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Universal posts record profit
Earnings rise to $35.3 million despite attendance drop
Scott Powers | Sentinel Staff Writer
Posted April 1, 2006
Universal Orlando overcame a steep drop in attendance last year -- which it blamed in part on Walt Disney World's aggressive marketing -- to earn record profits.
The parent company, Universal City Development Partners, on Friday reported a 3 percent improvement in operating profit in 2005, to $141 million. After paying debt interest, Universal finished with a net income of $35.3 million, up from $22.5 million in 2004.
Yet Universal Studios and Islands of Adventure suffered a combined 11 percent plunge in paid attendance, to 10,772,000, according to the annual report. That drop is even steeper than the 8.5 percent estimated by a widely cited trade magazine, Amusement Business.
Universal offered several reasons for the smaller crowds: The year 2004 brought record attendance, which was tough to sustain in 2005. Gas prices kept people away. Consumer sentiment weakened. And Disney's big 50th-anniversary promotion and new flexible ticket plans lured people away.
Still, the privately held Universal -- which in 2004 became part of General Electric Co. -- made money partly by getting the average visitor to spend 8 percent more on everything from soda to T-shirts. It also earned 6 percent more from such sources as hotel contracts and corporate sponsorships. And Universal cut operating costs nearly 3 percent, employing 700 fewer people in 2005.
"Our positive financial performance during 2005 is a credit to the strength and dedication of our management team and our employees," Bob Gault, president of Universal Orlando Resort, said in a written statement. "During a year that included some attendance challenges, we were able to control our costs and increase our revenue-per-guest so that we actually grew our operating income. We are a stronger business today."
Company officials would not comment further.
Universal hopes to boost attendance this year with a new advertising campaign, its own flexible ticket plan and a "kids get in free" deal.
Several industry observers said the company needs to, because attendance is the driving factor of theme-park income.
Dennis Speigel, president of the Cincinnati-based International Theme Park Services, said Disney's big campaign has been "knocking down attendance" at all competing parks.
"Plus, Universal's been going through a difficult time. I think with the new ownership there's certainly been a strong undercurrent [of talk] in the industry that they're not supporting the parks very well," he said.
Universal officials have denied that support is lacking. And the report says the company intends to spend $65 million on improvements this year, up from $30 million last year.
Still, the 2005 report states that Universal Orlando employed 12,900 workers, while the previous one reported 13,600 employees.
Scott Powers can be reached at spowers@orlandosentinel.com or 407-420-5441.
Earnings rise to $35.3 million despite attendance drop
Scott Powers | Sentinel Staff Writer
Posted April 1, 2006
Universal Orlando overcame a steep drop in attendance last year -- which it blamed in part on Walt Disney World's aggressive marketing -- to earn record profits.
The parent company, Universal City Development Partners, on Friday reported a 3 percent improvement in operating profit in 2005, to $141 million. After paying debt interest, Universal finished with a net income of $35.3 million, up from $22.5 million in 2004.
Yet Universal Studios and Islands of Adventure suffered a combined 11 percent plunge in paid attendance, to 10,772,000, according to the annual report. That drop is even steeper than the 8.5 percent estimated by a widely cited trade magazine, Amusement Business.
Universal offered several reasons for the smaller crowds: The year 2004 brought record attendance, which was tough to sustain in 2005. Gas prices kept people away. Consumer sentiment weakened. And Disney's big 50th-anniversary promotion and new flexible ticket plans lured people away.
Still, the privately held Universal -- which in 2004 became part of General Electric Co. -- made money partly by getting the average visitor to spend 8 percent more on everything from soda to T-shirts. It also earned 6 percent more from such sources as hotel contracts and corporate sponsorships. And Universal cut operating costs nearly 3 percent, employing 700 fewer people in 2005.
"Our positive financial performance during 2005 is a credit to the strength and dedication of our management team and our employees," Bob Gault, president of Universal Orlando Resort, said in a written statement. "During a year that included some attendance challenges, we were able to control our costs and increase our revenue-per-guest so that we actually grew our operating income. We are a stronger business today."
Company officials would not comment further.
Universal hopes to boost attendance this year with a new advertising campaign, its own flexible ticket plan and a "kids get in free" deal.
Several industry observers said the company needs to, because attendance is the driving factor of theme-park income.
Dennis Speigel, president of the Cincinnati-based International Theme Park Services, said Disney's big campaign has been "knocking down attendance" at all competing parks.
"Plus, Universal's been going through a difficult time. I think with the new ownership there's certainly been a strong undercurrent [of talk] in the industry that they're not supporting the parks very well," he said.
Universal officials have denied that support is lacking. And the report says the company intends to spend $65 million on improvements this year, up from $30 million last year.
Still, the 2005 report states that Universal Orlando employed 12,900 workers, while the previous one reported 13,600 employees.
Scott Powers can be reached at spowers@orlandosentinel.com or 407-420-5441.
Way to go somebody! 
