UK Theme Parks Operator Merlin Ramps Up Hotel Offerings

Theme park operator Merlin Entertainments added a record number of hotel rooms across its portfolio as it accelerates growth in its hotel offering.

The UK-based company opened an extra 644 rooms in the first six months of 2018 — increasing its overall number 18 percent.

“That’s quite an achievement. It’s the highest number of rooms we’ve opened in any one year,” chief financial officer Anne-Francoise Nesmes said on an earnings call on Thursday after the release of Merlin’s first-half results.

Boosting the level of accommodation it has to offer guests is part of a group-wide strategy to transform Merlin’s theme parks into destination resorts.

All of the rooms added were in Legoland parks:

• 252 room hotel at Legoland Japan, developing the park into a resort
• 250 room Legoland California Castle Hotel, doubling on-site accommodation
• 142 room Pirate Island Hotel at Legoland Deutschland, adding to the existing 319 rooms.

The company now has 4113 rooms spread over 14 sites, with the biggest being Alton Towers in the UK.

Revenue across the group increased 3.5 percent to $927 million (£709 million) with extra accommodation adding $24 million (£18 million) to the top line.

Terrorism Impact

Although revenue and visitor numbers increased (+0.8 percent to 30 million) profits actually fell during the period.

Operating profit declined 13.7 percent to $82 million (£63 million), which Merlin put down to "adverse foreign exchange movements and a higher depreciation charge due to new business development".

Merlin is also still feeling the impact of a series of terrorist attacks in its key London market during the course of 2017. This primarily affects its Midway division, which includes brands such as Madame Tussauds, The Dungeons and Sea Life.

"Trading in London remains suppressed, and it is too early to judge if there are definitive signs of a recovery," the company said.

The first six months of the year are quieter for Merlin, with the company expecting to make 70 percent of annual earnings before interest, taxes, depreciation, and amortization (EBITDA) in the latter half.