AP NEWS
Related topics

Merlin Entertainments has its eye on Florida

February 15, 2015

ORLANDO, Fla. (AP) — Don’t call it a Ferris wheel. At 400 feet high, the Orlando Eye towering over the tourism mecca of International Drive is an “observation wheel,” its British owner insists. When the estimated $90 million attraction opens this spring, visitors will be able to observe Cape Canaveral, 55 miles away, on a clear day.

The Eye will be hard to ignore — much like its owner, London-based Merlin Entertainments, which is quickly morphing into a serious player in Central Florida’s cutthroat theme park business. At the new I-Drive 360 entertainment complex, the Eye will be flanked by a Madame Tussauds wax museum and a Sea Life aquarium, all three family-friendly properties owned by Merlin, the $4 billion-plus company that also operates Legoland Florida Resort in Winter Haven.

Though it’s far from a household name, Merlin has become the undisputed, second-largest visitor attractions operator on the planet based on attendance. Disney, no surprise, has a comfy lead in the No. 1 spot, but you won’t hear Merlin complain about that.

Instead, Merlin’s success is based on a keen obsequiousness to Disney, especially in this area. Whereas SeaWorld and Busch Gardens have struggled to compete directly with the Mouse House and Universal Orlando Resort, Merlin has learned how to profit off its proximity to the giants by marketing second-tier, affordable fare.

“After people are done with the parks, we’re hoping they come here and spend time with us,” says Todd Andrus, Merlin’s head of marketing for its Florida attractions.

Done with the parks.

That phrasing speaks volumes about their strategy. Merlin is a remora successfully acknowledging, and feeding off, Disney and Universal’s whale sharks. As a business model, it’s paying off.

____

Merlin Entertainments generates more than 60 percent of its revenues from attractions in the United Kingdom and Europe. Since going public in late 2013, its stock has risen steadily, based partly on Merlin’s interest in the United States and Asia, the latter of which will get the world’s largest Legoland in South Korea in 2017. (Of course, it also helped Merlin’s stock that The Lego Movie, released in February 2014, was a worldwide smash.)

Although it defers to giants Disney and Universal, the company has become gigantic itself: 105 attractions in 23 countries on four continents. Its core properties fall into three basic categories — midway fare, the Legolands and the Sea Life aquariums — all of which transcend cultures. They might be slightly cheesy, but they’re also wholesome and relatively affordable. (Ticket prices aren’t available for the Orlando Eye yet. The London Eye and other Madame Tussauds locations are about $30 per ticket, although there will be numerous package deals linking the Merlin properties.)

“We’re very confident in our brand,” says Robin Goodchild, general manager of the Orlando Eye. “These are high-quality unique attractions for the whole family.”

By spreading out its investments across the planet, “we are insulated from any (financial) impact on a global scale,” says Andrus, adding that “diversity” of attractions and locations is one of their key strategies. “Four years ago, we didn’t have the magnitude of attractions we do now in the United States.”

Established in 1997, Merlin’s greatest strength, however, may be its keen niche awareness. For all its global spread, it also knows how to work small.

For instance, even though SeaWorld is just a few blocks away from Sea Life, Andrus isn’t worried. From Merlin’s perspective, their new attraction will be the first real aquarium in Orlando, and presumably far less expensive and more accessible than ponying up to cheer for Shamu.

“You’re not just going to pop into SeaWorld,” he says. “That’s another niche we fill. This is our market. We do it better than anyone else.”

____

That niche awareness is perhaps best illustrated at the Legoland properties. From the start, Legoland has unflinchingly targeted a specific demographic: kids 2 to 12 years old. “We’ve never tried to be all things to all people,” says Legoland Florida general manager Adrian Jones.

As a result, that bricktastic park in Winter Haven broke attendance and revenue records in 2014, and is poised to do so again in 2015 when it opens the on-site Legoland Hotel and a new area with rides and shows tailored specifically for girls.

Industry insiders have been impressed with Merlin, which, before acquiring the Legoland parks, made its biggest splash in 2006 through buying the Madame Tussauds franchise. CEO Nick Varney has been equally praised for his money savvy and creative smarts.

“In terms of product and expansion, they do a really good job of picking the right acquisitions and locations in high-density areas,” says Dennis Speigel, president of International Theme Park Services, a Cincinnati-based industry consultant. “And Varney is a really smart guy who understands our industry, the economics and the numbers.”

Speigel also touts Merlin’s strengths at “cross-pollinating” — that is, using attractions to help promote other attractions. There will be a bus stop made of Lego at I-Drive 360; at Legoland, in turn, guests will be directed to the Orlando Eye, Madame Tussauds and Sea Life.

Merlin hasn’t made many missteps, Speigel says, although it did take the company a few years to go public on the London Stock Exchange. “Every time they got to the altar, the economy would tank,” the analyst says. And any concerns of early financial struggles were recently lessened when Moody’s Investors Service recently upgraded Merlin’s debt.

Lower gas prices and tourists willing to drive and spend are also good news for Merlin, which has seen its stock price rise 13.5 percent in just the past three months alone. “There aren’t many more discretionary purchases than a trip to a tourist attraction, so Merlin Entertainments should benefit from consumers with a bit more spare cash,” financial analyst Laith Khalaf recently told the British press.

Merlin hasn’t set a specific opening date for the Orlando Eye and its neighboring attractions. Nor will it divulge future plans in Florida. (“The entire United States is a focus,” Andrus says.)

But there’s no mistaking Merlin’s desire to stake a claim here. Once again, it’s all in the language of that wheel: “The London Eye has been able to become the icon of London,” says Andrus. “And we’re going to see the same thing with the Orlando Eye. It’s going to become a new icon in Orlando.”

___

Information from: Tampa Bay Times (St. Petersburg, Fla.), http://www.tampabay.com.

AP RADIO
Update hourly