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ICSC Convention Report ‘Entertainment Convergence’— the buzzword of
the millennium By Judi Biederman Las Vegas, Nevada— The International
Council of Shopping Centers held its annual spring convention in Las Vegas from May 25-27,
1999. Conventioneers who were lucky enough to attend the seminar offered on “The
Future of Entertainment in Shopping Centers” got an earful of useful and interesting
information from the power panel consisting of: John L. Gerdes, director of retail
properties for L&B Realty Advisors based in Dallas; David L. Malmuth, senior vice
president of development, TrizecHahn Development Corporation; Robert Snowden, executive vice president,
Entertainment Enterprises LLC; Kenneth Howarth, executive vice president, worldwide sales
and marketing, Imax Corporation; and Robert L. “Chip” Harris, president,
Entertainment Properties Trust. Gerdes, acting as moderator, pointed out that
the discussion about the new concept of entertainment centers was well placed in Las Vegas
as the city is the center of entertainment center development. While it offers world-class
shopping and entertainment venues, Vegas has an edge on the rest of the world because of
its gambling opportunities, which make it a tourist destination long before visitors enjoy
the wealth of other activities offered. The rest of us, he said, need to create
entertainment centers without that gambling edge, and in order to compete successfully,
they will need to be exciting, promote return traffic, and offer high profits. Malmuth said, “People are not just
interested in buying things. They want an experience,” adding that the keys to
providing successful experiences are authenticity, fun and participation. Americans have
money to spend and will spend it on entertaining themselves. In fact, statistics show that
people in the United States spend more on entertainment than on health care or clothing. Pointing to TrizecHahn’s entertainment
projects under current development, which include the Desert Passage at Aladdin in Las
Vegas and Hollywood & Highland and Paseo
Colorada, both in California, Malmuth said, “There is no substitution for a great
location.” In choosing a location for an entertainment center, it helps if the area
offers a one-of-kind opportunity, but developers should also capitalize on the site’s
intrinsic value, literally asking, ‘What is inherently great about this
location?’ Focus should be put not only on the financial value of an entertainment
center, but also on its human value, by making an attempt to figure out what is needed in
the area and what people want. Successful projects will be captivating for locals as well
as for tourists. Snowden, who was general manager of Constructa
Inc.’s CocoWalk in Coconut Grove, Florida and is now heading up Entertainment
Enterprises LLC’s Neonopolis in Las Vegas, said that successful urban revitalization
projects must combine the elements of entertainment, shopping, dining, sports and culture.
Because the continued growth of e-commerce is making inroads into the traditional retail
arena, the entertainment center industry is and will continue to face a real challenge.
“More and more things will be done at home,” he said, adding that shopping via
the Internet used to be appealing because it was convenient. “Now it’s about
price, too,” Snowden said. “But we’re building for people who want to get
out of the house. When they need to get out, they need something special.” In other words, people want— even
need— to be entertained. It’s not a new human necessity nor is the concept of
providing a public venue for entertainment a modern one. Howarth noted that the human race
has a history of patronizing places that offer diversion, offering the example of the
Coliseum in Rome as perhaps the earliest entertainment center. “But don’t think
of what they are or were, but what they can be,” he said. We shouldn’t forget
our history, but we should take the best of the old and the greatest of the new and
continue to redefine and reinvent. Successful concepts can include brand-new facilities or
redeveloped older sites, as has been done so successfully with projects like the Getty
Museum in Los Angeles and the Trocadero in London. Today, the successful entertainment
center will offer the dual lures of entertainment with retail legitimacy so that patrons
can extend their experience. In the United States, going to the movies is one
of the oldest and best known entertainment venues. However, even that old entertainment
standby is changing as the market changes. The friendly neighborhood theater of yesteryear
is becoming a thing of the past. Tomorrow’s theater will be huge, and it will be
placed in a venue that offers multiple movies as well as myriads of other ways to spend
leisure time and money. Howarth said that the development of multiplex
theaters is the future of the cinema exhibition industry. Current figures show that
multi-screened theaters already take in 50 percent of the American box office. The
large-screen format is the strongest slate in the history of cinematic history, and there
is a whole new generation of 3-D movies yet to come. Where movie theaters used to be
anchor tenants for shopping malls, today they are taking the lead in building their own
facilities that are then surrounded with ancillary tenants, including specialty retailers.
This happens because the combination of a movie theater with shopping facilities offers
strong retail opportunities. Howarth cited industry statistics showing that the average
18-screen theater attracts two million visitors; 73 percent of moviegoers in shopping
plazas use other facilities, restaurants being the major use; and 50 percent of theater
patrons can be tempted to shop before or after seeing a movie. Empty nesters, who often
have money to spend, are the fastest growing market for theaters. Cinema exhibition, while
it is a strong and growing industry, will benefit from the expanding combination of
entertainment and retail into entertainment centers because the mix of venues appeals to a
broader demographic base. Harris agreed that multiplexes were the future
for cinema exhibition facilities but went even further by predicting that small theaters
simply won’t be built anymore and that closings of existing small theaters will
accelerate. Stadium seating is becoming necessary to compete successfully, he said, and
the diversification and upgrade of food offerings in and around theaters will become a key
point in multiplex competition. Theaters and eateries require parking, which will also
become more important in the planning and development of successful new movie/restaurant
facilities. Such amenities will make it more
expensive to build new theaters, so financing is also becoming an issue. “Developers
have to get financiers to focus on the income statement, not the balance sheet,”
Harris said. “It’s hard to find a theater that went dark during its initial
lease term.” For now, older theaters may be closing, but that is because there is a
better use for the land in a new market. “Older theaters will be converted or changed
into a new experience,” he said. The new market experience must include a mix of
entertainment and retail opportunities, Harris said, and the presentation must be
entertaining in order to compete with e-commerce, television and home video offerings. But
home entertainment will never replace a well-designed, good entertainment center. If the setting is right and the opportunities
are varied and interesting, we will go out to shop and be entertained, too. As Howarth
proclaimed, “entertainment convergence is the buzzword of the millennium.” Contact information: John Gerdes, L&B Advisors, Inc. (214) 989-0676 David Malmuth, TrizecHahn Development 619-546-3376 Robert Snowden, Entertainment Enterprises LLC 702-477-0470 Kenneth Howarth, Imax Corporation 905-403-6500 Chip Harris, Entertainment Properties Trust 310-286-9955
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