Cinepolis plans to expand luxury cinema concept in Southland
Carlos Wellman is hoping to bring a Mexican revolution to the sluggish U.S. cinema industry.
Wellman is the U.S. point man for Mexico City-based Cinepolis, the world’s fourth-largest theater chain and Latin America’s top circuit that has ambitious plans to extend its brand of luxury cinemas to Southern California.
Cinepolis recently opened its first U.S. venue in Del Mar, Calif., investing $8 million to create San Diego County’s first luxury theater, where patrons can kick back in a leather recliner and press a button to order teriyaki beef skewers, sushi rolls or a glass of Thomas Hyland Chardonnay.
The eight-screen Del Mar theater is modeled after similar high-end movie houses that Cinepolis operates in wealthy areas of Mexico, Brazil, Colombia and other Latin American countries, and is the first of several that the chain intends to open in Southern California.
Three additional theaters are planned for next year, one currently under construction in Carlsbad, and two others in Orange County, in Laguna Niguel and Rancho Santa Margarita. Cinepolis also is negotiating deals to open theaters in at least two Los Angeles County locations: in Westlake and in the Westwood area, Wellman said.
The cinema company is gambling that consumers are willing to pay a hefty premium to watch movies — tickets cost as much as $19.50 — in exchange for the luxury experience.
That would seem to be a risky strategy given the anemic state of the economy and the fact many budget-conscious consumers have balked at rising movie ticket prices, which are already at record levels.
Cinepolis’ expansion into Southern California, and possibly elsewhere across the country, is also surprising in that much of the growth in the theater industry is happening outside the U.S. Overseas ticket sales account for nearly 70% of Hollywood’s annual box-office receipts.
The expansion also comes at a time when theatrical attendance in the U.S. and Canada has been stagnant the last seven years. So far in 2011, the number of tickets sold has fallen nearly 6% and revenue is off 4%, despite higher ticket prices. Analysts have pointed to several factors, including a weaker crop of movies, fewer studio releases, higher ticket prices and longer-term challenges, such as consumers spending more time playing video games and watching movies in their homes.
“It sounds like a risky endeavor to me, given the current economic climate and the fact that there are more [entertainment] choices available to consumers,” said Bruce Austin, a communications professor at the Rochester Institute of Technology. “Movie theaters with an $8 ticket are finding it difficult to entice people. If it’s $19, the food better be good.”
But Wellman contends many American consumers have stopped going to theaters because they are “run down” and “dated,” and that they would be willing to pay a premium for something far better than what they would experience at the local multiplex.
“We’re setting a new standard,” he said, munching on a chicken Caesar salad wrap in a cafe at the Del Mar theater. “It’s more like first-class entertainment.”
Theaters have been experimenting with new ways to lure customers by offering VIP services, such as reserved seating and in-theater dining. ArcLight Cinemas, a subsidiary of Los Angeles-based Pacific Theatres, has been expanding its premium cinemas, most recently to San Diego. Australian luxury theater operator Gold Class Cinemas brought its high-end brand to Pasadena nearly two years ago, serving gourmet food and drinks to patrons watching movies in plush recliners.
Cinepolis is hoping to capitalize on the trend that has worked well for the circuit in other countries. The theater chain pioneered its luxury cinema concept in Mexico City in 1999 and has since expanded to about 150 screens across Latin America.
Luxury theaters generally outperform conventional theaters in the circuit, generating 9% of the profits even though they account for 6% of the roughly 2,600 screens, said Alejandro Ramirez Magana, chief executive of Cinepolis.
“We’ve proven the concept and it’s worked well in every single market we’ve tried, so there’s no reason in our mind it shouldn’t work in the U.S.,” Magana said, adding that Cinepolis may eventually roll out similar theaters in other states.
Since its opening in July, the Del Mar theater has outperformed expectations, operating at close to full capacity, Wellman said.
The all-digital theater includes a large hotel-like lounge area and lobby with couches and touch screen monitors showing movie trailers, a cafe serving coffee and desserts and a full bar with specialty drinks such as Chili Mango Martini. The auditoriums, two of which serve alcohol, feature reclining leather seats, each with its own swivel table and a button to call a waiter. Patrons can reserve seats online and pick up their tickets at the concierge desk or with the swipe of a card.
Wellman said most moviegoers understand that you pay for what you get, but he acknowledged receiving some complaints about the high ticket prices.
“It’s a great idea, but it’s not that affordable for most families,” said Janet May, 64, a retired occupational therapist from Solana Beach who stopped by the theater with a friend on a recent weekday afternoon.
But Rancho Santa Fe resident Lara Eggers, who went to the theater with her husband to watch “Moneyball,” thought the ticket price was worth it.
“It was amazing,” said Eggers, 42. “You can watch a movie at home in the comfort of your living room, so you need theaters like this to give you a reason to come out of the house.”
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