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2026: General Discussion
GooseOnTheLoose
TS Member
The Tussauds Group did not sell Alton Towers to Merlin Entertainments.
Blackstone, the private equity giant, purchased The Tussauds Group from DIC. They then merged Tussauds with their existing leisure asset, Merlin Entertainments.
If you look at the DIC ownership era (2005–2007), the hints were about as subtle as a brick. DIC purchased the group with the specific intention of flipping it for a profit. Consequently, we saw a period of rapid, marketable, but perhaps not high quality CapEx (Rita, Charlie and the Chocolate Factory) designed to inflate the book value and visitor numbers quickly to make the asset look attractive to buyers. They fattened the pig for market.
If you are looking for parallels to the current situation; aggressively cutting OpEx (outsourcing, redundancies), restructuring the corporate hierarchy, and centralising control are the classic hallmarks of a private equity firm preparing a business for a sale or an IPO... My money has been on the latter for the past year and a bit.
Bert2theSpark
TS Member
I thought the reason Merlin were taken off the stock market was in-part because they struggled to perform under the timeframe of investors’ expectations. This isn’t something unique to Merlin either, as other publicly-listed theme park operators have struggled to meet investors’ expectations, and the high-performing parks are either part of a wider conglomerate or in the hands of private equity.
The perspective and argument I’ve seen with the recent restructuring is more so the company can go heavier on bigger investments, and that restructuring was needed to achieve this in the high(er) interest environment. We’re yet to see the outcomes of restructuring and specifically for Towers the upcoming season will be the one to watch. I can see possibly one of the outsourced functions returning back in-house over the medium term, but I suspect there will need to be a heavy amount of economic data (and guest feedback if they include qualitative data) to reverse any decisions once contracts expire.
Dave
TS Founding Member
This really winds me up so sorry if this is terse but the government budget has had an imperceptible impact on these businesses.
For a start very few of these businesses are making a loss, and small businesses have mostly been excluded for things like NI increase.
The reason the leisure industry is struggling is:
1) Increased energy costs due two two issues, the first was Ukraine war, second was losing access to the energy single market after Brexit.
2) Increased food costs, again partly due to Ukraine war but also due to Brexit increased costs.
3) Pay increase restraint due to businesses prioritising growth (therefore shareholders) over stable business.
Budgets take years to filter through to the economy and as far as we know currently the economy is doing about on par or better than other G7 countries.
I did my best to keep the post non-political.
The fact does remain that the budget will affect many businesses in all sectors. Leisure & entertainment will likely be affected more than others as this is discretionary spending for consumers - we can manage without our trip to the pub / restaurant / theme park. Most sections of the media - across the broad political spectrum - seem to agree on this.
It will certainly be a tough year for the leisure & entertainment industry. They may just weather it out better than expected (time will tell). But looking back a few years to when we were coming out of the pandemic, the staycation industry boomed (OK, due in part to the risk of rules changing at short notice). So it is quite possible that consumers may forego overseas holidays in favour of "special treat" days out / short breaks, which would be beneficial to the leisure & entertainment industry, which of course, includes the theme parks.
Alton Towers - like all of the hospitality sector - will face recruitment challenges due to reasons already stated (location / pay / transport etc).
GooseOnTheLoose
TS Member
It was less about struggling to perform in terms of revenue, and more about the City undervaluing the stock relative to what the consortium believed it was worth. The share price had stagnated. The market had grown tired of the "roll out a Midway every 10 minutes" strategy and was spooked by the CapEx required to keep the aging theme parks relevant.
Taking it private removed the quarterly scrutiny. This allowed them to make the "difficult decisions" we are seeing now, aggressive restructuring, outsourcing, asset disposal, without having to issue a profit warning every time they saved a penny on a gardener.
The current restructuring isn't necessarily to allow them to go heavier on investments in a benevolent sense. It is to improve EBITDA to make the debt servicing viable in a high interest world, and to dress the business up for its inevitable return to the public markets or sale.
I would exercise extreme caution regarding the idea that outsourced functions will return in house. Once you have TUPE'd staff over to a third party like OCS or Aramark, bringing them back is a legal and financial nightmare. You aren't just taking back the staff, you are taking back the pension liabilities, the HR administration and the risk. Unless the contractor fundamentally breaches the contract to a catastrophic degree, those functions are gone for good.
I am with you on the structural causes, but I must correct you on the budget impact. It is certainly not imperceptible for the leisure industry.
The increase in Employer's National Insurance contributions is a massive hit for high volume, low wage employers like theme parks and their contractors. They employ thousands of people. That bill has just gone up significantly. They cannot easily pass that cost onto customers who are already price sensitive, so they cut hours or staff numbers instead. It is a direct lever.
You are absolutely spot on regarding the energy costs, though. Theme parks are energy intensive beasts and losing access to the Internal Energy Market post Brexit has left the UK uniquely exposed to price spikes compared to our European neighbours. That is a structural failure that no amount of efficiency savings can fix.
This is the critical operational failure. Alton Towers is geographically isolated. If you pay minimum wage, you cannot expect staff to own a car and pay for fuel to get there. If you cut the staff transport, you cut your labour pool off at the knees. It is a false economy of the highest order.
I wouldn't bank on it. 2021 was an anomaly caused by legal restrictions on travel. The current data suggests that people are prioritising their week in the sun in Spain over everything else, and cutting back on domestic days out to pay for it. The "special treat" is the holiday abroad; the "expendable luxury" is the £300 family day at Alton Towers.
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Dave
TS Founding Member
I mean you didn’t really keep your post non-political (not that it’s a problem) when you mentioned the budget. And I wasn’t responding politically specifically, I’m ambivalent to the current government.
My point is the right wing are blaming everything but the actual causes of the current stagflation (Brexit and wars with a pinch of Covid), even Sunak (who wasn’t good) couldn’t fight those headwinds (Truss on the other hand turbo charged them, then fed them into a nuclear reactor before detonating it).
I can’t get my phone to double quote but as for @GooseOnTheLoose comments on the budget, I get your point to an extent but the companies impacted are still posting profits (even Merlin in practice, even if not on paper). I do think the business rate discount ending (which was planned when the Tories were in power), was handled
Clumsily but that’s about it.
SuperMuscleMan
TS Member
Remoaner vibs here but these are not the facts. Large Policy-Related Factors from the previous 2 government's increased costs and gas is locked in with Europe. If it wasn't we would pay less. Our current government promised to reduce bills but £300 per year from when they started the car crash. However upto October since taking power prices went up from 1,568 to £1,755.
Labours National Living Wage, added billions in costs for retailers, food manufacturers, and farms. While Extreme weather has disrupted UK and European crops like wheat and potatoes. Global commodity prices for dairy, oils, and meat have contributed to elevated wholesale costs. UK farms face record input costs for fertiliser and energy, ( see Labours green agenda) amplifying these pressures despite some muted import effects.
We are also seeing extended producer responsibility for packaging and business rates being applied in 2026 thanks to this government... Not Brexit.
That maybe for Merlin but I think your find alot of hospitality business like pubs (500 have closed since labour took over) have had to reduce staff numbers so they can keep mother staff on. Therefore younger workers are missing out. Businesses will take far fewer risks if they are not rewarded for their output.
We are now suffering some of the lowest investment as businesses are concerned over taxes and policy shifts and changes. Youth unemployment has risen sharply, with us having the steepest G7 decline in youth jobs market performance. Possibly due to the fact not one member of the government cabinet has ever run a business and most haven't had a job in the real world. (It doesn't count if your dad owned a tool factory or your worked in customer service in accounts!)
I don't blame businesses scaling back, trying alternative methods and reducing staff. Every labour government on record has messed up employment and has a higher civil servant count and lower higher unemployed count at the end.
Brexit has had an impact but it's one of many factors that could have been avoided. A wider more critical view shows it's not a one trick pony but several on here like to blame Brexit for everything.
GooseOnTheLoose
TS Member
I honestly don't know where to start with this salad of Daily Mail headlines and economic illiteracy, but I shall do my best to unpick it.
The Border Target Operating Model, which charges up to £145 per consignment for imports from the EU, is a direct consequence of Brexit. That is a cost that didn't exist before 2020. That is a fact, not a "vibe".
Just because they haven't run a hedge fund or sold used cars doesn't mean they haven't had a "real job". Incidentally, the last Prime Minister to "run a business" was Rishi Sunak, and he presided over the highest tax burden since the Second World War.
When Labour left office in 2010, after the greatest global financial crash in history, unemployment was lower (7.8%) than it was when they took over from the Conservatives in the recession of the early 90s. Between 1997 and 2008, the UK experienced the longest period of sustained economic growth and employment stability on record.
Blaming the current government for the structural economic damage caused by 14 years of austerity, a botched Brexit deal, and the Kamikwasi budget event is rewriting history.
Starting your argument with "Remoaner VIBES" in 2026 is the intellectual equivalent of turning up to a gunfight with a banana. It doesn't invalidate the data, it just shows you have run out of actual arguments.
The UK is part of a global energy market. The price of gas is determined by global demand, not by Brussels. Being "connected to Europe" via interconnectors is actually what keeps the lights on when the wind doesn't blow. If we weren't connected, we would be entirely reliant on LNG shipments, competing directly with Asia for the highest bidder. That would make energy more expensive, not less.
Fertiliser is made using natural gas. The price of fertiliser skyrocketed because Vladimir Putin invaded Ukraine and the global gas price spiked. Blaming "Labour's Green Agenda" for the global price of ammonia production is a reach that would dislocate a lesser shoulder.
Extended Producer Responsibility was legislation introduced and championed by the Conservative Government under the Environment Act 2021. Labour are merely implementing the timeline set by their predecessors. Do try to check which rosette the politician was wearing when they signed the bill.
The Border Target Operating Model, which charges up to £145 per consignment for imports from the EU, is a direct consequence of Brexit. That is a cost that didn't exist before 2020. That is a fact, not a "vibe".
I find this "real world" argument tiresome. Keir Starmer was the Director of Public Prosecutions, running the Crown Prosecution Service, a massive organisation with thousands of employees and a budget of half a billion pounds. Rachel Reeves worked as an economist at the Bank of England.
Just because they haven't run a hedge fund or sold used cars doesn't mean they haven't had a "real job". Incidentally, the last Prime Minister to "run a business" was Rishi Sunak, and he presided over the highest tax burden since the Second World War.
This is demonstrably false.
When Labour left office in 2010, after the greatest global financial crash in history, unemployment was lower (7.8%) than it was when they took over from the Conservatives in the recession of the early 90s. Between 1997 and 2008, the UK experienced the longest period of sustained economic growth and employment stability on record.
Blaming the current government for the structural economic damage caused by 14 years of austerity, a botched Brexit deal, and the Kamikwasi budget event is rewriting history.
Rob
TS Team
I'm going to leave the existing discussion in place, but please can I ask that we get back to Alton Towers discussion rather than in depth discussion regarding the budget and other political subjects. As mentioned above, we have dedicated threads for that. Any further off-topic posts may be deleted.
Thank you!
Thank you!
Well I wouldn’t say this comment is political but I know a few people personally who have just been made redundant from the hotels, a couple of senior staff at least.
Then again, Alton Towers love having a bit of a staff cull every few years offering redundancy to long term staff on park.
Then again, Alton Towers love having a bit of a staff cull every few years offering redundancy to long term staff on park.
I'm expecting the park to open just as it closed in November - no significant changes / improvements except for that we know of. The hotels will be exactly the same.
Only thing we are guaranteed of is the annual increase in the cost of the Pizza Pasta buffet
Wouldn't surprise me if parking goes up this year as well - its easy money for Merlin
Only thing we are guaranteed of is the annual increase in the cost of the Pizza Pasta buffet
Wouldn't surprise me if parking goes up this year as well - its easy money for Merlin
They always do paint and clean at least something last year they replaced a lot of the wooden fences around Kantanha CanyonI'm expecting the park to open just as it closed in November - no significant changes / improvements except for that we know of. The hotels will be exactly the same.
Only thing we are guaranteed of is the annual increase in the cost of the Pizza Pasta buffet
Wouldn't surprise me if parking goes up this year as well - its easy money for Merlin
If they tidy up some of the areas and redo do some paint jobs be quite satisfied with that also Project Horizon might be beginning this year
Skyscraper
TS Member
Bert2theSpark
TS Member
Usually when we’ve had a quieter season/cutbacks we’ve usually seen some level of refurbishment/rearranging of the deck chairs. The Towers TLC program was a big front for this to try and re-ensure consumer confidence after some devastating cuts.
I reckon they’ll be small extra costs across the parks but they’ll want to keep stuff like baggage holds on 13 and Smiler. From what I’ve seen in similar businesses so far, staff will bare the brunt of next season as they adjust to having smaller teams, and having a much higher than normal cognitive load from learning new things across the park on top of previous responsibilities. They’ll have to adjust to where the responsibility lies with small projects and where the buck stops when things go wrong. 2026 will very much be a season of adjustment and getting a feel on how things will flow here on out.
I reckon they’ll be small extra costs across the parks but they’ll want to keep stuff like baggage holds on 13 and Smiler. From what I’ve seen in similar businesses so far, staff will bare the brunt of next season as they adjust to having smaller teams, and having a much higher than normal cognitive load from learning new things across the park on top of previous responsibilities. They’ll have to adjust to where the responsibility lies with small projects and where the buck stops when things go wrong. 2026 will very much be a season of adjustment and getting a feel on how things will flow here on out.