Profits Plummet By 20% At This Disney Theme Park. Here’s Why It’s Good News For Fans

Disneyland Paris’s operating profits shrunk last year – but it may be good news for fans. (Photo by Toni Anne Barson/WireImage)

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Disney has revealed that the operating profit of one of its flagship theme park resorts collapsed by 20% to $156.3 million last year but instead of being a sign of decline, it actually gave the complex a magic touch.

A crash in the operating profit of a company doesn’t usually give supporters reason to be cheerful as it is often due to a downturn in performance, whether that is due to a drop in revenue or an increase in costs.

The former is rarely positive for the operator of a theme park as there are few benefits from less money flowing into the company. However, an increase in costs can keep the resort ahead of the competition or stop it from falling behind which is precisely what Disney wanted to avoid in Paris.

Disneyland Paris is Europe’s most-visited tourist attraction with 15.8 million visitors streaming through its turnstiles last year according to the latest data from the Themed Entertainment Association. However, despite its popularity, dark clouds gathered over the resort in summer 2023 when disenchanted workers marched through its two theme parks on strike.

Ironically known as cast members due to the role they play in a fairytale environment, the strikers demanded an increase in pay to combat runaway inflation in France. The crescendo came when protests from around 1,000 cast members led to the cancelation of the nightly fireworks show. A video of angry guests booing quickly went viral after it was posted by the DLP Report social media account which documented the disturbance in detail.

It’s no surprise that guests were furious given how much they pay with the cheapest price for a night in a two star on-site hotel in November/December coming to $488 (€424) for two people with two days of park tickets.

Cast members dedicate their lives to entertaining guests, not disappointing them, so the strikes were a last resort. They ended up casting a powerful spell.

Unions representing many of the 18,244 staff at the resort met with Disneyland Paris management three times in August and September 2023 to negotiate their wages for the following year. Their effort paid off.

Thanks to the tireless work of the unions, especially the National Union of Autonomous Trade Unions (UNSA), a French confederation of trade unions, the majority of staff got a 5.5% pay rise for 2024 as well as a bonus of $761 (€700), a transport subsidy of up to $1,305 (€1,200) and even reimbursement of 80% of their public transport costs. As this report revealed, Disneyland Paris is also the media giant’s first theme park which pays a share of its profits to staff with $570.75 (€525) handed out in January last year to any employee who had worked for the company for at least three months.

It is in stark contrast to the rewards received by cast members at Disneyland in California who were offered an annual average wage increase of less than a dollar last year. After they threatened to strike, Disney improved its offer but still only settled on $24 per hour. Workers at Walt Disney World in Florida are even worse off as their latest pay rise only gave them $18 per hour, let alone a share in the profits as their counterparts get in Paris.

The pay rise and generous package of benefits demonstrated that the unions are in the driving seat as management agreed to their demands after they went on strike. In turn, this put Disneyland Paris on a more stable future and fans have rejoiced as there have been no strikes since the cast members got what they wanted. Nevertheless, it took some of the sparkle off the resort’s bottom line.

Disneyland Paris is wholly-owned by The Walt Disney Company in California which does not break out the earnings of individual parks in its filings. However, the financial performance of Disneyland Paris is disclosed in the financial statements of its French parent company Euro Disney Associés (EDA). As this author reported in The Times of London, EDA’s revenue surged by $243 million (€218 million) to a record $3.5 billion (€3.1 billion) last year but even this couldn’t compensate for a $282 million (€253 million) surge in costs to $3.3 billion (€3 billion).

Almost half of the increase came from a $119 million (€107 million) rise in social security contributions, wages and salaries to $1.1 billion (€977 million) which can be seen in the English version of the filings here. The increase in revenue partly offset this but not entirely, leading to the operating profit dropping by $39 million (€35 million) to $156 million (€140 million). If the social security contributions, wages and salaries had increased by $80 million (€72 million) rather than $119 million (€107 million) the operating profit would not have fallen on the previous year. Accordingly, the increase in pay directly contributed to the fall in operating profit.

It is important to stress at this stage what is meant by operating profit. It is calculated by deducting the costs of running the business, unsurprisingly known as operating costs, from the revenue it generates. This gives a clear view of a company’s performance with few accounting measures distorting the end result. The further you look down a company’s profit and loss statement, the more the outcome is affected by non-cash items and, in the case of EDA last year, one of them was a $53.6 million (€48 million) charge to settle a commitment dating back to 1994 to cover the cost of designing the resort’s movie-themed Walt Disney Studios park.

As this report revealed, the charge contributed to EDA’s after-tax profit (its very bottom line) falling by 45.3% to $98.2 million (€88 million) last year. The charge was settled through a debt-to-equity conversion so no money actually changed hands in contrast to the increased pay to cast members. It was well worth it.

Saying that the dispute between management and staff at Disneyland Paris had become strained is somewhat of an understatement. In the wake of the strikes, several cast members were dismissed fueling suggestions that Disneyland Paris had broken French labor law as the right to strike is enshrined in it. This was never proven as the matter never went to court and Disneyland Paris said in a statement that “in order to protect the rights of our employees and those of the company, we do not comment on internal procedures.”

However, that wasn’t the end of the story as a work inspector ruled that one of the dismissals should be overturned as local media reported. A spokesperson for the UNSA explained that the “worker wasn’t fired, but put on hold for several months before the work inspector invalidated the demand of firing by the management.”

Not only have employee relations ameliorated since then but so has the local economic climate. As this report recently revealed, attendance at Disneyland Paris was down during summer 2024 due to the Olympics taking place nearby and distracting visitors. It was a different story in summer this year. With no Games taking place, the resort got a boost which explains why Disney’s chief financial officer Hugh Johnston said on its third quarter earnings call in August that Disneyland Paris “is performing strongly” and he expects it “to do very well”.

This isn’t just because of a lack of competing events but also due to the introduction of dynamic pricing this year which adjusts the price of tickets depending on how busy the parks are. It has been such a success that it is expected to be implemented in Disney’s domestic parks. That’s not all.

In 2018 my colleague revealed that the on-site Disney Village shopping and dining complex at Disneyland Paris would be transformed by both a major renovation and expansion. This was finally officially announced four years later and last weekend the latest step was unveiled with the re-opening of a massive sports bar.

The venue previously looked like it had come straight out of the 1980s but the renovation has given it a more contemporary appearance. It could be argued that this should have been done long ago though more noteworthy announcements are expected today.

In November 2017 my colleague also broke the news in British newspaper The Express that Disney was planning its biggest show of support yet by investing $2.1 billion in Disneyland Paris. This was finally officially announced in February 2018 by Disney’s chief executive Bob Iger and French president Emmanuel Macron.

They announced that the money would be spent on adding three new lands to the Walt Disney Studios park. The first one, based on Disney’s Marvel superheroes, swung open its doors three years ago and later today Disneyand Paris is expected to announce the opening date for the second which is themed to hit animated movie Frozen. The park will also be renamed Disney Adventure World as Disney believes that behind the scenes movie tours have become outdated, despite the staggering success of the one in the United Kingdom based on Harry Potter.

The highlight of the upcoming Frozen land at Disneyland Paris is a log flume which is one of the oldest ride systems in the theme park industry. The ride itself is a copy of one which opened at Disney World in 2016 and has since been copied at Hong Kong Disneyland. Its Frozen land opened two years ago and also includes another ride which Paris lacks.

In summary, the Frozen land isn’t unique or groundbreaking. A water ride is also perhaps not the most sensible addition given Paris’ cold climate. Indeed, last weekend, a thick blanket of snow covered Disneyland Paris and a veil of fog smothered the resort.

Undeterred, last year the resort announced that the third new land in the Studios park would be home to yet another log flume which will be located right next to the other one and will be themed to Disney’s classic cartoon The Lion King. It is expected to debut towards the end of this decade which is just the right time as in 2031 Disney’s arch-rival Universal Studios is due to open a park in the United Kingdom just a few hours by train from Paris.

The two lands at Disneyland Paris sit around a recently-built man-made lake which will soon also be home to a new night time show. It is a bold gamble given that Paris is bitterly cold at night for many months of the year. It is highly likely that wind will whip over the large lake picking up water droplets and dropping them on audiences around the perimeter.

Visibility could also be an issue as a Frozen-themed show on a lake at the Disneyland Paris hotel complex could barely be seen due to freezing fog when it debuted in January 2020. Furthermore, Disney’s recent track record with night time shows is far from picture perfect.

In April 2023 scathing reviews led to the Disney Enchantment fireworks display at Disney World’s Magic Kingdom park being dropped after just 18 months. In the same year, Disney’s neighboring Epcot park dropped its new son et lumière show Harmonious after excoriating feedback from fans.

Then, last year, Disneyland in California was beset by criticism when it resumed its flagship nighttime show Fantasmic after a one-year hiatus. Fantasmic was put on hold following a fire inside the 45-feet animatronic dragon at the heart of the show but instead of repairing it, Disney replaced it with an actor. With a major new competitor on the horizon Disneyland Paris may have to do better than that if it wants a happy ending.

Additional Reporting by Chris Sylt