Is Luxury the Ticket?

By Lisa Takeuchi Cullen/Boca Raton

It's a torpid summer night in Florida, the kind made for watching DVD movies, lying motionless in refrigerated living rooms. Yet here is Eddie Ventrice, 43, tie off, shirt untucked, sprawled in the VIP section of the Muvico Palace theater for a 7:05 showing of War of the Worlds. Sure, he's got a 60-in. set at home as well as a 40-in. flat screen, not to mention a wife and kids. Sure, his ticket cost $18. But here he gets to hang with two buddies and watch killer aliens on the big screen. There's a lobby bar with a martini menu and a restaurant serving mahimahi. Says Ventrice, with eyes glued to a pre-movie American Express commercial starring Robert de Niro: "It's definitely worth it."

It has been a torpid year for Hollywood and, by extension, for most movie theaters. Attendance is down 10% from last year. Theater owners and industry execs blame the drop not on this year's bombs but on last year's hits, namely Mel Gibson's The Passion of the Christ and Michael Moore's Fahrenheit 9/11, which together made up the $500 million box-office difference. But so-so selections only remind moviegoers of the other reasons they're avoiding movie theaters these days: double-digit prices, irritating commercials and that imbecile down front with the Mariah Carey ringtone. As a result, the biggest chains are reeling. Market leader Regal Entertainment Group's stock is off 10% this year, and poor results have pushed rivals AMC Entertainment and Loews Cineplex Entertainment into a merger.

The demanding tastes of moviegoers have inspired a few upstart cinema chains, however, to try a different script. By building extravagant theaters, adding family events and offering plush amenities, those exhibitors are enticing viewers back--even at higher prices. In a down market, the boutique theater chain Muvico, a Fort Lauderdale, Fla., company with 12 theaters in three states, has managed to boost attendance 2% this year. National Amusements, run by Viacom heir apparent Shari Redstone, is expanding its upscale Cinema de Lux brand of theaters, which sells 35% more tickets per theater than its sibling brands. At Pacific Theatre Co.'s swinging ArcLight Cinemas in Los Angeles, attendance has swelled 25% over the past two years. Says Paul Dergarabedian, president of Exhibitor Relations Co., a box- office--tracking firm in Encino, Calif.: "It's counterintuitive--if attendance is down, why would you invest more in a theater?--but this template is one that is working."

It's working for Hamid Hashemi, CEO of Muvico. The Iranian immigrant began accumulating Florida cinemas in the 1980s. "I thought, What an easy business," he says. "The movies are made by someone else. You sell popcorn. Easy!" But when a major chain opened a rival screen down the street and put his first theater out of business, Hashemi realized he had to offer what the big guys didn't. "At the end of the day, you all get the same 35-mm tape," he says. "What sets you apart is how you package it."

The package at the Paradise in Davie, Fla., is an Egyptian-themed extravaganza. Moviegoers follow the purple-tiled pattern of the Nile between hieroglyph-covered pillars into the lobby. Parents can leave kids in supervised playrooms. Inside the auditoriums, guests navigate wide aisles to reach red-velvet seats. At the Boca Raton Palace, Premiere customers--21 or older, please--get their own entrance to a chandeliered bar and restaurant that serves Vietnamese crab-stuffed artichoke ($16) and Black Angus beef fillet ($32). The concession stand has sushi and Taittinger Brut.

Hashemi says that privately held Muvico posted revenues of $130 million last year. And with plans to add three or four theaters a year, he predicts revenue growth of 30% to 40% annually. Concessions, which typically make up 25% of exhibitors' sales, add up to 33% of sales at Muvico; the Palace restaurant alone grosses $4 million a year. Of course, costs are higher too for the exhibitor and moviegoers, who are charged up to double the average ticket price for the experience.

Still, they come. "The idea is to make the theater itself a destination," says Redstone, president of National Amusements, an 86-theater chain that also controls Viacom. Redstone, 51, was named vice chairman of Viacom in July but still spends 60% of her time running the privately held cinema business. "It's my love," she says. Redstone takes particular pride in the growing number of screens being relaunched under Cinema de Lux, which was based on a Los Angeles prototype called the Bridges. At the sleek, modern cinema, couples cozy up around lamplit tables in the hip Lounge 12 bar, sipping themed cocktails tied to current movies. Seats in the VIP Directors' Halls, $15 on weekends, are leather. In one auditorium, a comedian warms up the crowd and gives away movie T shirts.

For moviemakers, the luxury trend is nothing less than a godsend. "I don't want to be sacrilegious, but theaters are like churches," says Craig Brewer, writer and director of Hustle & Flow. The ramped-up sound systems and huge screens of a great theater convey the experience in ways a home theater can't. "When this beat hits, I want it to feel like when Indiana Jones is punching somebody," he says. Brewer, a Memphis, Tenn., resident who set and shot his film there, held the premiere in his hometown Muvico--a risk he says he probably wouldn't have taken with a lesser theater.

That's the kind of stardust developers are betting on. Among the six projects on Muvico's drawing board is a theater in Xanadu, an enormous New Jersey mall complex. Designed as the largest movie-theater complex in the U.S., it will feature 26 screens and a helipad to fly in celebrities from nearby New York City for premieres. "We're a starstruck nation," says Larry Siegel, CEO of developer Mills Corp. For most of us, these posh new cinemas may be the closest we'll get to being treated like one. --With reporting by Desa Philadelphia/Los Angeles

With reporting by Desa Philadelphia/Los Angeles