Universal's attendance down, profits up

[crazy4wdw]

UNIVERSAL'S OPERATING PROFIT RISES

Crowds still thin but revenue is up at Universal

Scott Powers | Sentinel Staff Writer
Posted May 12, 2007

Universal Orlando's theme-park attendance continues to slide, yet the resort continues to entice more spending from each visitor, so total sales and profits increased during the first quarter of this year.

The resort's parent company, Universal City Florida Holding Co., reported a 3 percent growth in revenue, to $186.6 million, in the three months that ended April 1, according to the report it filed Friday with the U.S. Securities and Exchange Commission.

The revenue increase, and some cost cutting, allowed Universal to post an operating profit of $9 million -- more than triple what the company cleared in the first quarter of 2006.

Universal was able to boost sales despite selling fewer park tickets. Paid attendance at Universal Studios and Islands of Adventure fell a combined 2.8 percent to 2.1 million visitors, even though the quarter got a boost this year because it included the first weekend of the lucrative Easter season.

Universal attendance has been slipping steadily for most of the past two years. A drop in domestic visitors dominated the slide during the first quarter of 2007; Universal enjoyed an increase in international visitors.

And in a news release Friday, Universal hinted that the parks had a good April, since the end of the first quarter; on April 7, the day before Easter, the two parks combined for a one-day attendance record.

"We're committed to our business strategy of delivering our guests great entertainment experiences at a great value," Bill Davis, president of Universal Orlando, stated in the news release. "And we are pleased that we delivered a solid performance against our key financial indicators."

Driven mostly by merchandise sales, per-visitor spending was up 6 percent compared with the same quarter last year. The average Universal theme-park visitor spent $19.66 on food, drinks and souvenirs.

Looking forward, Universal noted that a Blue Man Group show opens next month, and a simulator ride based on The Simpsons TV cartoon will open in Universal Studios in spring 2008. Universal also has undisclosed plans for one or more other major attractions, as evidenced by the $100 million to $120 million the company has pledged to spend this year on improvements.

Scott Powers can be reached at 407-420-5441 or spowers@orlandosentinel.com.

 

[swilphil]

I wonder if their resort occupancy is up this year, along with getting extra from people who buy the Express Pass. I've only been to Universal once, and we spent most of our time at the Resort Pacific Resort instead of in the parks, as originally planned. I thought Disney deluxes were pricey until I went to book at the Royal Pacific. It was a lot of $$, but I do have to say it was so much nicer than any of the Disney resorts.

 

[ToddS]

It's funny... the tone of this story seems to imply that this is a good news/bad news type of situation for Universal. But isn't this really a win/win? If they can increase revenue while park attendance decreases, don't the less-crowded parks create a more pleasant experience for the visitor? I'd love it if Disney could find a way to reduce park attendance while increasing (or at least maintaining) revenue. Aside from increasing admission price, of course.

 

[Peter Pirate 2]

The Royal Pacific is much nicer than AKL, The Polynesian or Grand Floridian??? I beg to differ. It's a quality hotel but the AKL experience blows it away, IMO. Now the Hard Rock is nicer than Royal Pacific but still no better than the three I mentioned (I haven't stayed at Portofino), of course we all certainly get to have our own opinion.

USO just pulled 'an Eisner' in the last couple of years and cut, cut, cut so even though attendance is down profits were still up. This can't continue though and is why we're hearing rumblings of grand additions to Universal...We'll see.

 

[G8RFAN]

The analysis is volume variance versus $ variance. When looking at a company's revenues, you always want to see growth however not at the expense of your margins. When you analyze an increase in volume and attendance being down, the trend could be alarming if the decline in attendance continues. The market needs to know if the $ variance is due to an increase in ticket prices, cross marketing, expansion into a difference line of business or a repositioning of pricepoint up market for everything. Generally, if the market expected the decline due to an event consistent with the industry, or market, or a direct result of a repositioning of the "product" the corporation is not penalized.

But I agree, I love it when the parks are empty.

 

[ToddS]

Very true -- good point.

 

[Planogirl]

Harry Potter will reverse that, if only they'd get busy.

And yes, Peter Pirate, it is a matter of opinion. I love, love, LOVE AKL but I would never consider it as luxurious as any of the three Universal hotels. The Polynesian is an old, overpriced favorite of mine and to me the Grand Floridian is a poor copy of the Hotel Del but these are just my opinions. I think that Loew's is just simply good at that luxury stuff.

By the way, Portofino is the best of the lot but way too quiet for me. You should meander over there sometime.

 

[Peter Pirate 2]

I've been there (to Portofino), just never stayed and it does seem more luxurious but I just can't see RPR as more "anything" than the AKL (So I guess it's AKL that I'm still so impressed with) ... As I said I can see the argument for HRH but yes, opinions are just that. RE: The Polynesian, I agree, but I'm always a little scared to say anything bad about it around here. Shhhh.

I agree that HP would be huge, especially if they attack it with the same vigor they had when they built IOA initially.