Two interesting snippets from today’s US newspapers discussing Orlando’s ongoing efforts to improve its “Attractions” to ensure the region’s continued strong growth from well-over 50,000,000 (50 million!) visitors a year today to who-knows what in the years to come?
From first article is from The New York Times and discusses the ever-evolving Theme Parks. The second is from today’s Orlando Sentinel and discusses the expansion and renovation work at Orlando shopping paradise, The Florida Mall…
Clash of the Theme Parks
ORLANDO, Fla. – Pull down your lap bars: Universal Studios, the theme park chain now controlled by Comcast, is rolling out new weapons in its battle against Walt Disney Parks and Resorts – and Disney is fortifying its defenses.
Universal Studios Hollywood this week will introduce a 3-D “Transformers” ride, at an estimated cost of $100 million.
Universal’s parks have always languished in the shadow of mouse ears, and that will not change anytime soon. Disney has eight parks in California and Florida that attract over 73 million visitors each year, with summer the busiest season. Universal operates three parks, with annual attendance totaling about 18 million.
But Universal is starting to look a lot less puny. A $265 million Harry Potter-themed addition to its resort here sent 2010 attendance soaring 30 percent over the year before, draining attention from Walt Disney World in the process. Universal is now racing to replicate the attraction at its parks in California and Japan while expanding the boy wizard’s presence in Orlando.
To maintain momentum, Universal – with more Comcast money – is introducing a swarm of offerings. A major 3-D ride themed to Michael Bay’s “Transformers” movies opens this Friday at Universal Studios Hollywood, at an estimated cost of $100 million. New draws at Universal Orlando include a refurbished Spider-Man ride, a lavish parade, a high-tech fountain and pyrotechnics show and a ride based on “Despicable Me.”
“There is an incredible sense of energy and forward motion around here, no doubt about it,” said Thomas L. Williams, chief executive of Universal Parks & Resorts.
Disney is watching all of this with a clenched jaw. Although it has publicly dismissed a Potter-enhanced Universal as being even a remote threat, arguing (accurately, analysts say) that a rising tide in Orlando lifts all boats, Disney is privately concerned about preventing market share erosion on both coasts.
Competition with Universal, for instance, factored into Disney’s decision to beef up a previously planned expansion to its Magic Kingdom park in Orlando and spend an estimated $500 million on an “Avatar”-themed addition to its nearby Animal Kingdom park. The $425 million Magic Kingdom expansion opens in phases starting this year. “Avatar” construction is set to begin next year and open in 2015. Design details are secret, but James Cameron, who directed “Avatar” and is working on two sequels, has said part of the project will include a ride that simulates flight.
Disney declined to comment for this article.
Theme parks represent one of the few areas of stable growth outside of cable television for media and entertainment conglomerates like Comcast and Disney. Parks can be vulnerable to swings in the economy and require costly and continuous investments in new rides; escalating labor costs threaten margins. But for a media industry challenged by piracy, a fading DVD business and broadcast networks that continue to struggle, parks have emerged as a bright spot. For reasons that economists can’t quite pin down, Americans have not cut back on expensive theme park vacations the same way they have pared retail spending and other discretionary purchases.
Comcast’s movie division, for instance, recorded operating cash flow of only $6 million in the most recent quarter; the current quarter is also looking troubled, with the costly “Battleship” taking in a weak $25.4 million in theaters over the weekend. Comcast’s broadcast network, NBC, recorded an operating cash flow loss of $10 million in the recent quarter.
In contrast, Universal’s parks had operating cash flow of $157 million in the last quarter, a 17 percent increase from the same period a year ago. For 2011, the parks supplied 8 percent of NBCUniversal’s total revenue but made up 20 percent of its total operating cash flow, the second-largest contributor behind cable television.
Disney reported similar results May 8. While the company’s movie studio had a loss of $84 million – mostly because of a huge write-down for “John Carter” – operating income at its theme parks surged 53 percent, to $222 million.
The rivalry between the two parks operators, which dates to the late 1980s, when Disney scrambled to open its Hollywood Studios park here to beat Universal’s planned arrival, next moves to California. Universal will soon open its “Transformers” ride; Disney will unveil a $450 million “Cars”-themed addition to its California Adventure park in Anaheim on June 15.
Disney bid for the Harry Potter rights but balked at the degree of creative control sought by the author J.K. Rowling; cost was also an issue.
Comcast gained control of the Universal parks last year when it paid $13.75 billion to General Electric for 51 percent of NBCUniversal. Comcast quickly doubled down on the business, spending $1 billion to buy a stake in Universal Orlando owned by the Blackstone Group. G.E. and Blackstone were both more interested in wringing cash from the parks than expanding them; selling them entirely was regularly on the table.
But Comcast is different. “We’re really feeling the love,” said Mr. Williams, Universal’s chief.
Comcast has increased spending on the parks – by how much it won’t say – and is betting on strong international growth. Universal announced a deal in April to open a park in Moscow by the end of the decade. The company, which opened a park in Singapore two years ago, also has resorts in the works in South Korea and Dubai; it is pursuing a deal in China.
Stephen B. Burke, a Comcast executive vice president and chief executive of the NBCUniversal unit, spent over a decade at Disney, working for part of that time as a senior parks manager. Mr. Burke, who was recently in Orlando to discuss plans to promote Universal across the Comcast empire, told analysts in a recent conference call that he was “very bullish” on the theme park business.
“Comcast is pretty excited about spending money there because they see a lot of potential growth,” said Doug Mitchelson, a media analyst at Deutsche Bank. Mr. Mitchelson estimates that Comcast will spend $150 million a year on improvements for at least the next five years. Universal’s previous owners in many recent years kept spending at the basic maintenance level, estimated at about $50 million annually.
At the moment, Universal is particularly hopeful that “Transformers” will continue an upswing at Universal Studios Hollywood, which is still best known for its tram tour of the Universal Pictures back lot, a feature that first opened in 1964. The Hollywood property in 2010 opened a new “King Kong” attraction and attendance jumped 26 percent over the year before.
The 3-D “Transformers” ride, which ThemeParkInsider.com called “among the very top rides in the world” in a review, could move the needle again. The attraction, which replaced an antiquated one built around the 1991 film “Backdraft,” was designed in conjunction with Mr. Bay and takes riders on a (perceived) high-speed adventure through the streets of Chicago, where good alien robots are engaged in a ferocious battle with evil ones.
Riders wearing 3-D glasses sit in motion simulators, which pivot, undulate and vibrate while moving through a 60,000-square-foot building on a track, stopping in front of 14 screens that tower up to 60 feet in the air. Transformers imagery is projected on the screens at four times the resolution of standard high-definition media, making it seem that the robots are real as they pull you into grinding gears, drag you through a skyscraper and blast weapons at your head.
On a tour last month, the ride’s show producer (and a former Disney employee), Chick Russell, pointed out how “tactile effects” – water, wind, heat, smoke – are designed to occur in tandem with 3-D action sequences.
“We’re the best, we think, at creating the world’s greatest theme park attractions,” Mr. Russell said as he hopped out of the ride vehicle.
Those sure sound like fighting words.
and from the Sentinel…Florida Mall Expands!
Simon Property Group Inc. announces a new renovation plan and several new retailers for The Florida Mall.
The mall owner said it plans to tear down and remove the 110-foot block structure that houses Dylan’s Candy Bar in the mall’s Center Court and remodel that space to put in several new tenants. The new tenants include an 800-square-foot Wasabi Sushi restaurant and a 250-square-foot Pinkberry frozen yogurt shop, both slated to open in the fall.
“The property will undergo a complete transformation, which will better serve the needs of our customers and visitors, whether they are here for shopping, dining or entertainment or just to enjoy a welcoming and comfortable environment,” said Mall Manager Sal Saldana in a prepared statement. “We are thrilled to welcome the new tenants to our diverse retail lineup and offer these great options to our shoppers and visitors.”
Additionally, iFix and Repair – offering maintenance for mobile devices, gaming consoles, tablets, MACs and accessories – is slated to open an 800-square-foot store in the Nordstrom wing in the fall, while Signature Day Spa will open a 1,761-square-foot location in the former Motherhood space in the Sears court.
Meanwhile, the existing 4,000-square-foot Victoria’s Secret store expects to complete an expansion to 12,796 square feet by July. And New York & Company relocated to a space next to the M&M’s store in the Macy’s wing.
Clarks is expected to complete a full remodel to showcase its latest store concept and move to the 2,250-square-foot store formerly occupied by New York & Company later this month.
The Florida Mall’s last major renovation was three years ago, when Simon Property Group (NYSE: SPG) tore down the former Lord & Taylor store and reworked it into several retailers, including H&M, Zara and Forever 21, as previously reported by Orlando Business Journal.
Shop (even more) until you drop – and then go for a refreshing swim in the Florida Sun!
Bliss!
Bill Cowie
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