Do they ever want Alton Towers to recover?

[Yalnix]

Gotta say here I personally think AT wins out. I just like the rides better and thats it.

The problem Alton has is not competition within the UK. If you ask me if I'd rather go to Phantasia/Europa or Alton, then catch me feasting on Bratwurst every night.

 

[ChristmasPud]

It kills me when people look at these two things in this way - they're not exclusive of each other. Theme parks sell a feeling - or the opportunity/tools to create one. If you offer people a sucky experience, they won't come back and it hurts you financially. They will spend their cash somewhere else. The industry is almost entirely reliant on discretionary spending.

You can't have one recovery without the other. It doesn't make any sense.

I agree with all this Rick, but I (politely!) wonder why then you often defend their strategically cheap quality? I dont mean to criticise the 'cheaper than ideal' spending, because that's always been the case for the UK. I mean how they more often spend that money in ways that are short-termist and creates (most the time) poor value for money in the guest experience.

They do choose strategically to slash on quality, and hurry projects through every development stage. In favour of spending bigger budgets on marketing - The kind of strategy to make people want the product as much as possible, then after they're through the door it doesnt matter as long as you deliver the basics. Personally I don't subscribe to that idea, I don't think it works long term. (But perhaps we are seeing an unexpected change now with SW8?)

Merlin may have solved the big problem of being able to run attractions on a global scale without financially collapsing (without a big media arm to back them up like Universal or Disney), but it's come at a cost to substance and quality in their resort theme parks. RTPs seemingly can't be run very well when treated like FMCG, which has been proven in many ways, surely?

Merlin want Alton Towers to recover, but I doubt Merlin will keep their resort theme parks, increasingly they don't perform under their global strategy. They may perform better on a differently structured business - but I don't know nearly enough about that to comment!

 

[PeteB]

I agree with all this Rick, but I (politely!) wonder why then you often defend their strategically cheap quality? I dont mean to criticise the 'cheaper than ideal' spending, because that's always been the case for the UK. I mean how they more often spend that money in ways that are short-termist and creates (most the time) poor value for money in the guest experience.

They do choose strategically to slash on quality, and hurry projects through every development stage. In favour of spending bigger budgets on marketing - The kind of strategy to make people want the product as much as possible, then after they're through the door it doesnt matter as long as you deliver the basics. Personally I don't subscribe to that idea, I don't think it works long term. (But perhaps we are seeing an unexpected change now with SW8?)

Merlin may have solved the big problem of being able to run attractions on a global scale without financially collapsing (without a big media arm to back them up like Universal or Disney), but it's come at a cost to substance and quality in their resort theme parks. RTPs seemingly can't be run very well when treated like FMCG, which has been proven in many ways, surely?

Merlin want Alton Towers to recover, but I doubt Merlin will keep their resort theme parks, increasingly they don't perform under their global strategy. They may perform better on a differently structured business - but I don't know nearly enough about that to comment!

It's strange, surely the big theme parks should be their highest performers. It can only be down to their own doing.

Just in Towers case, there was talk a few years ago (might have been in the LTDP) that they wanted guests numbers to increase to something like 3.8m or 4m. When an average year seems to be 2.8m it makes you wonder if there is a ceiling to how many people they can attract.

That being said, the park has done years where they've attracted 3.4m visitors. Most notibly the early to mid 90's after the park has taken an enormous slump for years. Surely then, it's a case of poor quality offerings, and lack of investment.

The UK has a suitable population, ever increasing, so it wouldn't too far of a stretch to double visitor numbers to 6-7m surely?

 

[Matt.GC]

The is no credible evidence to suggest that the theme park industry is in long term decline. None whatsoever.

Of course it would be hard to prove either way due to Merlin parks having such a massive share of this market in the UK, which basically allows them to say whatever they want to their shareholders.

Their parks are in decline, and they own the biggest and most major parks in the country; therefore the industry must be in decline. That's the way they're excusing their poor performance and justifying it to their investors.

This suggests to me one of the following (just me thinking out loud legal team and NOT presented as fact)-

A. They don't, for various reasons, see UK Theme Park Resorts as playing a major part in the future of the business and could be looking for either a partial or full exit from this market.

B. Gross incompetence where they completely fail to understand the market they operate within. In this scenario, they have genuinely convinced themselves that UK RTP's are in decline, it's not their fault and if they sit back and do nothing, guests will just return on their own accord.

C. They've got themselves in to a bit of a sticky situation. Things have not gone as planned, they're not in the place they thought they would be a few years ago and need to buy themselves more time. Cheaply knocking up a few expensive hotels is a great way to generate short term profits so they just need a few short term excuses to keep the wolves at bay for now.

D. Wishful thinking this one - They actually originally planned massive spending projects in UK resort theme parks over the next few year's and have decided to redirect this investment elsewhere instead. Investment in parks like Alton will remain at similar levels to now. Nothing of substance (other than a load made up flannel about "cost synergies", which isn't even real English) has been said recently by Merlin about the future of operating budgets for the park.

So in light of recent events, I think to answer the question "Do they ever want Alton Towers to recover?" I would have to change my original response to say that they HOPE it will, but don't have much confidence that it will. Be that due to lack of competence, lack of appetite for it or just no longer seeing it as part of the long term strategy of the business.

 

[James]

Just in Towers case, there was talk a few years ago (might have been in the LTDP) that they wanted guests numbers to increase to something like 3.8m or 4m. When an average year seems to be 2.8m it makes you wonder if there is a ceiling to how many people they can attract.

That being said, the park has done years where they've attracted 3.4m visitors. Most notibly the early to mid 90's after the park has taken an enormous slump for years. Surely then, it's a case of poor quality offerings, and lack of investment.

The UK has a suitable population, ever increasing, so it wouldn't too far of a stretch to double visitor numbers to 6-7m surely?

If I remember correctly, the LTDP outlines three strategies. One involving low investments, resulting in guest figures lowering from the average at the time (2.5m, something like that), but staying steady. One involving a mixture of low-medium investments, with the occasional high investment, resulting in figures ranging from 2.5 to 3m. Then one involving consistently high investments, resulting in figures rising to 4-5m+.

I think the plan outlined the above and stated that they decided to go for the middle ground and keep figures steady, not aiming to rise guest figures really high.

I might be a bit off with the numbers but it was something along those lines. Plus since the LTDP was released (even though half of it can be dismissed now) you can see they've kept to this, they've been investing in the park each year, but not enough to really draw in big numbers.

I'm sure Alton Towers is capable of reaching high guest figures of 4-5m+, although the park would need so much investment and quality and infrastructure improvements to meet this, and actually try to meet the standard of European/world wide parks. It's clearly not going to happen under Merlin, they have no desire whatsoever to invest much in this area. They invest for the sake of it, to keep the businesses running and to keep shareholders happy. Plus it beefs up their portfolio.

It wouldn't surprise me if the theme parks are dropped at some point. Merlin seem invested in midway attractions, and to be fair to them I think they do very well in that market. The theme park resort division just seems to be... there, a royal pain in the backside for them, cost a lot to run, no enthauism to expand or invest. No passion.

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[Matt.GC]

I think it's the UK theme park division specifically. Merlins very crude strategy (which works fine for a midway operator, but disastrously for Theme parks) of "backing the winners" means that parks doing well do get investment.

In the uk, they can't just build whatever they want due to planning restrictions and therefore need to think far more clever about their investments in order to get a return.

They also seen crap at understanding the core demographic of their parks. Towers is a wildly different park to any of their other parks, not just in the UK but the world. It's the only one that ever had a world class reputation, has stunning grounds which are an attraction in their own and it's in the middle of nowhere. I'm sure the Merlin board would use Thorpe as an example to justify their strategy of late, but if you build expensively themed B&M wing riders and £multi million dark ride experiences in a low capacity park little bigger than car park located in suburban Surrey what do you expect? If either ride had been built at Towers, they would have likely been a success IMO.

If SW8 doesn't get the gate figures back to at least 2.5m over the next few seasons (I don't think it will) than they have a big problem on their hands. That estate and hotel capacity simply can't be maintain such low visitation levels like their small parks can. Towers will always require higher operating budgets than standard medium sized Merlin parks.


What Towers effectively needs is a bailout!

 

[themeparkfan]

The problem also comes when the midway attractions don't do as well either we were at London last week and shrek, sealife, dungeons and eye weren't that busy. AT was a alot busier on Sunday but they didn't seem equipped for it.

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[PeteB]

If I remember correctly, the LTDP outlines three strategies. One involving low investments, resulting in guest figures lowering from the average at the time (2.5m, something like that), but staying steady. One involving a mixture of low-medium investments, with the occasional high investment, resulting in figures ranging from 2.5 to 3m. Then one involving consistently high investments, resulting in figures rising to 4-5m+.

I think the plan outlined the above and stated that they decided to go for the middle ground and keep figures steady, not aiming to rise guest figures really high.

I might be a bit off with the numbers but it was something along those lines. Plus since the LTDP was released (even though half of it can be dismissed now) you can see they've kept to this, they've been investing in the park each year, but not enough to really draw in big numbers.

I'm sure Alton Towers is capable of reaching high guest figures of 4-5m+, although the park would need so much investment and quality and infrastructure improvements to meet this, and actually try to meet the standard of European/world wide parks. It's clearly not going to happen under Merlin, they have no desire whatsoever to invest much in this area. They invest for the sake of it, to keep the businesses running and to keep shareholders happy. Plus it beefs up their portfolio.

It wouldn't surprise me if the theme parks are dropped at some point. Merlin seem invested in midway attractions, and to be fair to them I think they do very well in that market. The theme park resort division just seems to be... there, a royal pain in the backside for them, cost a lot to run, no enthauism to expand or invest. No passion.

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Yes it was very much a long those lines, but the LTDP has pretty much been scrapped. Nothing happened in the timelines planned. The only thing which did come off was more accomodation and new ride on the Black Hole site. Both just eventualities anyway, following the same old routine Towers had been at for years. So I find that more of a coincidence than "going according to plan".

I do hope they drop the theme park division, but I certainly wouldn't praise Merlin for their midway attractions as to be honest, they're all crap as well. The Dungeons are not a patch on what they used to be, Madame Tussauds are all a borefest - 2 big tourist brands which were once hailed as some of the best in Britain and now under Merlin's ownership just poor quality. We also have glorified Ferris Wheels and Sea Life centers popping up everywhere. I don't think they perform staggeringly well, its just a case of they keep opening so many of them that naturally their visitor numbers increase year on year.

A time will come when all these midway attractions stop performing, if they haven't already. Merlin are just too cheap, too copy & paste, to achieve any kind of greatness. I remember 6-7 years when we were all saying the way they treat the theme parks will eventually catch up with them, now it's happening, and the same goes with their midway attractions. Just a matter of time.

 

[themeparkfan]

That's what I don't get. They will cut 100 million off there overall budget so ALL the attractions will deteriorate so this will result in a further decrease in visiting numbers and then Merlin top brass will pull another excuse out of the excuses lucky dip : result of Brexit, further terrorist threat, poor weather, incident somewhere or other and decline in economy. That will appease the shareholders who are too blinkered to see the real reason.

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[GaryH]

.... and they will probably build another hotel...

 

[Matt.GC]

That's what I don't get. They will cut 100 million off there overall budget so ALL the attractions will deteriorate so this will result in a further decrease in visiting numbers and then Merlin top brass will pull another excuse out of the excuses lucky dip : result of Brexit, further terrorist threat, poor weather, incident somewhere or other and decline in economy. That will appease the shareholders who are too blinkered to see the real reason.

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The markets didn't get it either, hence the hammering the share price has taken.

 

[MaxPower]

Maybe the shareholders are waking up to the fact that these 'difficult trading conditions' Merlin constantly speak of are caused by the incompetent way they run their business, rather than other factors.

 

[Matt N]

I agree with all this Rick, but I (politely!) wonder why then you often defend their strategically cheap quality? I dont mean to criticise the 'cheaper than ideal' spending, because that's always been the case for the UK. I mean how they more often spend that money in ways that are short-termist and creates (most the time) poor value for money in the guest experience.

They do choose strategically to slash on quality, and hurry projects through every development stage. In favour of spending bigger budgets on marketing - The kind of strategy to make people want the product as much as possible, then after they're through the door it doesnt matter as long as you deliver the basics. Personally I don't subscribe to that idea, I don't think it works long term. (But perhaps we are seeing an unexpected change now with SW8?)

Merlin may have solved the big problem of being able to run attractions on a global scale without financially collapsing (without a big media arm to back them up like Universal or Disney), but it's come at a cost to substance and quality in their resort theme parks. RTPs seemingly can't be run very well when treated like FMCG, which has been proven in many ways, surely?

Merlin want Alton Towers to recover, but I doubt Merlin will keep their resort theme parks, increasingly they don't perform under their global strategy. They may perform better on a differently structured business - but I don't know nearly enough about that to comment!

What does FMCG stand for?

 

[Matt.GC]

What does FMCG stand for?

Fast Moving Consumer Goods, proper retailing as we call it in the supermarket world (not the sissy, slow paced, 9-5 side of retail like clothing etc).

I think electricBill means it in the context of 'high volume, low margin', a trait which characterises FMCG industries.

 

[Matt N]

Fast Moving Consumer Goods, proper retailing as we call it in the supermarket world (not the sissy, slow paced, 9-5 side of retail like clothing etc).

I think electricBill means it in the context of 'high volume, low margin', a trait which characterises FMCG industries.

Ah right. Thanks @matthewgcole!

 

[Dave]

It's strange, surely the big theme parks should be their highest performers. It can only be down to their own doing.

Just in Towers case, there was talk a few years ago (might have been in the LTDP) that they wanted guests numbers to increase to something like 3.8m or 4m. When an average year seems to be 2.8m it makes you wonder if there is a ceiling to how many people they can attract.

That being said, the park has done years where they've attracted 3.4m visitors. Most notibly the early to mid 90's after the park has taken an enormous slump for years. Surely then, it's a case of poor quality offerings, and lack of investment.

The UK has a suitable population, ever increasing, so it wouldn't too far of a stretch to double visitor numbers to 6-7m surely?

The LTDP had a 4 million guest option (the plan proposed three options) but it wasn’t the one they stated they where selecting. The plan they declared they went down was keeping guest numbers stable but increasing spend per head.

Towers usually under-report their guest numbers in 2011 they reported 2.8million guests when they had over 3 million.

I would suspect they are well back into the 2.4 million mark this year, certainly rumour is Towers is doing the best compared to budget of all of the RTP’s. Don’t expect Merlin to improve investment as the park recovers though, it clearly isn’t their plan.

 

[Rick]

The park is recovering, no doubt about that. Yesterday was insane in terms of visitor numbers and judging by the waits in food and retail, people weren't shy of spending either.

The park handled it pretty well. Rides ran consistently. Parking was fairly efficient - even with 1000+ cars on the grass.

The is no credible evidence to suggest that the theme park industry is in long term decline. None whatsoever.

In the UK, or generally?

 

[Matt.GC]

In the UK, or generally?

In the UK.

 

[Rick]

In the UK.

It depends what metric you use, I guess and what you define as a theme park. You could probably bend and shape the numbers to fit whatever argument you wanted to make.

Since the turn of the millennium, we have lost a vast number of parks. Primarily the regional players (Camelot, Granada Studios, American Adventure, Loudoun Castle etc) but also a huge number of seaside properties (Frontierland, Ocean Beach, Rotunda, Pleasure Island, original Pleasureland and Dreamland) that have been left behind with the decline of the British seaside.

Meanwhile, the larger parks have gotten bigger. The word consolidation is banded around a little bit, but that's not really new in the UK industry if you think back to what Tussauds owned in the theme park market, it's only one different than Merlin (Legoland) but it's more prevalent because so much of what previously existed in the market has gone).

 

[Matt.GC]

It depends what metric you use, I guess and what you define as a theme park. You could probably bend and shape the numbers to fit whatever argument you wanted to make.

Well when I made that original statement, that's exactly the context in which I said it and the point I made. Merlin have posted disastrously bad Lfl half year figures in their resort theme parks and have failed to even bother trying to explain to investors as to the reason why.

They wrote war and peace, preaching to the converted about Midways, particularly London. I don't think there's anyone who doesn't think that the 0.9% fall in midway attendance is a direct result of terrorist activity. But they've completely failed to the explain the 2.1% fall at RTP, simple opting to tack "...and Resort Theme Parks" onto a sob story about Midways.

Investors are owed a proper explanation as to why these parks have declined to such an extent. In the absence of that explanation it's perfectly reasonable to scrutinise why Merlin have not given this information over and, in the absence of this, what the reasons behind this decline are.