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SHELLY GARCIA Staff Reporter Universal Studios Inc., having already agreed to slash the size of its expansion by 44 percent, is digging in its heels as residents call for an even bigger cut. A new round of public hearings on Universal’s planned $1 billion expansion gets underway this month, and surrounding neighborhood groups concerned about traffic and noise are getting ready for a major push to shrink the project. But Universal officials say they’ve already given up all the space they can. The company needs to grow in order to meet the demands of a fickle marketplace continually on the lookout for new attractions, they say. “We’re going to do everything possible to make this work for the community, but it also has to work for us,” said Helen McCann, Universal’s vice president overseeing the master plan. With 5.4 million visitors last year, Universal Studios Hollywood ran a distant second to Disneyland, which attracted 14.3 million visitors, among Southern California theme parks, according to International Theme Park Services Inc., a Cincinnati-based group that consults to the industry. If it is to compete, Universal needs the space to develop a broader array of attractions, said Dennis Speigel, the consulting firm’s president. “This is an extremely competitive market,” Speigel said. “Expansion is a necessity.” At its current size, Universal can only hope to attract visitors for a single day, and that makes the park especially vulnerable to all the vagaries of the marketplace the weather, the economy and the amount of leisure time available to consumers. Worse yet, without a wide variety of attractions, visitors tend to tire of the park. The opening of Jurassic Park The Ride in June 1996, illustrates the point. Attendance at Universal Studios Hollywood was bolstered by the opening of the popular ride, but the numbers tapered off as the attraction entered its second year. By its fiscal year ended June 30, 1998, Universal reported that paid attendance at Universal Studios Hollywood had declined 13 percent. In its annual report, the company said, “The attendance shortfall was caused by the impact of El Ni & #324;o, as well as difficult comparisons with the prior year, which benefited from the opening of Jurassic Park The Ride in June 1996.” But if Universal can provide both the attractions and the accommodations so that visitors treat the theme park as a distinct destination, the company can hope to snare a greater share of the market of visitors and keep them for stays of several days or more. “As most theme parks recognize, to keep the crowds coming, you have to constantly keep fresh and constantly expand,” said Richard Giss, a retail consultant with Deloitte & Touche LLP. “The idea of expanding retail and expanding the park at the same time makes it more of a destination stop.” Universal is seeking to add 3.2 million square feet to the development, with about half of that square footage devoted to recreational uses and the remainder devoted to office and studio additions. The company hopes to build two hotels, enlarge its theme park by 388,000 square feet, add 250,000 square feet to CityWalk, increase its office space by 1,169,000 square feet and add 450,000 square feet of studio production space. The idea is to capitalize on Universal’s roots as a movie studio, in an effort to distinguish itself from Disneyland and other competitors. “We want to be better and different from Disney,” said McCann. “Our strength is based on movie products. This is the only place where people can come and see the movies being made.” A key component of the plan is the addition of two hotels with 600 rooms each. The hotels will be located so that visitors can look out over the studios and back lots. “The majority of people come for the day and stay elsewhere,” said McCann. “What we’d like to do is extend that to a three-day length of stay.” Universal’s expansion proposal returns to public view this month when Los Angeles city and county planning officials hold a series of public hearings to gather responses to the final Environmental Impact Report for the project. Community groups are expected to make several requests, including a greater role in monitoring the progress of the development. Homeowner groups also have joined with labor unions in asking that they be allowed to review the work periodically, to make certain that additional traffic and noise generated by the project is properly mitigated. “Today, all that’s in the (master plan) is, they’ll produce an annual report which people can comment on. But big deal, it doesn’t change the development agreement if things aren’t working,” said Tony Lucente, president of the Studio City Residents Association, one of the groups opposing the development. Residents, who earlier gave their preliminary approval to the revised size of the project, also are expected to ask Universal to cut another 90,000 square feet from the development. Universal has already cut its hotel expansion by 63.5 percent and eliminated completely plans for a second theme park. McCann called the decision to eliminate the second theme park “painful and difficult,” but she insists that Universal can achieve its objectives with the plan as it now stands. “It retains the key elements we’re seeking the plan for,” McCann said. She said each part of the development the studios, the entertainment attractions and CityWalk will help to strengthen the other components. “The whole idea is, everything we add should be greater than the sum of its parts,” she said. Consultants in the entertainment industry say Universal is wise to focus on its heritage of movie making. This summer, when Paramount Pictures produced a show based on its blockbuster film “Titanic,” for example, business at its theme parks increased dramatically, according to Speigel at International Theme Park Services. But others point out that Universal is likely to have an uphill battle in Southern California regardless of its expansion. “Disney has pretty much written the book on theme park operations,” said Brian Eisenbarth, a portfolio manager with Collins & Co., an investment brokerage in San Francisco. “The thing about that industry is, you’re either No. 1 or you’re struggling to catch up.”

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