Expansion Potentials at Citywalk

University of Central Florida STARS Harrison "Buzz" Price Papers Digital Collections 10-1-1996 Expansion Potentials at Citywalk Harrison Price Company Part of the Tourism and Travel Commons Find similar works at: https://stars.library.ucf.edu/buzzprice University of Central Florida Libraries http://library.ucf.edu This Report is brought to you for free and open access by the Digital Collections at STARS. It has been accepted for inclusion in Harrison "Buzz" Price Papers by an authorized administrator of STARS. For more information, please contact [email protected]. Recommended Citation Harrison Price Company, "Expansion Potentials at Citywalk" (1996). Harrison "Buzz" Price Papers. 151. https://stars.library.ucf.edu/buzzprice/151 *****CONFIDENTIAL***** EXPANSION POTENTIALS AT CITYWALK Prepared for UNIVERSAL CITYWALK October 1996 Prepared by HARRISON PRICE COMPANY 2141 Paseo Del Mar • San Pedro, California 90732 Phone (310) 521-1300 • FAX (310) 521-1305 TABLE OF CONTENTS Section Page 1 INTRODUCTION .............................................................................................. 1-1 2 PRESENT POSITION OF THE VENUES ON THE HILL................. 2-1 Performance Analysis ...................................................................................2-1 Capacity Analysis ....................................................................................... 2-13 Summary ...................................................................................................... 2-15 3 AVAILABLE MARKETS, ATTENDANCE AND MARKET PENETRATION ............................................................................. 3-1 The Resident Market ..................................................................................... 3-2 Tourist Market Support ................................................................................. 3-2 Total Market Support .................................................................................. 3-1 0 Market Penetration ..................................................................................... 3-1 0 Saturation ..................................................................................................... 3-11 Competitive Entertainment Centers ............................................. ~ .......... 3-15 4 SUMMARY AND CONCLUSIONS ................................................................... 4-1 Summary .........................................................................................................4-1 Conclusions ....................................................................................................4-6 I MAX 30 Potential. .........................................................................................4- 7 Other Additions ............................................................................................ 4-1 0 LIST OF TABLES Table Page 1 Universal City Attraction Unduplicated Venue Attendance Trends .............................................................................. 2-2 2 Total Attendances (Duplicated) at Universal City ....................................... 2-4 3 Universal Studios Hollywood Gross Revenues by Venue ........................ 2-6 4 Theme Park Revenue Trends by Type of Activity ....................................... 2-7 5 Universal Studios Hollywood Food Service Trends .................................. 2-9 6 Universal Studios Hollywood Merchandise Trends ................................ 2-11 7 1995 Per Capita Analysis for All Venues .................................................. 2-12 8 Aggregate (All Venues) Gross Revenues by Type of Function ............................................................................................. 2-14 9 Demographic Trends Universal City 75-Mile Ring ..................................... 3-3 1 0 Demographic Trends Magic Mountain 75-Mile Ring ........................... ;..... 3-4 11 Demographic Trends Knott's Berry Farm 75-Mile Ring ............................. 3-5 12 Demographic Trends Disneyland 75-Mile Ring .......................................... 3-6 13 Overnight Tourism to the Greater Los Angeles Area ................................. 3-7 14 Selected Characteristics to the Greater Los Angeles Area ...................... 3-9 15 Comparison of Central Florida and Los Angeles/ Orange County Market Penetrations .......................................................... 3-12 16 Attendance and Market Share Trends in Los Angeles/ Orange County Parks .................................................................................... 3-14 17 Typical Major Market I MAX Penetrations ..................................................... 4-9 Section 1 INTRODUCTION Harrison Price Company first prepared a report on the economic outlook for themed retail facilities at Universal City in 1982 for AI Dorskind. It stated that 8.2 million visits in all venues was an obtainable target for all venues of the complex and that market support suggested an initial size of 120,000 square feet of specialty shopping space. In 1990, HPC prepared a second report entitled Theme Retail Potential on Main Street at Universal City. This report concluded: ''The proposed additions on Main Street can add on the order of 5-6 million attendance to the hill (Rockplex and the themed retail segment can add 4-4 1/2 million). New major themed restaurants can add 1-1 1/2 million. Fourteen to fifteen million would appear to be a rational target for total attendances on completion of these projects. Retail demand indicated by 9 million attendance is $81.8 million. Deducting existing volume of $16.0 million indicates an unexploited incremental retail volume of $65.8 million." The present state of CityWalk is that it generated $60 million in gross revenues in 1995. and 15.3 million in total attendances, close to the above values. Its overall positive contribution to the complex on the hill in terms of image, public awareness, visitor volume, product choice, and market share is understood and appreciated. Its deficiencies in profitability and low ROI are steadily being corrected by transition to an operating and joint venture format. To some degree, it is mindful of the 1-1 Disneyland experience in 1960 when, in order to improve profitability, it was decided not to renew concession and tenancy leases five years after opening the park. In June of this year MCA requested that HPC review the expansion potentials of CityWalk once again, this time with the advantage of three years' operating experience. The proposal written in response to that request contained these tasks: CityWalk and its theater complex lead the way in defining a new concept for a mixed venue urban entertainment mix. The question before the house is how far to drive it? What is its rational expandability? The sequence of work contemplated is as follows: 1. Define attendance and revenue generation in existing Universal City elements 1990-1995, including the tour, cineplex, amphitheater, and CityWalk retail, food service and entertainment. 2. Examine the impact of CityWalk on other Universal City elements. 3. Establish the resident trading area of CityWalk and compute market size and attendance from local and tourist sources. Evaluate similar distribution in other elements of Universal City. 4. Assess what the Southern California competition is achieving in revenue generation in prime retail, entertainment, and attraction complexes. 5. Compute rational strategic planning objectives taking into account: • venue distribution • available space 1-2 • interplay and synergism of existing elements • achievable market penetration goals • balance of the mix. 6. Comment on leasing, joint venturing, and operating modes and their impact on profitability. Section 2 dissects the complex operating data of the multi-venued attraction operations at Universal City. An attempt is made to show how the venues interrelate particularly CityWalk and its impact on food service and merchandise throughout the complex. In Section 3, the Los Angeles/Orange County resident and visitor markets, attendance and market penetration performance for MCA and its major competitors and the question of saturation of the market are treated. Section 4 contains the summary and conclusions of the analysis. We appreciate the support and assistance given us by MCA personnel who supplied the operating numbers and financial history of the venues on the hill. This material is classified and will remain confidential in our records management. 1-3 Section 2 PRESENT POSITION OF THE VENUES ON THE HILL Performance Analysis Evaluating expansion potentials of CityWalk begins with an analysis of the performance and interrelationships of the various venues operating at Universal City. Particularly pertinent is an examination of the venues in operation during the critical half decade 1990-1995. Performance trends in the period 1992-1995 show the impact of CityWalk on other venues after its opening in 1993. Table 1, venue attendances (unduplicated), shows the following: • A large increase of 2.466 million in venue attendances 1992-1995 (from 6.838 million to 9.304 million) • The trigger for enhanced visitation at Cineplex was CityWalk. Cineplex attendance went from 1.586 million to over 2.1 million in three consecutive years 1993, 1994, 1995. • Attendance at the theme park held at high levels 1993-1995; 5.0 million, 4.7 million, and 4.6 million. The CityWalk attendance gain was essentially all new business. Theme park attendance was lightly cannibalized if at all. In fact, the theme park hit

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