Today's Trading & Strategy Update
, has seen a number of key announcements from Merlin.Reallocation of capital
Firstly, is a reallocation of capital from new investments in both Midway Attractions and the Resort Theme Parks to a 'Productivity Agenda' and additional accommodation at the resorts (interestingly it was suggested that they'd eventually like 1000 rooms at each resort). During the presentation, Nick Varney seemed to place more of an emphasis on the midway capex being reduced rather than the theme parks, and also highlighted that this represents yearly capital investment being reduced from £150m to around £125m. The 'Productivity Agenda' includes things like back office efficiencies and increased automation, like the addition of the self-service ticket machines which have been trialled at the London Eye.
New Intellectual Property partnerships
Going forward, whilst our long-standing Six Strategic Growth Drivers remain unchanged, we will be reallocating planned capital investments from the Existing Estate into an accelerated accommodation roll out and a Productivity Agenda. Specifically:
- Intention to reduce Existing Estate capex by approximately £100 million over the period 2018-21, predominantly from the Midway Attractions and Resort Theme Parks Operating Groups, with investment in Health and Safety and Repairs and Maintenance unaffected.
- Approximately £30 million investment in a Productivity Agenda, the initial benefits of which are expected from late 2019 onwards.
- Acceleration in accommodation roll out, with 2,000 rooms expected over the 2018-21 period (2,000 over 2016-20 previously).
Merlin continue to pursue IP-based experiences, with the announcement of future Bear Grylls and Peppa Pig attractions - I have posted more details about 'The Bear Grylls Experience' midway brand in the Birmingham attraction's topic
. As for Peppa Pig, it is highlighted that Merlin's deal
covers all countries apart from the UK, so the two theme park areas which have been announced for 2018 will presumably be in Gardaland and Heide Park. It appears the brand will also be applied to midway attractions, with the first "standalone attraction" opening in 2019 - during the presentation, Nick Varney stated that these would initially be 'interactive, soft-play experiences' but then also said that there was the potential for 'mid-sized theme parks' (like LEGOLAND) further down the line.
Merlin today announces it has entered into two global exclusive IP partnerships to develop location based entertainment:
- Bear Grylls - Partnering with the world-famous survival expert, international TV host and bestselling author, ‘The Bear Grylls Adventure’ will be targeted at the adventure-based experiences market, with the first attraction to open in Birmingham, UK, in 2018.
- Peppa Pig – A multi-territory agreement with Entertainment One (eOne) to open Peppa Pig themed attractions and accommodation. Peppa Pig is one of the world’s leading pre-school brand properties with over 1,000 licensees across 60 countries. The deal which excludes the UK gives Merlin exclusivity in all territories other than China, where the licence is granted on a non-exclusive basis.
It was also announced that a 'The LEGO Movie Land' will be added to all LEGOLAND parks from 2019, with the accompanying visual perhaps giving some hint as to what attractions may be included:Share price
Today's update has seen Merlin's share price significantly fall (initially down 20%) to pretty much the same level as this time in 2015 following the impact of The Smiler incident, completely wiping out the growth that the last two years has seen...