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The owner of Legoland, Sea Life and Madame Tussauds plans to charge visitors more during peak summer weekends than rainy weekdays in the off-season, as Merlin Entertainments seeks to make up for fewer visitor numbers than before the Covid-19 pandemic.
Scott O’Neil, the chief executive of Europe’s largest theme park operator, said the company was building a dynamic pricing model — widely known as surge pricing — to be introduced at its top 20 global attractions by the end of 2024, and major US attractions next year.
The model, which allows the company to flex prices at particular times in response to shifts in supply and demand using machine learning, is “very intuitive”, according to O’Neil.
“If [an attraction] is in the UK, it’s August peak holiday season, sunny and a Saturday, you would expect to pay more than if it was a rainy Tuesday in March,” he told the Financial Times.
While hotels and airlines have used dynamic pricing for decades, restaurants and entertainment facilities are increasingly adopting the model.
Last month, the US fast-food chain Wendy’s came under fire for announcing that 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 are visiting us most” but lower prices at slower times of day.
The pricing plan of Merlin, which was taken private in 2019, comes as the company said on Monday it had delivered record revenues of £2.1bn in 2023, up 8 per cent year on year, supported by international tourists in gateway cities like London. Nearly one in every four visitors to the city came to a Merlin attraction, it said.
Yet, the company’s visitor numbers had yet to return to pre-pandemic levels. Some 62.1mn customers visited its 141 attractions across 23 countries last year, a 13 per cent increase from the previous year but still below the 67mn visitors recorded in 2019.
“Guests seem to be choosing fewer attractions but spending more,” said O’Neil. As an operator, “there is a tug and pull in what you do in terms of volume and price and how you manage that,” he added.
Merlin posted a pre-tax loss of £214mn as it wrote down the value of the Legolands built during the pandemic in New York and Korea. O’Neil said that while he expected the New York theme park would pick up eventually, the Korean park would face challenges that require a “reset”.
The developer of Legoland Korea defaulted on its debt in 2022, triggering a wider corporate credit crunch in South Korea.
Merlin’s take-private transaction was one of the biggest European private equity-backed buyouts in recent history. Kirkbi, an investment vehicle run by Lego’s founding family, teamed up with private equity group Blackstone and Canadian pension fund CPPIB on the £6bn takeover.