Universal Orlando Aims to Offset Attendance Decrease with $120M Plan

[Figment!]

Universal Will Spend $120M on Attractions
Goal is to offset drop in visitors

BY DONNA BALANCIA and SCOTT BLAKE
Florida Today
April 5, 2007

Universal Orlando Resort plans to spend as much as $120 million this year on the design and construction of new attractions, as well as on other capital improvements, to offset declining attendance.

That's about three times what it spent in 2006 and about four times what it spent in 2005 for capital improvements, according to information contained in a report Universal Orlando's parent company filed this week with the U.S. Securities and Exchange Commission.

Universal City Development Partners said the investment will be made at Universal Studios and Islands of Adventure to more effectively compete in the theme park industry.

The move comes at a time when Universal's Orlando-area rival, Walt Disney World, posted strong attendance gains at its Animal Kingdom theme park, following the 2006 debut of its Expedition Everest thrill ride, which cost an estimated $100 million or more.

Animal Kingdom attendance rose 8.6 percent to 8.91 million paid visitors in 2006, according to estimates contained in a theme park attendance report released Wednesday by TEA (formerly called the Themed Entertainment Association) and Economics Research Associates.

That was the biggest gain among the 20 most popular North American theme parks.

Universal wants similar results, analysts said.

"Universal needs to keep its main core audience, and that's the teens, 16 and up," said Jerry Aldrich, president of Orlando-based Amusement Industry Consulting.
"Last year, they emphasized shows and attractions for the very young children. But Universal's strength is the 16-and-up market. Those are the ones who want the intense rides."

"Our plans involve innovative entertainment, but we are not going to discuss any specifics at this point," Universal Orlando spokeswoman Rhonda Murphy said.

A 'Simpsons' ride?

There has been some speculation within the industry that the recent closure of Universal's "Back to the Future: The Ride" attraction could give way to a themed ride, possibly based on the television show "The Simpsons."

Aldrich, however, said a ride based on "The Simpsons" would not fill a need for a fast-paced thrill ride.

"A Simpsons attractions is not a high-paced ride," Aldrich said.

"Every so often, they look at the demographics and make their decisions. If they were to spend $100 million on one ride, it will be in keeping with the kind of attraction their audience is seeking."
Murphy would not get specific about any attraction that may be built at Universal Orlando.

"A reference to capital expenditures always appears in our financial information," Murphy said.

"It's standard business practice to set aside funding for new development or improving existing facilities."

In its regulatory filing, Universal said: "During 2006 and 2005, we spent $41.4 million and $30.4 million, respectively, on capital expenditures, and estimate our capital expenditures, including intellectual property rights, to be between $100 million to $120 million during 2007. A large portion of this cost relates to the design and construction of multiple new attractions that are currently being negotiated that we anticipate opening during the next few years.

"We believe these investments are critical in maintaining our position of having technologically advanced theme parks and to effectively compete with our competitors," Universal said.
In its report, Universal reported its attendance dropped in 2006, but its profits were up 19 percent to $41.96 million, largely as a result of increases in food, beverage and merchandise sales inside the theme parks. The company said its paid attendance at its two parks was 10.47 million for 2006, down from 10.77 million in 2005.

Overall, the TEA/Economics Research Associates report found that worldwide theme park attendance increased by 2.2 percent in 2006, including an estimated 1.5 percent gain among the top 20 North American parks.

'Thou shalt reinvest'

Adding new rides or zones in a park that address families will tend to result in a higher attendance impact than improvements with a more specialized or niche appeal, the report found.
"If you go for the broad market, adding a major ride or 'land' to a park can bring a 5 percent to 10 percent increase in attendance," John Robinett, a senior vice president at Economics Research Associates, said in the report.
"Rule number one in the theme park industry is: 'Thou shalt reinvest,' " Ray Braun, another senior vice president at Economics Research Associates, said in the report.

That's happening at the Kennedy Space Center Visitor Complex, where the $60 million "Shuttle Launch Experience," a space shuttle simulation ride, is scheduled to open May 25.

Visitor Complex spokeswoman Andrea Farmer said attendance at the complex was "flat," or unchanged, from 2005 to 2006, although attendance was "strong" in November and December.
She would not disclose the complex's attendance numbers, citing proprietary reasons.

The space shuttle ride should boost attendance significantly at the Visitor Complex, said Rob Varley, executive director of the Space Coast Office of Tourism.

"It really steps the Space Center up a notch" as a tourist attraction, Varley said.
"It puts them on a new playing field."
Although attendance dropped last year at Universal's Islands of Adventure, the increased attendance at other Orlando theme parks bodes well for Brevard County's tourism business.

"When Orlando does well, we do well," Varley said.

[JRock0114]

Wow......this is great news. I'm a huge Universal fan (as well as a Disney Fan) and I have been dying for updates to Universal Orlando especially Islands of Adventures. This is a great park that just needs a few more "Stud" attractions. They so need to drop a Thrill Ride in Jurassic Park. This land is amazing but the attractions are weak.

If they update attractions like they did with Kong by building the very impressive Mummy the Ride.......then they will knock it out of the park. The Mummy is one of the best rides at any park, any where........including "the Mouse".

[WDWfanatic742]

120 million isn't much when you compare it to everest and mission space which both reportly cost 100 million. I believe Revenge of the Mummy cost 100 million too but not totally sure on that.

Anyway, you figure that at least a quarter of that 120 million will go into a replacement for Back to the Future. If they decided to level the entire building and start something new instead of just changing out films, retheming the building, and fixing all of the things that weren't working, and a whole lot more; that money can be spent fast.

I don't think that there has been a new major ride to go into Island's of Adventure since it's opening, and Universal Studios has had just Men in Black and ROTM in probably the last five years or so. When you figure rides wise, you can do both parks in a day if you have been there before. Not much to see after that inital visit...