[🌎 Universal GB] Impact on the UK market

[Matt.GC]

@Matt.GC

But running the parks into the ground is a terrible long-term investment, look at Disney, their parks are not a bit of side-income, the parks are the financial backbone of the whole company. It proves if you bring people into a truly magical place, people want to spend money there, and take some of that magic back home with them too. Their biggest problem is too many people want to go, even when they increase ticket prices exponentially the crowds still come!

Any sensible investor would want to copy exactly what they are doing.

What Merlin have been doing is milking the UK due to no competition and having a virtual monopoly, and re-investing profits into other parks, namely opening new Legoland parks to compete against existing parks elsewhere in the world. From a UK perspective I hate what they've done to our parks, but when you see some of their parks outside the UK it makes you realise, oh, it's not that they can't do good theming or maintain anything, it's they just don't see the need to in the UK. In terms of cash flow, Merlin completely have the money and ability to defend their UK home ground against universal, but they'll have to stop the enshitification of our parks to subsidise their Asia and US projects.

You're misunderstanding what I'm saying.

You're right, it is a terrible long term investment. But venture capital hedge funds aren't in it for the long-term are they?

You're comparing a stable publically NYSE listed company with a private equity cash cow.

That's not to say the Merlin parks don't have a place in the market. They do. As a domestic market budget offering. That's what they are now, that's what they will continue to be.

But all this "up their game" stuff, assuming it somehow means that the parks will get better and we start seeing higher quality attractions and operations, is absolutely absurd. Madness even. If a business comes along and takes almost all of your non-core premium market away, throwing money at putting tanks on their lawn is absolute insanity.

What we have now at Merlin parks is likely what we'll have in the future. For most intents and purposes, Universal GB and Merlin are not "competitors", despite 2 years of over excited Thoosies falsely, and repeatedly, claiming otherwise.

One will offer a world class holiday resort, the other will offer a collection of funfairs with B&M's for 90 quid a year. Different business models, mostly different markets.

If "upping their game" to "compete" means sharpening their current strategy, then I'll completely agree with that. Maybe they'll mix a little bit more beef into their burgers and they'll open another ride or 2.

But any suggestion that the cheque book will come out and we'll start seeing any tangible high quality investments is utterly insane, and makes zero business sense. What we've got now, is pretty much what we'll have in the 2030's. That's your special occasion posh restaurant Vs you Big Mac and chips.

Anyone expecting the best years of Merlin parks, particularly Towers, lay ahead of them, will be sorely disappointed.

 

[Hid]

I think it may have a small impact might increase attraction quality Merlin do better when there is other parks

 

[Dave]

You're misunderstanding what I'm saying.

You're right, it is a terrible long term investment. But venture capital hedge funds aren't in it for the long-term are they?

You're comparing a stable publically NYSE listed company with a private equity cash cow.

That's not to say the Merlin parks don't have a place in the market. They do. As a domestic market budget offering. That's what they are now, that's what they will continue to be.

But all this "up their game" stuff, assuming it somehow means that the parks will get better and we start seeing higher quality attractions and operations, is absolutely absurd. Madness even. If a business comes along and takes almost all of your non-core premium market away, throwing money at putting tanks on their lawn is absolute insanity.

What we have now at Merlin parks is likely what we'll have in the future. For most intents and purposes, Universal GB and Merlin are not "competitors", despite 2 years of over excited Thoosies falsely, and repeatedly, claiming otherwise.

One will offer a world class holiday resort, the other will offer a collection of funfairs with B&M's for 90 quid a year. Different business models, mostly different markets.

If "upping their game" to "compete" means sharpening their current strategy, then I'll completely agree with that. Maybe they'll mix a little bit more beef into their burgers and they'll open another ride or 2.

But any suggestion that the cheque book will come out and we'll start seeing any tangible high quality investments is utterly insane, and makes zero business sense. What we've got now, is pretty much what we'll have in the 2030's. That's your special occasion posh restaurant Vs you Big Mac and chips.

Anyone expecting the best years of Merlin parks, particularly Towers, lay ahead of them, will be sorely disappointed.

Venture capitalists are not that short term.

They will just sell if they feel that vulnerable, my gut feeling is one of two things will happen soon.

1) Kirkby have the capital to buy the whole group and see it as a longer term investment.

2) Lego is split off from the group and remain with Kirkby and the rest of the group will be split off either together as one big sale or the individual assets sold off and Merlin wrapped up.

 

[Matt N]

I think it may have a small impact might increase attraction quality Merlin do better when there is other parks

I would add the caveat there of “Merlin do better when there are other parks on their level”.

Unlike the competition to Merlin in Germany and Italy, Universal will be in a wholly different league. They have big bucks like no other operator aside from Disney, they have big IPs like no other operator aside from Disney, and they will charge big bucks to get in accordingly.

If Merlin goes high end in an attempt to compete with them, I feel this would be hugely misguided and would result in them being placed in Universal’s direct firing line, setting them up for a head on head battle with Universal that Universal would almost certainly win. That would be needlessly creating market overlap when there wasn’t any before, which is almost akin to business suicide when talking about a huge player like Universal.

The key will be creating difference with Universal rather than trying to be similar, and this is why I feel sticking with what they’re doing now is probably their best competitive bet. Price is a legitimate dividing line and competitive USP, and one that Universal is unlikely to undercut them on.

I think that Merlin’s key challenge, rather than raising quality, will be ensuring value for money and bang for buck at a cheaper price point. If they can offer value for money, that will keep Alton Towers and the other parks appealing in a post-Universal UK industry.

 

[Dave]

I would add the caveat there of “Merlin do better when there are other parks on their level”.

Unlike the competition to Merlin in Germany and Italy, Universal will be in a wholly different league. They have big bucks like no other operator aside from Disney, they have big IPs like no other operator aside from Disney, and they will charge big bucks to get in accordingly.

If Merlin goes high end in an attempt to compete with them, I feel this would be hugely misguided and would result in them being placed in Universal’s direct firing line, setting them up for a head on head battle with Universal that Universal would almost certainly win. That would be needlessly creating market overlap when there wasn’t any before, which is almost akin to business suicide when talking about a huge player like Universal.

The key will be creating difference with Universal rather than trying to be similar, and this is why I feel sticking with what they’re doing now is probably their best competitive bet. Price is a legitimate dividing line and competitive USP, and one that Universal is unlikely to undercut them on.

I think that Merlin’s key challenge, rather than raising quality, will be ensuring value for money and bang for buck at a cheaper price point. If they can offer value for money, that will keep Alton Towers and the other parks appealing in a post-Universal UK industry.

They won’t try and compete with Universal but they can’t continue their current model if they want to be successful.

It needs to be cheaper to enter than Universal but not terrible, otherwise people will just think “I might as well spend the extra for universal”

The key is to find a sweet spot that is good enough that people go “it’s not worth paying the extra every year, I can do X for 30% less and it’s not bad”

 

[Hid]

I would add the caveat there of “Merlin do better when there are other parks on their level”.

Unlike the competition to Merlin in Germany and Italy, Universal will be in a wholly different league. They have big bucks like no other operator aside from Disney, they have big IPs like no other operator aside from Disney, and they will charge big bucks to get in accordingly.

If Merlin goes high end in an attempt to compete with them, I feel this would be hugely misguided and would result in them being placed in Universal’s direct firing line, setting them up for a head on head battle with Universal that Universal would almost certainly win. That would be needlessly creating market overlap when there wasn’t any before, which is almost akin to business suicide when talking about a huge player like Universal.

The key will be creating difference with Universal rather than trying to be similar, and this is why I feel sticking with what they’re doing now is probably their best competitive bet. Price is a legitimate dividing line and competitive USP, and one that Universal is unlikely to undercut them on.

I think that Merlin’s key challenge, rather than raising quality, will be ensuring value for money and bang for buck at a cheaper price point. If they can offer value for money, that will keep Alton Towers and the other parks appealing in a post-Universal UK industry.

Your saying parks are in Germany like Phantasialand and Europa Park aren't on par with Universal in terms of ride quality and overall upkeep them two are large high quality parks.

Merlin needs to get availability better but also general upkeep that's all they really need to do just to entice people who go to Universal to get them come to their parks

 

[Matt N]

They won’t try and compete with Universal but they can’t continue their current model if they want to be successful.

It needs to be cheaper to enter than Universal but not terrible, otherwise people will just think “I might as well spend the extra for universal”

The key is to find a sweet spot that is good enough that people go “it’s not worth paying the extra every year, I can do X for 30% less and it’s not bad”

I agree with this fully.

I wasn’t talking “current model” in terms of everything, but I do feel that they should maybe optimise their current “cheaper pricing” model to provide the optimal guest experience for the price point rather than going high end.

Your saying parks are in Germany like Phantasialand and Europa Park aren't on par with Universal in terms of ride quality and overall upkeep them two are large high quality parks.

Merlin needs to get availability better but also general upkeep that's all they really need to do just to entice people who go to Universal to get them come to their parks

I’m not saying that Phantasialand and Europa Park aren’t great parks.

But in terms of appeal to the general populace, Universal is on a wholly different scale in terms of guest figures and mass appeal. While Europa Park attains around 5-6 million per year, and Phantasialand attains around 1.5-2 million per year… Universal UK is forecast to hit 8.5 million in its first year by Universal.

Many of Universal’s parks regularly surpass 10 million guests per year, and the park in Japan gets as high as 14-15 million, if I’m not mistaken. In terms of guest figures and mass appeal, the scale of Universal is on another level, with Disney being the only real legitimate rival.

As much as you can talk about Phantasialand, Europa and the like being high quality experiences, popular branding that resonates with the populace and high brand recognition are also really important, and Universal, like Disney, have this in absolute droves in a way that no other operator can compete with. That Universal name, like the Disney name in France, is a force to be reckoned with in terms of brand recognition.

The only Universal theme park in Europe, and some of the big name IPs that will likely come with that, will absolutely draw people from all over the continent in a way that an original product without the brand recognition wouldn’t. People on here might bemoan IPs, but when heavyweight brands are brought to life by Disney or Universal, they really do have pulling power like nothing else.

With that in mind, I stand by my thinking that Universal will be on a wholly different scale of visitation and power compared to anything else in Europe other than DLP.

 

[Matt.GC]

Venture capitalists are not that short term.

They will just sell if they feel that vulnerable, my gut feeling is one of two things will happen soon.

1) Kirkby have the capital to buy the whole group and see it as a longer term investment.

2) Lego is split off from the group and remain with Kirkby and the rest of the group will be split off either together as one big sale or the individual assets sold off and Merlin wrapped up.

Depends what we mean by short-term. Upon sale, Blackstone will ensure they walk away with far more than they put in once TVM is taken into account. Judging by how the parks have been these last few seasons, I'd wager they are looking for an exit pretty soon. Whether this announcement hastens that or entraps them for slightly longer, I'm not sure.

But I agree. Option 2 is where my money would go. I suspect, and this is little more than intuition, that was always the plan.

The deciding future is on whoever buys and what they want to do. Lego is safe, as you've already said, Chessington and Thorpe will likely feed off of Universal and benefit. But I could see the three main parks being flogged, maybe with midways, to someone else. Interesting times.

 

[Tim]

I'm not expecting massive investment, and for Merlin to suddenly start building Forbidden Journey level dark rides to try and compete with Universal.
But I do expect more investment to bring the basic offering up to standard.

The biggest impact of Universal entering the market is that the monopoly is finally broken. Merlin have effectively set the standard in the UK because no one else had the backing to go big. Blackpool is the only other park building big rides (and very rarley). Paultons might rival them in quality but with just one site (which is relatively small) they weren't enough of a threat by themselves to evoke change.
Now however Merlin is sandwiched. They won't control the high end or the low end of the market. Universal will be offering a high end but also very pricey offering. Merlin can offer the budget friendly version of that, but the bar of what is expected for that budget offering will be higher than it is now. Guests will expect a similar level of presentation to Universal even if they don't expect the same headline rides. Especially when places like Paultons have already got the balance of quality vs prices of a mid-teir park just right.

 

[Matt.GC]

Merlin needs to get availability better but also general upkeep that's all they really need to do just to entice people who go to Universal to get them come to their parks

They don't need to do any of that. All they have to do is offer not far off what they offer right now for a significantly cheaper price than Universal (spoiler alert - they will). A clever marketing campaign piggybacking off of the Universal bug whilst highlighting the massive price differential and Fanny's your aunt.

That's a successful business strategy. There is no incentive whatsoever for Merlin parks to improve from what we see at the moment. On the contrary, I can pretty much guarantee you that any Capex being pumped into them over the next 6 years will be far less in real terms than it was in any 6 year period between 1992 and 2014. Why would they?

 

[Dave]

The deciding future is on whoever buys and what they want to do. Lego is safe, as you've already said, Chessington and Thorpe will likely feed off of Universal and benefit. But I could see the three main parks being flogged, maybe with midways, to someone else. Interesting times.

I don’t get where this idea that Thorpe and Chessington will benefit from Universal comes from.

There is no direct public transport link (currently it would take 2hrs and 15 minutes to get from Universal to Thorpe on public transport on a Monday morning and 1hr 50 on average in car (1hr 25 with no traffic). Obviously public transport to towers would be abysmal but in car it’s 2hrs 20min so only one hour further. People seem to think that because Thorpe and Chessington are in Greater London they sit in some bastion of public transport links but they are not that well connected.

Even if the planned boost to links with centeal
London occur Thorpe and Chessington don’t benefit as you still need to travel into central London and then back out again to either of the parks.

Towers has the whole North of England and Scotland in its catchment area….

 

[Matt.GC]

I don’t get where this idea that Thorpe and Chessington will benefit from Universal comes from.

There is no direct public transport link (currently it would take 2hrs and 15 minutes to get from Universal to Thorpe on public transport on a Monday morning and 1hr 50 on average in car (1hr 25 with no traffic). Obviously public transport to towers would be abysmal but in car it’s 2hrs 20min so only one hour further. People seem to think that because Thorpe and Chessington are in Greater London they sit in some bastion of public transport links but they are not that well connected.

Even if the planned boost to links with centeal
London occur Thorpe and Chessington don’t benefit as you still need to travel into central London and then back out again to either of the parks.

Towers has the whole North of England and Scotland in its catchment area….

All parks, including Towers, are part of a UK tourist industry that will grow when a Universal park opens here. For that not to be the case, there would be no incentive whatsoever for Universal to build here (I still don't understand what those incentives are, but they must have their reasons which will soon become apparent).

That's why the "competition" argument is so rediclous. There is none, most of the market that Universal will operate in does not currently exist. More tourists in the UK = more people to sell tickets to. It also equats to more people landing in a London airport. Regardless of transport links, because I don't think they matter as much as some make out, Thorpe and Chessington are near London, a major tourist attraction in itself. Even if none benefit, I can't see any, including Towers, being significantly harmed.

 

[WillPS]

I don't think it's a coincidence that investment quality at Alton Towers peaked in the early-to-mid 90s, then dropped off after DLP had opened (and proved to be far less of a threat than they had promised to be).

The lesson from that might've been that there's little to worry about.

I also don't believe for a moment that Merlin will have any desire to compete on attraction quality; it'd represent a complete about-turn in their business model at this point. Their attractions are no better or worse in markets where they already compete more directly with Universal or Disney are they?

 

[Bowser]

I don’t get where this idea that Thorpe and Chessington will benefit from Universal comes from.

There is no direct public transport link (currently it would take 2hrs and 15 minutes to get from Universal to Thorpe on public transport on a Monday morning and 1hr 50 on average in car (1hr 25 with no traffic). Obviously public transport to towers would be abysmal but in car it’s 2hrs 20min so only one hour further. People seem to think that because Thorpe and Chessington are in Greater London they sit in some bastion of public transport links but they are not that well connected.

Even if the planned boost to links with centeal
London occur Thorpe and Chessington don’t benefit as you still need to travel into central London and then back out again to either of the parks.

Towers has the whole North of England and Scotland in its catchment area….

You’re working on the assumption that tourists will be staying at Universal as a hub for their trip but I’d argue it’s just as likely (if not more so) that they will be staying in London, in which case the southern trio of Merlin parks are much more accessible.

Though I maintain my view that the portion of visitors who would have an interest in doing so is likely tiny. I wouldn’t be surprised if less than 1% of UK visitors to DLP also visit Parc Asterix.

On the other hand I do think Minecraft has the potential to be a turning point. It’s a strong enough IP to attract tourists if delivered right and the park are seemingly putting Universal levels of investment in it. So in that sense if anyone is going to benefit it’s more likely Chessington and Legoland due to brand recognition.

 

[Hid]

I think if Towers keep improving as they are tidying up the park add new rides they could be onto a winner position themselves and offer something different to Universal.

All the Merlin Parks offer something different to Universal, Chessington got the Zoo, Legoland has Lego, Thorpe has thrills, Towers is mixed combining natural beauty and historic structures with great rides. They are all different

 

[GooseOnTheLoose]

You’re working on the assumption that tourists will be staying at Universal as a hub for their trip but I’d argue it’s just as likely (if not more so) that they will be staying in London, in which case the southern trio of Merlin parks are much more accessible.

The assumption is likely safer, that tourists will stay at Universal as a hub for their visit. When visiting parks abroad, most families will opt to stay on the resort.

Universal will benefit from tourists who are visiting London, who will likely budget for a single day at a nearby theme park, but I can't the stretch to a second park visit. If you're visiting Paris, you might pop over to Disneyland for a day, but you wouldn't go to Parc Asterix the day after, unless you're a dedicated theme park enthusiast.

Ths coat of staying within London itself should also be taken into account, given that it is one of the most expensive cities in the world to visit. Budgets will be a little more stretched than they would elsewhere.

Merlin's London Midways will absolutely get a secondary spend bounce, but the M25 parks not so much.

 

[Matt N]

If Thorpe and Chessington benefit from any secondary spend bounce, I think it will come from a renewed interest in theme parks among the domestic market as a result of Universal. If this occurred, all of the parks would likely benefit.

I think it’s fair to say that UK theme parks have had a tumultuous time over the last decade or so, and the most prominent news about theme parks has been negative, with things like the Smiler crash dominating the airwaves. What I feel Universal could do is fill the airwaves with positive theme park news and reinvigorate the UK public’s interest in the wider theme park industry, which would have knock-on benefits for other parks in the country.

I ascertain that Year of the Rollercoaster in 1994 was similar. While Alton Towers, Blackpool Pleasure Beach and Drayton Manor were the ones building big roller coasters, they weren’t taking slices of the existing pie from other parks, they were growing the pie so that everyone got a bigger slice. Universal has the potential to be similar, I feel.

 

[flyingguitar]

If Thorpe and Chessington benefit from any secondary spend bounce, I think it will come from a renewed interest in theme parks among the domestic market as a result of Universal. If this occurred, all of the parks would likely benefit.

I could see this happening, although I do wonder how that will weigh up (if thorpe gets less due to people going to universal, or if they get more sue to increased theme park demand)
I really don't think Thorpe or Chessington would get much international travel, tbh I don't think universal UK will bring that much international visitation, I think a lot of its visitation will be from the UK similar to universal Japan.
even if it dose bring more visitors, people won't go to other parks, the other parks have virtually no public transport, even if people wanted to go I can't imagine them wanting to put up with driving through london to get there.

I'm not expecting massive investment, and for Merlin to suddenly start building Forbidden Journey level dark rides to try and compete with Universal.
But I do expect more investment to bring the basic offering up to standard.

this is what I am expecting, I could see 2 ways they do this depending on the park:
AT and Chess: investment increased with more 1990's era wardley quality investments such as nemesis, oblivion, etc

thorpe: I could see this going 2 ways, either they try to improve themeing and add some well themed rides, or the lean into the no theming and just add rollercoasters trying to get the thrill market.


The problem merlin will have is that people will now be able to compare universal to AT, chess and Thorpe.
the theming quality isn't the first thing people may notice it is some of the older or worn parts they will notice, for instance 13's station, the facade is falling apart if people went to universal, then go to AT or vice versa they may decide it isn't worth it and rarther than going to AT once a year just save for a year and go to universal once every 2 years or so.