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A small number of visitors at EXPO 2000 in Hanover OR What do Expo and Euro-Disney have in common?
The current number of visitors at
the Expo 2000 in Hanover (Germany) is far behind the predictions. At the last
few weekends it was impossible to attract more than 100.000 customers, hence the
Expo 2000 GmbH (the operating company) has problems to achieve its goal: 261.000
visitors a day, which are necessary to achieve a total of 40 million visitors at
the end. To change this situation the Expo introduced some discount tickets last
week in order to attract more visitors.
What is wrong with the Expo? Do we
(as potential visitors) not understand the Expo concept in Germany, does it take
too much or are we not able to understand the advertising campaign?
The reasons for the poor results
of the Expo are mainly based in a wrong self-assessment, leading to wrong
decisions in the management. The Expo does virtually the same management and
operating mistakes that Euro Disneyland Paris does, when it was opened in 1992.
Disneyland’s objectives were
very demanding: 11 million visitors and a profit after tax of 204 million FFR
for the first year of operating. But after the first year there was a loss: 1,1
billion FFR. The reasons for this situation were the low number of visitors and
the low visitor spending for food, beverages and for merchandise souvenirs. Only
after a massive change in all facets of the pricing system (entrance fee, room
rates etc.) it was possible to achieve the number of expected visitors.
What can be learned from Euro Disney? Disney and Expo thought /think that they have a kind of uniqueness, that would not allow to compare them with other parks. This is basically the right point to start from: There is just one Mickey, one Donald Duck and one and only Walt Disney Company. There is just one Expo exhibition, too. That basis (mis) leaded both companies to the assumption, that they would have a monopoly, enabling them to charge outstanding prices. Their common theme: If there is a monopoly, we can calculate the prices, no matter the real value of the service or good delivered. An economist would say: The monopolist tries to achieve super normal profits.
That is the basic assumption of
all players at the Expo: From the operating company, the German Railway up to
the last self-service restaurant at the Expo area.
At the end the visitors pay too much – a full day at the Expo can be
expensive as a half-week holiday trip to the Mediterranean see.
The trap is that the products are
unique (in terms of brand etc.), but that there is not a real monopoly. The
reason is, that both parks are (only) destinations for spending your leisure
time – a good place for a weekend trip or for a day off. Hence the potential
visitors with various other destinations can compare them, e.g. a one-day trip
to Hamburg for a musical or with a trip to the ILA Berlin (International
air/aviation exhibition). On the basis of the current price structure it is too
expensive to visit the Expo – if one compares the Expo with other options.
In addition there are some smaller
mistakes and problems. Despite the low number of visitors one has to wait 1 hour
or longer to enter some pavilions. This is the same situation as it was at Euro
Disney in 1992 and 1993. In the first week of the Expo in June the ticket sale
system collapsed through overloading. What would happen, if 261.000 people would
like to visit the Expo on a specific day?
The current marketing activities
are far behind a best practice situation. The advertising campaign consists
mainly of image advertising. Hence potential visitors do not know exactly what
they can expect and which pavilions they should visit. This was the same mistake
that Disneyland did in 1992.
What can be done now? The
discussion about the pricing structure was started. The Expo’s hope for an
increase in the number of visitors is an easy way out and not a real solution.
We have to consider that the pricing structure is more symptom than real reason.
Hence the Expo’s self-assessment needs to be changed – The Expo has to learn
that it has to compete with other destinations and therefore it has to offer
competitive prices.
Oliver
Recklies
For further information: Click
here
Annual report 1992
Annual report 1993
Jensen,
J.: Movies star in connection with major theme parks, in: Advertising Age, Sept
27, 1995
Playing
Disney in the Parisian Fields, New York Times February 17, 1991
Slack:
Operations Management, London, 1998
S.G.
Wartburg Securities, Euro Disneyland: Offer for sale“ (October 5, 1989)
Waiting
for Dumbo: Euro Disney, The Economist, May 1, 1993
Reekie, W.D.
(1991), The economics of modern business, Blackwell, Oxford