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. Growing the existing estate through planned investment cycles

  • Adding new rides and features to our attractions to drive customer satisfaction, increase capacity and provide a compelling new proposition to guests.
  • The investment cycle is specific to each attraction which receives a ‘high’, ‘medium’ or ‘low’ investment depending on its place in the cycle. These cycles smooth capital expenditure across the portfolio, ensures investments are funded from operating free cash flow, and enable attractions to plan effectively.
  • New product and features in 2016 included ‘Derren Brown’s Ghost Train’ at THORPE PARK, ‘NINJAGO – The Ride’ at LEGOLAND Billund, and 15 major new product investments across the Midway Attractions Operating Group.

2. Exploiting strategic synergies

  • Leveraging the scale of the Group in key markets to exploit enhanced operational, marketing and buying power, including the implementation of e-commerce initiatives that provide commercial benefits and improved ‘digital journeys’ for our guests.  For example:
  • 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 across all of our LEGOLAND parks and LEGOLAND Discovery Centres.

3. Transforming our theme parks into destination resorts

  • Developing our theme parks as short break destinations to extend the catchment area, create new revenue streams and improve guest satisfaction.
  • Key to this is on-site themed accommodation, for example the 100-bedroom fully adventure themed hotel opened at Gardaland in May 2016.
  • Our 2020 milestone target is to add 2,000 rooms to our accommodation portfolio between 2016-2020.

4. Rolling out new Midway attractions

  • Opening new Midway attractions under one of our chainable global brands, with a focus on ‘cluster’ locations where we can derive operating cost, marketing and cross-selling advantage.
  • Our 2020 milestone target is  to open 40 new Midways between 2016 and 2020.

5. New LEGOLAND park developments

  • 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.
  • We operate under three models (operate and owned, operated and leased, under management contract). We combine our operational expertise with the LEGO brand’s worldwide popularity.
  • Our 2020 milestone target is to open 4 new LEGOLAND parks between 2016 and 2020.

6. Strategic Acquisitions

  • Pursuing acquisition opportunities that complement our strategic objectives. For example:
  • 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.
  • Merlin formed of a strategic partnership with Big Bus Tours in February 2016, the leading global owner-operator of Hop On Hop Off city tours, allowing further cooperation across many of our key city centre markets.