Merlin's Strategy

“To create a high growth, high return, family entertainment company based on strong brands and a global portfolio that is naturally balanced against the impact of external factors.”

Since Merlin’s formation in 1999, it has sought to strengthen and diversify its portfolio of nationally and internationally recognised premium brands focused on “fun learning” which provide memorable, entertaining, interactive and educational experiences, principally for families and young adults.

Merlin has sought to diversify geographically and to maintain a balance between its indoor and outdoor attractions and between domestic and international visitors with the aim of reducing trading volatility and producing reliable returns on capital invested.

Underpinning this strategy is a focus on six growth drivers:

1. Growth of Existing Estate Via Planned Investment Cycles

  • Regular planned investment in new rides, shows and themed areas at all attractions to maintain and enhance our product quality.
  • Driving volumes and guest satisfaction.
  • For example, a new 14-looping roller coaster, ‘The Smiler’, at Alton Towers or a Madagascar show at Gardaland in 2013.

2. Strategic Synergies

  • Maximising the marketing, product and cost synergies available as a result of the Merlin’s scale and range of iconic brands. These are most effective where Merlin has strong concentrations of assets, such as the UK and Germany. For example:
  • The Merlin Annual Pass, national promotions with strategic partners, and procurement savings
  • Clustering our Midway assets together to drive cross selling and operational efficiency.
  • Being able to share capex developments over more than one site. For example a new 4D LEGO film can be utilised in six parks and ten LDC’s.

3. Resort Destination Positioning

  • Developing our theme parks as short break destinations whilst maintaining our position in the day visit market by adding themed accommodation and other leisure activities. For example, a fully LEGO themed 250-room LEGOLAND Hotel opened at LEGOLAND California in 2013.
  • This extends the catchment area and drives new revenue streams and additional spend whilst developing a closer relationship with our guests and encouraging pre-booking.

4. Roll-Out Of Midway Attractions

  • Merlin has five chainable Midway brands (SEALIFE, Madame Tussauds, The Eye, The Dungeons and LEGOLAND Discovery Centre).
  • Since the start of 2010, 23 new Midway attractions have been opened in 10 countries further diversifying the portfolio geographically, building clusters such as Dallas and Tokyo, and increasing our concentration of assets in key markets in America and Asia.
  • Midway businesses are cost effective to build and deliver a good return on capital and steady cashflow whilst strengthening and building the portfolio gradually over time.
  • We have identified at least 100 further potential roll out locations and have the resources to target and deliver an average of 6-7 new openings each year.

5. LEGOLAND Park Development

  • The strength of the LEGO brand globally and the nature of the LEGOLAND Park format mean that there is potential to develop new LEGOLAND Parks whilst driving a good return on capital.
  • In the last two years Merlin has successfully opened new LEGOLAND parks, in Florida and Malaysia and is actively looking for new sites, mainly in Asia and North America. We estimate there is currently potential for up to 20 more LEGOLAND Park sites worldwide.
  • Merlin intends to open a new LEGOLAND Park on average every two to three years.

6. Strategic Acquisitions

  • These are targeted strategic acquisitions intended to support the development of the business and the other growth drivers. For example:
  • Merlin acquired Sydney Attractions Group in 2011 which enabled a Madame Tussauds to be added to the Sydney cluster in 2012.
  • Merlin acquired Living and Leisure Australia in 2012 adding ten new sites to the portfolio in the fast growing Asia-Pacific region, and creating clusters in Shanghai and Bangkok.