Merlin Entertainments Is Looking to Drive More Business With an Investment in Big Bus

The operator of Legoland, Madame Tussauds, and the London Eye is now in the bus business.

UK-based Merlin Entertainments, which has a portfolio that also includes hotels, aquatic attractions and other theme parks, said Thursday that it had invested more than $34 million for a 15 percent stake in Big Bus Tours.

The sightseeing transportation company offers hop-on, hop-off bus tours in 18 cities around the world, including eight where Merlin has attractions.

Merlin Entertainments CEO Nick Varney said during a presentation that in those markets where both companies operate, Big Bus will sell Merlin tickets and Merlin attractions will sell tickets for the bus tours.

"We will drive real value into our Midway operating group and we will be, by definition, driving it into the bus business, which is why it will be good for us to have an equity stake in the business," he said.

The deal plays into Merlin's strategic goal to "own city-center tourism," Varney said. "We want to be the portal through which tourists coming to the cities actually access the city and its sights and attractions, and for that reason we've been looking at adjacent operations that actually feed into that."

News of the investment came during a day filled with activity — some not so positive — for the company. Merlin also presented its preliminary financial results for 2015 and gave a strategy update for analysts Thursday. The UK's Health and Safety Executive also announced that the company would be prosecuted for a 2015 accident involving a roller coaster at the Alton Towers theme park in Staffordshire, England that left five people badly hurt.

The company has said that human error was to blame for the crash and has cooperated with authorities as they investigated.

"Obviously it wasn’t something we expected to come out today, but as an independent, objective arbiter of these things, I'm sure it’s only coincidence that it happened today," Varney said. "We will wait to see what comes forward at the next stage."

He said Merlin doesn't expect the theme park to recover until 2017. Attendance at Alton Towers and another ride-heavy park declined last year and revenues fell for the company's resort theme parks group.

Company-wide, attendance, like-for-like revenue and profits increased by less than 1 percent.

The six Legoland Parks were a standout, however, with like-for-like revenue increasing 8.2 percent. A Legoland Hotel opened in Florida last year, and the company already has plans to expand again with a beach village-themed resort there.

Four more Legoland parks are expected to open by 2020, including three that have already been announced in Dubai, Japan, and South Korea.

Plans also call for 2,000 more hotel rooms throughout the portfolio and 40 new Midway attractions — which include Madame Tussauds, The Dungeons, aquatic centers, and other venues, including some in partnership with DreamWorks — by the end of 2020.

"Our vision over the next five years is to consolidate Merlin's position as a global entertainment company at the heart of which are multi-layered intellectual property partnerships, which actually will be part of how we move the business forward," Varney said.