Unlock the Publisher’s Digest for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
The owner of Legoland, Sea Life and Madame Tussauds plans to charge visitors more during peak summer weekends than rainy weekdays in the low season, as it tries to make up for fewer visitors than before the Covid pandemic -19.
Scott O’Neil, chief executive officer of Merlin Entertainments, said the company is building a dynamic pricing model – widely known as surge pricing – to introduce across its top 20 global attractions by the end of 2024 and into major U.S. attractions next year.
The model, which allows Europe’s largest theme park operator to flex prices at particular times in response to changes in supply and demand using machine learning, is “very intuitive,” O’Neil said .
“Self [an attraction] it’s in the UK, it’s August, peak holiday time, sunny and it’s a Saturday, you’d expect to pay more than if it were a rainy Tuesday in March,” he told the Financial Times.
While hotels and airlines have been using dynamic pricing for decades, restaurants and entertainment venues are increasingly adopting this model.
Last month, US fast food chain Wendy’s was criticized for announcing it would test dynamic pricing for burgers during peak demand as early as 2025. It later released a statement clarifying that it would “not raise prices when our customers visit us more often.” ” but lower prices during the slower hours of the day.
The pricing plan from Merlin, which was taken private in 2019, comes after the company said on Monday it made record revenues of £2.1 billion in 2023, up 8% year-on-year, supported by international tourists in gateway cities like London. Nearly one in four visitors to the city came to a Merlin attraction, he said.
The company’s visitor numbers had yet to return to pre-pandemic levels. Some 62.1 million customers visited its 141 attractions in 23 countries last year, up 13% from the previous year but still below the 67 million visitors recorded in 2019.
“It appears guests are choosing fewer attractions but spending more,” O’Neil said. As an operator, “there’s a push and pull in what you do in terms of volume and price and how you manage it,” he added.
Merlin reported a pre-tax loss of £214m as it wrote down the value of Legolands built during the pandemic in New York and South Korea. O’Neil said that although he expects the New York theme park York eventually resumes, the Korean park will face challenges that require a “reset.”
Developer Legoland Korea defaulted on its debt in 2022, triggering a broader corporate credit crunch in South Korea.
Merlin’s take-private deal was one of the largest private equity-backed European acquisitions in recent history. Kirkbi, an investment vehicle run by Lego’s founding family, has teamed up with private equity group Blackstone and Canadian pension fund CPPIB for a £6 billion takeover.