Attraction Source Forum

Surely Wicker Man should prove to the group what is needed for future growth?

A decent ride, with a decent theme and backstory will bring in the crowds. Alton have a winner on their hands and more "Wicker projects" are needed throughout their parks, every year!

In an ideal world, we really should see a new coaster/major investment every three years. Four is good, but with Alton pushing this to 5 years, this is certainly pushing the boundaries.

Thorpe have suffered in recent years. Ghost Train didn't fill the spot and really 2016 should have been a coaster!

I think what doesn’t help Alton Towers is that people don’t want to keep going from one coaster to another, I have friends who hate coasters but love flat rides, which is slowly becoming a struggle due to queue times and removals of flats.

I know this subject is talked about a lot but if Merlin invested more flats to the Towers, visitor numbers would increase, and queue times would be scattered due to this.

Share prices seem only linked to the short term growth. Last year's, well profits are down, but hey we've expanded hugely and are still making money, was characterised as being bad. Medium term as a company, Merlin to me seems to be looking reasonably good, so long as they eventually stop spreading themselves so thin. A question was asked about what could happen if share prices keep falling, well maybe a leadership challenge. But I do seem to remember that when the share prices dropped last year, management people sunk a reasonable amount of money into the company.

Obligatory: The above was not advice and is simply my opinion and shouldn't be used outside of general discussion of the company. There may be inaccuracies and all sorts in what I've said. Don't go buying shares unless you're happy to lose all your money.

However, some of the fairly amateurish marketing that I've seen across the Merlin companies, particularly via their online presences, look like they could start causing them problems. The Advertising Standards Agency ruled today that a Tweet by Merlin, via Alton, was misleading and told not to do it again. The Tweet offered kids go free, for a price that seemingly didn't exist, and that it was actually cheaper to stay without kids.

I can think of a handful of similar issues across the park, which seem like they have the potential to give Merlin a headache from advertising authorities. Thorpe's randomly changing car park price, which I've noted is not always up-to-date online or via tweets. Thorpe's declaration of the park being open via website and confirmation Tweets, that then subsequently turn out to be untrue. Thorpe's declaration that all mazes will be open at midday as part of its initial Fright Night advertisements, which then quietly changed to 3pm and 6pm before anything opened. Advertisement of an attraction that will be part of the full Fright Night lineup, which was only ever intended to be there for 4 days. Then my current issue, free DigiPass with a PMAP renewal, where twice I've gone to get it and twice I've failed as they couldn't find what they needed to do it. These are all in the last 2 months and just at one park. I can also throw in Alton refusing to sell rooms with MAP discount at the start of the season, due to "technical issues". Or Legoland refusing entry to any MAP holders due to capacity limits reached before the park opened, but providing no mechanism for passholders to secure an entry. Or an Annual Pass, which only lasts 3 months and quietly has its name and Ts&C's changed to reflect this short lifetime a few weeks after it goes on sale.

Leaving yourself wide open to the potential for regulators to start sniffing around, is really not a great idea. Especially when they target the top level company, seemingly ignoring the internal structure, so it would become lots of cases against the same entity. But sadly it seems to me how the company is currently operating.

Growth or large dividends are the big drivers for share price. 

Where's the growth going to come from for Merlin? The Midway attractions aren't proving massive money spinners, you can only build so many Legolands.

I'm not sure any UK parks can truly achieve a resort like Universal or Disneyworld that have year long opening and where you can spend weeks at and not get bored. In theory Thorpe Park could have enough space for an entertainment complex and an indoor water park but would they even get planning permission, let along stump up the cash needed to do build on or fill in the lakes?

At any point another Smiler could happen and decimate sales at parks. Theme parks are high risk, high investment and often have very low profit margins, it's very easy to spook investors 

Towers is in dire need of flat rides, cant they go down the lease route and add a couple every few years and just theme them well? Surely this would be a better move to keep things looking fresh in the park.

Merlin's preliminary results are out today, and overall it appears guest numbers went up and revenue went up. I haven't read much of it, but here is an easy to read at this time of day breakdown of it:


Source

From a NASDAQ article:

Revenue at its Resort Theme Parks division grew 9.1 percent and was up 6.4 percent at Legoland. The Midway Attractions division saw growth of 1.1 percent with a continued recovery in London trading.

I hope this is the start of something positive to come for Merlin. They could really do with the increase of guests and revenue about now, maybe even see the start in bigger budgets for some of the parks.

Excellent news, maybe now would be a good time to spam them on social media commanding that they reinstate the baggage holds? You never know unless you try...

Some more analysis of today's results, giving profit for the resort theme parks.

Underlying operating profit rose 39.9% to £51m at Resort Theme Parks. Revenues rose 9.1% to £360m. Performance was driven by rising like-for-like sales, extra attractions in parks and a strong Halloween season. Weather was also more favourable across the UK and Europe.

Source

With a strong Halloween season being declared a factor, could this be why Fright Nights is being extended at Thorpe Park? I'd really love to see the park have a less shoestring budget for this, and make the park have a site-wide spooky party atmosphere similar to Universal's Halloween Horror Nights.

DeadJack5 wrote:I hope this is the start of something positive to come for Merlin. They could really do with the increase of guests and revenue about now, maybe even see the start in bigger budgets for some of the parks.

Apart from the fact they announced RTP Capex would be reduced to fund Midway and Legoland development...

Yup! See below.

I want to be positive but it's a depressing outlook.

Just sell the parks to Cedar Fair or someone, please.

When are Merlin going to understand that you can't keep adding accommodation to the Resort theme parks without also adding new attractions to make people actually want to stay longer! whilst adding a new flat ride may not show a direct return, or show obvious value to investors in the same way a new hotel room can, you simply can't keep failing to invest in smaller attractions as all that will happen is people won't see it worth making a multi day visit to the Resorts.

Surely we have got to the point where there is nothing left to cut in the theme parks. If they cut any more it's going to reach a point where the parks simply do not have enough budget to function on even a basic level. You do have to question just how the higher ups at Merlin seem either incapable of seeing this, or worse, don't seem to care that this is the situation. It does make me wonder if at some point in the next 5-10 years we may see Merlin sell off their Resort Theme Park division, although I understand even this move would be far from straightforward with the land for Alton Towers and Thorpe Park being owned by Nick Leslau and not Merlin.

Well I'm surprised to see that restriction already declared. I can understand being cautious in reallocating funds back to a division that happened to have a single good year. But do they not realise how this particular division is reliant on investment to have a better year?

Six Flags and Cedar Fair both have similar sized revenues to Merlin. Both of these are adding new world class attractions on a frequent basis. The resort parks are stagnating at best, and regressing in Thorpe's case, without development.

I wonder what the Merlin strategy is when they've finally installed a copy and paste Madame Tussaud's, Legoland or Lego Discovery Centre into every major city across the world? Or filled all their development areas with overpriced empty hotel rooms?

Given that Merlin are reporting notably high growth in the RTP division, which appears to be driven by accommodation, I don’t think the trend of adding new hotels will be changing anytime soon, as it’s delivering desirable results as far as Merlin are concerned.

There is a distinction to be made between operating and capital expenditure, with the slide posted above referring to existing estate capex remaining at lower levels. This therefore concerns the amount of money Merlin are willing to put into new attractions, rather than being associated with the reduced operating budgets that the last few years have seen. That “cost-cutting” is covered by the more investor-friendly named ‘productivity agenda’, which was referred to elsewhere in the presentation (and has been a feature of Merlin’s strategy for the last couple of years now). If I understood what was said correctly, existing attractions across the group had been set a target of keeping any increase in operating costs year-on-year to less than 3%.

Despite making the cutbacks in the above areas, Merlin are still claiming to have seen positive movements in their guest satisfaction measures, so again there wouldn’t seem to be any immediate motivation to change strategy. I think Nick Varney did say that an area that wanted to improve was around value for money where they currently rank “poor or very poor” though.

For as long as Merlin can produce growth from the RTPs, I can’t imagine they’d give any serious thought to selling them off. In the UK especially, they are a key part of their portfolio and presence, with the Merlin Annual Pass deriving most of it’s value from them. I can’t say I know much about the leasing situation with a number of Merlin’s UK sites, but I imagine with these being decades long there would be some sort of provision in there for Merlin to exit, or transfer responsibility to a new operator if they so wished.

Another overview of yesterday's results from Nick Varney.
To follow up on Lewis' comment that selling the resort parks in the UK being unlikely, due to them being a big part of the Merlin Annual Pass' value. I'm sure one of the reports I was reading yesterday stated the UK generated about a third or their income. If so, all of those parks are staying tied to Merlin, as the Merlin Pass has allowed them to gain a stranglehold over a lot of days-out entertainment in the UK.

Merlin's Parks are comparing fairly poorly, not just to cedar fair and six flags but to other parks in the UK now. 

Look at Paultons Park, a recent highly themed themed area with two modern family coasters is now getting joined by another one bringing some big white knuckle flats and a good spinning coaster. It's missing dark rides but I could easily see Paultons taking over from Chessington by 2022.

Flamingo Land is investing, Blackpool Pleasure Beach has more to come in the near future.

Merlin's new rides all seem to be coming at the expense of other, well loved rides and they're not like-for-like replacements, narrowing the parks appeal when they should broaden it.

Merlin do need to up the game, lately they seem to have been letting their parks fall to ruin, look at Thorpe....it seems like they are more keen on closing stuff and reducing their rides and even their catering offerings, rather than bring anything new. The new things they do bring, don't seem to be much more than a cheap gap-filler also, not planning ahead for the future. As it has been mentioned, Paulton's was a tiny little park with a very small ride offering, it has grown massively over the last 5-10 years and it looks fresh, welcoming and new. They are investing heavily, which is helping them to develop, however Merlin are not learning from their mistakes and seem to be focusing too much attention on their midway attractions, which seem to be just about everywhere now too anyway!

I know nothing about financial things, as a new attraction obviously costs a great deal of money and this needs to be spread evenly amongst the business, but from an outsiders point of view, Merlin needs to stop opening new attractions and focus on the portfolio they already have! I wouldn't be surprised if they try to sell one of their attractions in the near future.

Merlin Entertainments have today launched a shiny new website.

It does look a lot nicer than the old, outdated one. something tells me this isn't quite right though...

They also list Warwick as a theme park?