the 1990s downturn when it opened and current economic unrest, the view held by many is that Euro Disney has been blighted by bad luck. Arriving months before the latest downturn, Mr Gas has perhaps taken on the role of a crisis manager.
And his calm, controlled manner and clear passion for the parks, perhaps, make him an ideal candidate.
“Clearly, there have been situations that we could have done without. I could have done without the worst winter in 2009. That’s part of running a business. I think it is more about the journey – and learning.
And what happened in 1992, when we opened, is we started, based on a vision - and I think the vision is still the right one. I think you just have the growing pains. In the European landscape we are just babies. Eighteen years of existence is nothing.”
Mr Gas assures that rewarding loyal, long-term shareholders is his key objective. The shares have been volatile, falling 33pc in the last year and 66pc in the past five years. The market capitalisation of Euro Disney is currently €161m. But visitors still came despite the downturn.
In 2009, the park had 15.4m visitors. And Mr Gas believes people will continue to come and spending will increase as the economic conditions improve.
“What I am looking at is to provide a return to the people who have trusted us since the opening. Profitability and payment of dividend…But it can’t be a one-off. You have to make sure that when we reach profitability, it is sustained and, of course, we will then pay,” he said.
Separately, Mr Gas said that Disney’s global theme parks business is currently considering “urban experiences”. “Maybe not theme parks per se – not Disneyland somewhere – but another type of retail, dining, entertainment experience within cities. Think about the Disney Village closer to a city – you will have retail opportunities with a theme,” he said, adding that this concept could be applied anywhere in the world.
He said the relationship with its second largest shareholder Prince Alwaleed bin Talal is amicable, recently escorting him and his granddaughter around the park.
“He was interested to hear about the product. He was very interested to hear about Toy Story Playland [a new development at the Studios Park]. It was a few weeks before we opened it. To my knowledge, it was the first time he has come since I’ve been in charge.”
But the men apparently did not talk business and he said there were no questions about the Prince’s intentions for stake. “It was a private visit, so I did not want to pollute that with questions [about plans for his holding].”
