Melanie Graham, spokeswoman and head of marketing for Palace Amusement. - File

Cinema operators Palace Amusement Company Limited is on the hunt for a site in Kingston for a new movie theatre project, but is shying away from having to buy land.

"We are trying to find an appropriate location in the Constant Spring Road area. We are not interested in owning the real estate but, like Cineplex and Multiplex, if there is a complex that can accommodate our plans, then we will move on it," said Melanie Graham, marketing manager for Palace Amusement.

"We are also willing to partner with developers," she added.

Heavily trafficked zone

Constant Spring Road is one of the most heavily trafficked zones in the city, linking densely populated neighbourhoods such as Meadow-brook, Havendale, Mannings Hill Road, Manor Park, Stony Hill and beyond to the commercial zone in Half-Way Tree.

But only a few sites appear suitable for a movie theatre, including one currently under development - a commercial complex under development by the Progressive Grocers of Jamaica.

But Graham said, while Palace had approached the consortium, it was not interested in including a movie house in the plans.

Existing business dealings

Palace and members of that group already have business dealings. The Grahams already rent space for their twin-cinema Cineplex, at Sovereign Centre, a shopping mall in Liguanea owned by members of the Progressive group.

Palace currently operates five movie houses in Kingston, Montego Bay and Mandeville and also oversees a cinema in St Ann, with Kingston as its top-selling geographic segment and home of its flagship movie house, Carib 5.

Kingston and Montego Bay are profitable, but Mandeville has had losses of $4 million to $5 million in each of the past two years. Kingston brings in 74 per cent of the business.

Graham was unwilling to say much about the new investment, but it follows a less than successful venture in Portmore that the company locked down two to three years ago after the business failed to generate any substantial income.

Palace now spends $18 million on theatre rentals, while its costs for repairs, maintenance and renewals is $17.8 million.

Fixed assets on books as at June 2008 totalled approximately $150 million.

3d roll-out

Palace is also finalising plans for the roll-out of 3D movies, which is likely to happen before the new cinema is launched.

"We will more be looking to retrofit existing cinemas and are currently in negotiations; but nothing set as yet," said Graham.

"We hope to launch by summer."

Palace's talk of new investment follows a return to profitability - netting $21.6 million last year against losses of $5.6 million in 2007 - which Palace mostly blamed on rivalry from pirated movies.

But the near nine-decade-old cinema company is not yet out of the woods. Though it has consistently invested in technological upgrades and the quality of its facilities, it has also been struggling with maintaining its profitability.

Its first quarter ending September 2008 began with a loss of $1.45 million, compared to $9 million of profit in the same period in 2007.

The loss was generated on revenue of $131 million, a seven per cent increase over the $122.5 million turnover in the previous quarter. Operating costs rose more than $4 million in the period.

To save on overheads, Palace is in the process of switching to fluorescent lighting to cut its energy bill.

Palace's portfolio of cinemas has undergone several changes in the last two decades. Since 1989, Palace has expanded into Cineplex in Liguanea, Island in New Kingston; Portmore Palace in Portmore; Palace Multiplex in Montego Bay and Odeon Cineplex in Mandeville, while closing out Gaiety, Odeon Mandeville, and Odeon Half-Way Tree.

More recently, the company also closed out Portmore Palace and Island in New Kingston.

sabrina.gordon@gleanerjm.com