Bumpy rides: Universal tries to give studio tour fresh face.

WITH few big hits of late, the crow's feet starting to show and flashier newcomers stealing its scenes, the Universal Studios Hollywood theme park is resorting to time-honored strategies veteran stars use to stay in the spotlight.

It's getting a facelift, leaning on some friends with cash and ratcheting up the buzz with high-profile public events.

Universal Studios Hollywood is launching an overhaul on June 26, coinciding with new marketing campaigns and an ambitious sponsorship drive.

The moves are designed to help the 44-year-old park--a unique but aging amalgam of behind-the-scenes studio tours, thrill tides and attractions--which has seen its attendance drop while the Southland's other theme parks are seeing more visitors. Many of the park' s attractions are more than 10 years old and showing their age, including "Back to the Future," "WaterWorld" and "Terminator 2: 3D." Some of them have limited appeal to prospective young park-goers.

Universal Hollywood saw a 6 percent attendance drop last year, luring less than 5 million park visitors. Disneyland and Magic Mountain continued to see attendance grow, posting respective 8.5 percent and 5 percent increases over 2004, according to Amusement Business and Economics Research Associates.

Ron Herman, senior vice president of partnership development for Universal Parks & Resorts, said the key to the plan is to land the kinds of sponsors that will appeal to Universal's target audience, which Herman described as "fun loving, family oriented" types who tend to be a little bit ahead of the curve in terms of electronics and gadgets.

"It is a chance for us to get out there to new consumers," Herman said, adding that sponsors would undertake promotional efforts to drive consumers to the park. "Media promotions are good for us, and we do see an uplift in attendance when sponsors do promotions."

The park is making a simultaneous advertising push: It just signed with a new agency, L.A.-based davidandgoliath. Universal Hollywood spent $7 million on advertising in 2005, according to TNS Media Intelligence, a figure that pales when compared to the $45 million spent in 2004 by its sister park, Universal Orlando Resort in Florida, according to Nielsen Monitor-Plus. The difference is that the Florida theme park is considered a "destination site," drawing long-distance travelers for multi-night stays. At Universal Studios Hollywood, a substantial number of visitors are from Southern California.

Revving up

Whoopi Goldberg has signed on to become the voice of the park, appearing as a celebrity spokesperson via video displays on all the tour trams.

NBC Universal's Universal Parks & Resorts, which includes Universal Studios Hollywood and the much larger Universal Orlando, has hired Velocity Sports & Entertainment to bring in family-friendly park sponsors. The firm is hoping to land four or five long-term deals a year.

The park presently has a handful of sponsors, including Volkswagen, Coca Cola, Nestle's Arrowhead water, MasterCard and Chase Bank. Sponsorship revenues currently hover between $6 million and $7 million for the parks on both coasts.

Most of the deals go back at least four years, like Arrowhead and MasterCard, some as long as seven, like Coca Cola. Volkswagen is in the second year of its five-year, $200 million product placement deal, which extends across all of NBC Universal's properties.

"This is not a quick-hit deal for a sponsor," Herman said of the park's partnership terms. "This is all multi year, at least three to five years, and it's always a very significant startup investment for them."

Appropriately, the parks' efforts will target tech-related companies, who can supply a stream of new toys for consumers, which can be integrated into rides, shows, interactive displays, and park shops.

"The tech sector is most interested in getting their products in front of consumers fight now, because they have so many new things to put in front of people," Herman said.

The centerpiece of the makeover is the debut of an attraction based on "The Fast & Furious" film franchise, involving a high-speed street race. Some of the tour's classic elements, including a flash flood and dinosaurs, will receive an update as well.

Herman said that some of the park's older attractions remain among the most popular ones, and "can live for quite a few years. "But we are always looking at updating the rides and attractions, and we spend millions; it is very costly," Herman said. "There are major players in this (theme park) space and it is very, very competitive. We look for studio franchises that have a proven track record."

One challenge stems from the fact that Universal's film production unit has not been churning out theatrical hits of late. Hit films make the most enticing rides. One of the park's newer attractions, for example, is based on the 2004 film "Van Helsing," which did not fare well at the box office. The park sometimes employs barkers to lure visitors in to what is essentially a haunted house.

Narrow margins

So will the new attractions, sponsorship deals and increased advertising be enough to turn the tide?

"What's new in a park is the hook," said Beth Robertson, vice president of communications for the International Association of Amusement Parks and Attractions (IAAPA). "That brings the parks the most effective marketing; it is what will bring people in."

Herman said Universal Hollywood is expecting a better year attendance-wise in 2006, an anticipation that's in line with the general industry expectations.

"Theme parks in general have been doing well. The economy is flush, airfare is still cheap and people are taking vacations. Fuel prices have not yet affected the gates," said analyst David Miller of Sanders Morris Harris.

Profit margins are thin in the amusement park business, however, and not all park owners may be keen on making the hefty investment needed for upgrades and maintenance that will keep aging properties up-to-date.

"Typically in that industry, revenue and traffic growth is done through building new attractions and tides, and that's a significant upfront investment before you get any return," said Peter Winkler, managing director of PriceWaterhouseCoopers' media and entertainment practice. "If larger, diversified companies are looking at the bottom line, they're probably going to look at other ways to market themselves and increase attendance without doing that."

Winkler said PriceWaterhouse is projecting about 4 percent growth in the theme park sector over the next five years, just a bit less than the 5 percent projected for the overall media and entertainment industry.

"It's not easy to find growth in traffic and revenues," Winkler said.

And for such little return, not all park conglomerates may view large, long-term investment in the parks as worthwhile.

Last week, CBS sold its amusement parks to Ohio-based amusements company Cedar Fair LP for $1.2 billion, part of CBS's strategy to rid itself of non-core assets.

Cedar Fair already owns amusement parks including Knott's Berry Farm in Anaheim.

"Cedar Fair is a very big believer in reinvestment in their parks," Robertson said. "They are spending $50 million to $60 million each year on their seven properties. That's what it takes; you will see that really in the repeat business and attendance."

CBS' parks included Great America in California and Kings Dominion in Virginia, which generated about $420 million in revenues last year.

Because the theme park business is not high growth, but is solid and steady, it can be attractive to private equity firms, Winkler said. "There are going to be mergers and acquisitions in this industry area."

Theme Parked

Universal's attendance fell
while rivals' gained in 2005

Magic Mountain        +6%
Disneyland          +5.5%
Universal Studios     -6%