Which UK theme park do you feel is left most at risk by the potential of Universal entering the UK?

[Matt N]

Hi guys. In the last year or so, we’ve had a rather interesting prospect begin to develop in the form of Universal’s potential entry into the UK theme park market. This rather sudden revelation from Universal took the UK enthusiast community by storm, and by extension, I’d imagine that the revelation has piqued the industry’s interest as well. But with Universal showing signs of intending to develop in the UK, it does arguably pose some competitive risks to the parks that already reside in the UK. With this in mind, I’d be intrigued to know; which British theme park do you feel is left most at risk by the potential of Universal entering the UK?

Personally, I’m going to be slightly controversial and say that I think Universal poses the most risk to Alton Towers, of the current UK parks.

One reason I have for thinking this is that at present, most UK parks cater primarily to a day trip audience. Pretty much all of the smaller parks cater primarily to day trips, and I’d argue that even the London area Merlin parks are day trip-focused, to a strong extent. Thorpe Park in particular, of Merlin’s London properties, is predominantly day trip focused. Universal, on the other hand, will be going for the theme park short break pound, the sort of pound that goes to Disneyland Paris or PortAventura for a few days rather than Drayton Manor or Paultons Park for a regional day trip. With this in mind, I think there’s unlikely to be too much competitive overlap between Universal and most UK parks in this sense. But which park in the UK is an outlier in being somewhat more focused on theme park short breaks? Alton Towers. While the park does have many day visitors, it is unlike most UK parks in having an expansive and well-known resort offering; the park has 694 hotel rooms (indeed, this is supposedly more than Universal’s planned UK resort will open with), a waterpark, a crazy golf course and numerous other “resort”-y things that make it more than just a day trip theme park.

My other reason for feeling that Alton Towers potentially has the most to lose from Universal of the current UK parks is that unlike the other Merlin parks, I don’t feel it really has a strong USP or target market of its own that Universal will never aim to compete with. Thorpe Park has the big coasters, flat rides and general thrill-heavy targeting, Chessington has the zoo, and Legoland has the Lego; these are all areas in which Universal is unlikely to compete too heavily and which the 3 parks in question will likely always maintain a competitive advantage over Universal. But what does Alton Towers have? Universal is likely to aim for a very similar all-round target audience to Alton Towers, they are likely to go for a very similar “family theme park short break” pound to that which Alton Towers currently targets, and they are likely to trounce Alton in the areas of dark rides, theming, entertainment and IP. Granted, Alton Towers does have its thrill coasters, but to properly bend this to their competitive advantage, they’d likely have to do similar to Thorpe and up the thrill-heavy targeting, which would likely wipe out almost 30 years of trying to develop themselves as a family short break resort.

With all this in mind, I do personally feel that Alton perhaps has the toughest time ahead of the current UK parks if Universal does come to the UK. But I’d be keen to know; which UK theme park do you feel is left most at risk by the potential for Universal coming to the UK?

 

[owenstreet7]

I'm hoping it is none of them because they all have their niches i.e. Towers (Immersion), Thorpe (Thrills), Chessington (Animal) and Legoland (Lego) however I don't think it's as simple as that. The Merlins could easily be like Asterix to Disneyland Paris or Seaworld/Busch Gardens to Orlando Disney and Universal parks if they put their minds to it.

I'm going to say that one point I shall make is the Tussauds way of making Thorpe Park for Thrills and Chessington for Families might possibly put them at a disadvantage compared to Universal although it could work if multi day trips to theme parks work in the same way as Orlando. I personally think it's more likely that people will visit Universal UK and then the Warner Bros Studio Tour the day after (especially if a Potter themed area comes to Universal). Thorpe Park and Chessington with their approaches could easily be right for them and be an advantage as long as they're consistent with it.

My reasons for picking Towers is because the park seems to be stagnant in their investments and I'd be concerned if they don't start looking towards their line up gaps. They lack a lot of flat rides, a flume style ride, a selection of indoor rides and most of all a range of rides that everyone can ride together.

Another big factor that will really put Towers at a disadvantage compared to the south parks is how accessible they are by public transport which is what a lot of international tourists will use to get to parks. Thorpe Park having the Thorpe Park Express from Staines and Chessington being outside of Chessington South station both put their parks at a bigger advantage to Towers when Universal comes. In addition to this, they are both closer to London so it is easier for people to do those parks in addition to Universal although it isn't the most straightforward route to get to Staines from Bedford.

Legoland is a separate thing altogether and won't be disadvantaged by Universal as people will tend to go for the Lego brand experience. I'd say it'll sit similarly to Florida.

Merlin will be smart to invest into the southern parks in reality with Universal however I don't think Universal is their only threat.

Paultons Park, Drayton Manor and Blackpool Pleasure Beach represent more immediate threats of varying levels and target audiences which could sting Merlin sooner than Universal. I'd argue the biggest threat to Alton Towers right now is actually an expanding Paultons Park taking on thrills on top of their established and well catered family audience so the park can grow with them. A lot of people honestly don't think Towers will lose it's crown because of nostalgia however I think before Universal sweeps in, Paultons will hit them hard and take the crown first.

That's my take on it in my honest opinion and I'd say Towers will be hit the hardest not just because of Universal but the combined threat of Universal, an emerging Paultons and a renaissance of Blackpool and Drayton.

 

[Matt.GC]

Ok, before the thread fills up with the usual posts of treating "competition" as a binary zero-sum concept, and very simplistic calls for Merlin to "up their game" and "invest", I want to make a couple of points for consideration (that will likely be ignored):

1. Time - Comcast have not decided to go ahead yet, and there is no certainty, although I accept that the likelihood is increasing, and it's more likely than not something will be built. Within the current political climate, it's likely that local and national politicians are desperate to rubber stamp something like this, but there's still great deals of uncertainty around Comcasts business case, which is not abundantly clear.

They still have to crunch numbers against an economic back drop and international political climate that is highly volatile and changing rapidly. How much of this was factored in originally is also unknown.

But the main point I'm making is that this is still early stages with considerable amounts of work to be done. If we lean on blue sky thinking, everything falls into line, and Comcast are already well prepared for all eventualities and we get an announcement soon, were still looking at the back end of 2031. I'd actually envisage 2032 (most likely prediction at present) or maybe even beyond that.

Think back to Alton Towers, Chessington, Blackpool, Paultons, Drayton and many more and consider where they were in 2019? Who will own them in 2032? Who will own Merlin? They only went private in 2019, and we don't know which form Blackstone's exit will take (trust me, they'll have a target date and exit plan). How will they change by 2032?

If an announcement is made and they get further details, how will they respond? What structures will they have in place? What plans will they formulate?

2032 and beyond is a long way off. A long time in business, especially where private equity investment vehicles are involved.

2. Market segmentation and positioning - I assumed this was a simple concept that was widely known. But "competition" is not binary.

If a Costa opens a few yards away from a local Cafe, it doesn't automatically mean curtains for one or the other. British Airways didn't go bust when easyJet were growing rapidly in the 2000's and took the airline industry by storm. It wasn't as simple as Netflix causing Blockbusters downfall. B&Q isn't the sole reason behind the failings of Homebase. Comet didn't fail because Currys were so awesome. All those energy providers didn't go bust because we all loved British Gas so much. Tesco adopted a strategy of building adjacent shop units with hyper stores in the 2000's, sometimes even letting them out to competitors, and at the time there was strong evidence that, contrary to popular opinion, that large new anchor stores actually benefited local businesses like bakeries and florists to a certain extent as they specialised and fed off of the increased footfall of the anchor store.

There are far more nuances, too many to list here. But in a nutshell, there's a huge web of complex macro and micro environmental factors at play. It's not as simplistic as Universal Vs Alton Towers, Comcast Vs Merlin, direct "competition", or Merlin "upping their game" and "investing".

At a very basic level I'm drawn to 3 main things in this case in order to answer the question:

A. Competitive overlap. There will be some, but we can only speculate at this stage in what form this will take. At the moment, a potential offering by Universal will have a competitive overlap with Alton Towers more than any other park. Whilst other parks have numerous other unique features about them, all Alton Towers will have left is the MAP, the beauty of it's location, the gardens, and heritage as both an historic estate and theme park. With the new lows the resort and theme park keep hitting, it's already relying on the MAP, its brand and heritage heavily to carry it through right now.

Whereas I can see most other parks carving out their own unique markets, I can't see this with Towers. It'd be fine, or actually even thrive as a more down-market value alternative to Universal. But with how much I believe being a MAP anchor attraction has damaged the place, the meat has already been cut from the bone. Unless you have a MAP, it's not good value at the moment. The experience has been downgraded, and it's can be a bit of a rip-off. So rather than being a resort that could actually feed off of any sort of popular vibe Universal creates, positioned as a better value alternative, I can't see at the moment what Alton Towers would actually be for?

I know the price difference will likely be huge, but you'll pay for what you at Universal. At Towers you'll just be fleeced. There's a value differential there.

B. The size of the market. From the outside, building a Universal in the UK seems insane. I can think of very few reasons. But Comcast seem to think there is a good reason, and it'd be interesting to know what that is.

I think it's likely that they want suitable land to cement themselves inside the European market. Their eyes won't solely be on local or domestic markets, it'll be European and international visitation. Current UK parks don't chase either of those.

That said, the domestic market needs to be big enough. They won't be looking at UK parks to "compete" with them. They'll be looking at them through the lense of seeing a demand that isn't catered for currently. A different customer based that UK residents currently seek abroad.

Basically, they'd be here to attract foreign visitation and grow the domestic leisure/theme park markets, not steal current market shares.

Again, I can see most parks either not been affected or actually benefiting from this new grow and tourism. But I'm drawn back to Alton Towers again.

Alton Towers seems to be the consolation prize park. The place where many visitors go and fork out for extortionate small breaks because they didn't get a chance to get out of the country. This would be a very niche market with Universal park located down the road in Bedfordshire.

C. The direction of Merlin Entertainments. They sold the lead out of the roof when the sun was shining. It's now raining, and Universal can cause a downpour.

There's private investment in the company that will be looking for an exit soon, and there's no money in the kitty. This is either through market conditions or will to invest. I think it's the latter.

There will need to be a market repositioning of their current attractions should there be a Universal announcement, and that costs money. And guess which of their attractions needs this the most?

Alton Towers. A park so far gone now, that'd be hard to justify huge investments into it in the current climate, let alone when the big boys ride into town. That's why suggestions of "upping their game" or "investing" in the place in response to any announcement are rediclous. If blood isn't coming from the store right now, what business on earth would send dumper trucks full of cash up Staffordshire with a Universal park on the way?

I don't think it's too dramatic to say, and I questioned as much last year, that there is the potential of the last 9 seasons being the beginning of the end for Alton Towers as we've always known it.

As for all other UK parks, I can't see there being too many problems adjusting their strategies, if they need to much at all.

 

[Poisson]

Brean.

 

[MrTowers]

Ok, before the thread fills up with the usual posts of treating "competition" as a binary zero-sum concept, and very simplistic calls for Merlin to "up their game" and "invest", I want to make a couple of points for consideration (that will likely be ignored):

1. Time - Comcast have not decided to go ahead yet, and there is no certainty, although I accept that the likelihood is increasing, and it's more likely than not something will be built. Within the current political climate, it's likely that local and national politicians are desperate to rubber stamp something like this, but there's still great deals of uncertainty around Comcasts business case, which is not abundantly clear.

They still have to crunch numbers against an economic back drop and international political climate that is highly volatile and changing rapidly. How much of this was factored in originally is also unknown.

But the main point I'm making is that this is still early stages with considerable amounts of work to be done. If we lean on blue sky thinking, everything falls into line, and Comcast are already well prepared for all eventualities and we get an announcement soon, were still looking at the back end of 2031. I'd actually envisage 2032 (most likely prediction at present) or maybe even beyond that.

Think back to Alton Towers, Chessington, Blackpool, Paultons, Drayton and many more and consider where they were in 2019? Who will own them in 2032? Who will own Merlin? They only went private in 2019, and we don't know which form Blackstone's exit will take (trust me, they'll have a target date and exit plan). How will they change by 2032?

If an announcement is made and they get further details, how will they respond? What structures will they have in place? What plans will they formulate?

2032 and beyond is a long way off. A long time in business, especially where private equity investment vehicles are involved.

2. Market segmentation and positioning - I assumed this was a simple concept that was widely known. But "competition" is not binary.

If a Costa opens a few yards away from a local Cafe, it doesn't automatically mean curtains for one or the other. British Airways didn't go bust when easyJet were growing rapidly in the 2000's and took the airline industry by storm. It wasn't as simple as Netflix causing Blockbusters downfall. B&Q isn't the sole reason behind the failings of Homebase. Comet didn't fail because Currys were so awesome. All those energy providers didn't go bust because we all loved British Gas so much. Tesco adopted a strategy of building adjacent shop units with hyper stores in the 2000's, sometimes even letting them out to competitors, and at the time there was strong evidence that, contrary to popular opinion, that large new anchor stores actually benefited local businesses like bakeries and florists to a certain extent as they specialised and fed off of the increased footfall of the anchor store.

There are far more nuances, too many to list here. But in a nutshell, there's a huge web of complex macro and micro environmental factors at play. It's not as simplistic as Universal Vs Alton Towers, Comcast Vs Merlin, direct "competition", or Merlin "upping their game" and "investing".

At a very basic level I'm drawn to 3 main things in this case in order to answer the question:

A. Competitive overlap. There will be some, but we can only speculate at this stage in what form this will take. At the moment, a potential offering by Universal will have a competitive overlap with Alton Towers more than any other park. Whilst other parks have numerous other unique features about them, all Alton Towers will have left is the MAP, the beauty of it's location, the gardens, and heritage as both an historic estate and theme park. With the new lows the resort and theme park keep hitting, it's already relying on the MAP, its brand and heritage heavily to carry it through right now.

Whereas I can see most other parks carving out their own unique markets, I can't see this with Towers. It'd be fine, or actually even thrive as a more down-market value alternative to Universal. But with how much I believe being a MAP anchor attraction has damaged the place, the meat has already been cut from the bone. Unless you have a MAP, it's not good value at the moment. The experience has been downgraded, and it's can be a bit of a rip-off. So rather than being a resort that could actually feed off of any sort of popular vibe Universal creates, positioned as a better value alternative, I can't see at the moment what Alton Towers would actually be for?

I know the price difference will likely be huge, but you'll pay for what you at Universal. At Towers you'll just be fleeced. There's a value differential there.

B. The size of the market. From the outside, building a Universal in the UK seems insane. I can think of very few reasons. But Comcast seem to think there is a good reason, and it'd be interesting to know what that is.

I think it's likely that they want suitable land to cement themselves inside the European market. Their eyes won't solely be on local or domestic markets, it'll be European and international visitation. Current UK parks don't chase either of those.

That said, the domestic market needs to be big enough. They won't be looking at UK parks to "compete" with them. They'll be looking at them through the lense of seeing a demand that isn't catered for currently. A different customer based that UK residents currently seek abroad.

Basically, they'd be here to attract foreign visitation and grow the domestic leisure/theme park markets, not steal current market shares.

Again, I can see most parks either not been affected or actually benefiting from this new grow and tourism. But I'm drawn back to Alton Towers again.

Alton Towers seems to be the consolation prize park. The place where many visitors go and fork out for extortionate small breaks because they didn't get a chance to get out of the country. This would be a very niche market with Universal park located down the road in Bedfordshire.

C. The direction of Merlin Entertainments. They sold the lead out of the roof when the sun was shining. It's now raining, and Universal can cause a downpour.

There's private investment in the company that will be looking for an exit soon, and there's no money in the kitty. This is either through market conditions or will to invest. I think it's the latter.

There will need to be a market repositioning of their current attractions should there be a Universal announcement, and that costs money. And guess which of their attractions needs this the most?

Alton Towers. A park so far gone now, that'd be hard to justify huge investments into it in the current climate, let alone when the big boys ride into town. That's why suggestions of "upping their game" or "investing" in the place in response to any announcement are rediclous. If blood isn't coming from the store right now, what business on earth would send dumper trucks full of cash up Staffordshire with a Universal park on the way?

I don't think it's too dramatic to say, and I questioned as much last year, that there is the potential of the last 9 seasons being the beginning of the end for Alton Towers as we've always known it.

As for all other UK parks, I can't see there being too many problems adjusting their strategies, if they need to much at all.

I think option B might be the outcome. Universal could reinvent the UK theme park market bringing a lot more interest ultimately benefiting the rest of the big parks, if there are any casualties it might be the regional parks that already look in trouble as the minimum standard will be raised.

Merlin will need to pitch their parks as a value alternative to universal. Universal will make the theme park getaway more fitting with British culture encouraging more getaways in the UK. There could be some international tourists looking to visit several parks whilst in the UK and there might be some extra money in the pockets of those that may have gone to Orlando or Paris but stayed in the UK and can now visit other UK parks.

Ultimately this is all a long way away and may or may not happen. We don't know what position UK parks will be in by the time universal do open, if they ultimately do.

 

[John_P]

Alton Towers, I'm sure we'll all keep our annual passes and do a few day trips each year which will keep them ticking over.

However those families who visit once a year and stay on site (or just nearby) will in those first few years at least go to the new place.

Think even for those of us travelling from the north even though towers is closer that 45 minutes you spend on A and B roads driving single file towards the park (and away) would conceivable be put to better use driving another 50ish miles towards Universal which will have a big car park right by the motorway.

 

[Themeparksandy1981]

I think the big talking point will be costs. Like I would love to know the percentage of annual pass holders compared to Merlin pass holders on the same level pass.
Like for me I will more likely still have my Drayton Manor Annual pass to my son is at least 1.2m and then I will more than likely buy an Alton Towers annual pass instead. But if the prices to get into Universal is over £100 each plus parking, petrol and spending on food, drink and maybe souvenirs. You looking at a day out at Universal costing the same as an annual pass at Alton Towers.

 

[Smiley]

I think in the short-term Universal will carve out it's own niche:
- European customer base as well as UK
- a more themed, immersive and EXPENSIVE experience

I think the ticket price might re-define UK theme parks. The problem for existing parks would be whether to stay in their own lane (lower cost/investment) or make significant investments to aim for a better product and higher revenues.

 

[MrTowers]

It's interesting that the merlin annual pass comes up so much. It is incredible value when you think about it based on the number of attractions you can visit. I think it will be hard to convince someone that switching to a Universal annual pass will only give them access to one attraction (I'm guessing Bedford will only be one park initially)

When you look at merlin you have:

Discovery pass £99
200 days
No discounts on food
Parking not included

Silver £179
295 days
10% discount on food
Parking not included

Gold £249
340 days
20% discount on food
Parking included

Platinum £299
364 days
20% discount on food
Parking included

I know merlin annual passes are often discounted but this is the closest comparison I can do.

Now I'm not so familiar with Universal but looking at their options for Hollywood they have:

California residents pass £133
150 days (over 9 months)
No discounts on food
Parking not included

Silver pass £157
275 days
No discounts on food
Parking not included

Gold pass £220
325 days
15% discount on food
Parking included

Platinum £434
365 days
15% discount on food
Parking included
Halloween horror night (1 entry included)
Basic fast pass included daily from 3pm

I quite like the inclusion of fast pass for Platinum passes, I'm sure merlin had something similar at one point.

Obviously Universal will be a quality theme park, merlin in the other hand will be quantity of attractions which will still appeal to a lot of potential guests.

 

[owenstreet7]

It's interesting that the merlin annual pass comes up so much. It is incredible value when you think about it based on the number of attractions you can visit. I think it will be hard to convince someone that switching to a Universal annual pass will only give them access to one attraction (I'm guessing Bedford will only be one park initially)

When you look at merlin you have:

Discovery pass £99
200 days
No discounts on food
Parking not included

Silver £179
295 days
10% discount on food
Parking not included

Gold £249
340 days
20% discount on food
Parking included

Platinum £299
364 days
20% discount on food
Parking included

I know merlin annual passes are often discounted but this is the closest comparison I can do.

Now I'm not so familiar with Universal but looking at their options for Hollywood they have:

California residents pass £133
150 days (over 9 months)
No discounts on food
Parking not included

Silver pass £157
275 days
No discounts on food
Parking not included

Gold pass £220
325 days
15% discount on food
Parking included

Platinum £434
365 days
15% discount on food
Parking included
Halloween horror night (1 entry included)
Basic fast pass included daily from 3pm

I quite like the inclusion of fast pass for Platinum passes, I'm sure merlin had something similar at one point.

Obviously Universal will be a quality theme park, merlin in the other hand will be quantity of attractions which will still appeal to a lot of potential guests.

This is definitely a great point

One thought I do wonder if whether Merlin will consider keeping the Discovery Pass long term or whether this will be scrapped in favour of higher tiers such as Gold and Platinum with the ongoing cost cutting with Merlin.

I'm hoping that Universal offers better value passes such as Halloween entry, fast passes, Passholder events and passholders being included in VIP/Press events. One thing I do think Merlin are missing the mark with is that there's limited passholder preview events i.e. Hyperia, since the start of 2023. Anyone who got a pass more recently hasn't had the events that they had in the past.

 

[Matt N]

I think in the short-term Universal will carve out it's own niche:
- European customer base as well as UK
- a more themed, immersive and EXPENSIVE experience

I think the ticket price might re-define UK theme parks. The problem for existing parks would be whether to stay in their own lane (lower cost/investment) or make significant investments to aim for a better product and higher revenues.

I actually disagree that aiming for a more expensive product would be the Merlin parks’ best strategic bet in the face of Universal.

Aiming for a more expensive product puts the parks right in Universal’s firing line, whereas being cheaper does give them a legitimate point of division with Universal that Universal will likely never attempt to compete with them on. If anything, I could see Merlin reducing prices further in an attempt to undercut Universal more aggressively.

 

[Ash]

It's interesting that the merlin annual pass comes up so much. It is incredible value when you think about it based on the number of attractions you can visit. I think it will be hard to convince someone that switching to a Universal annual pass will only give them access to one attraction (I'm guessing Bedford will only be one park initially)

When you look at merlin you have:

Discovery pass £99
200 days
No discounts on food
Parking not included

Silver £179
295 days
10% discount on food
Parking not included

Gold £249
340 days
20% discount on food
Parking included

Platinum £299
364 days
20% discount on food
Parking included

I know merlin annual passes are often discounted but this is the closest comparison I can do.

Now I'm not so familiar with Universal but looking at their options for Hollywood they have:

California residents pass £133
150 days (over 9 months)
No discounts on food
Parking not included

Silver pass £157
275 days
No discounts on food
Parking not included

Gold pass £220
325 days
15% discount on food
Parking included

Platinum £434
365 days
15% discount on food
Parking included
Halloween horror night (1 entry included)
Basic fast pass included daily from 3pm

I quite like the inclusion of fast pass for Platinum passes, I'm sure merlin had something similar at one point.

Obviously Universal will be a quality theme park, merlin in the other hand will be quantity of attractions which will still appeal to a lot of potential guests.

Great point, but this is the exact Merlin problem isn’t it.

Those passes are just too cheap and should be the exception rather than the rule. Merlin have gone for the buy in bulk like them high option which id argue in the long run hasn’t helped them.

Whereas you’re looking at
€475/£400 for EP gold pass
€70/£59 day ticket

Towers £38 day ticket

This is exactly the problem.

Instead of charging more and creating better, they’ve cheapened the cost and the product comparatively. Long term it’s horrific.

They’ve devalued walking in the door, yes they get the big bulk of money upfront for the AP but that’s it. It’s warped everything.

Online imo Alton as the “premium” UK park should be £50+ everyday. But I also want a product that matches that price.

They are caught in this stupid trap of their own making and can’t get out of it.

Longer term I’d rather they had two annual passes £1000+ and day tickets as above.

Evidently, it hasn’t worked. Enough. No

They have treated the annual passes as though it’s the “Netflix” model. It isn’t. There isn’t a scalable model where it works.

 

[MrTowers]

Great point, but this is the exact Merlin problem isn’t it.

Those passes are just too cheap and should be the exception rather than the rule. Merlin have gone for the buy in bulk like them high option which id argue in the long run hasn’t helped them.

Whereas you’re looking at
€475/£400 for EP gold pass
€70/£59 day ticket

Towers £38 day ticket

This is exactly the problem.

Instead of charging more and creating better, they’ve cheapened the cost and the product comparatively. Long term it’s horrific.

They’ve devalued walking in the door, yes they get the big bulk of money upfront for the AP but that’s it. It’s warped everything.

Online imo Alton as the “premium” UK park should be £50+ everyday. But I also want a product that matches that price.

They are caught in this stupid trap of their own making and can’t get out of it.

Longer term I’d rather they had two annual passes £1000+ and day tickets as above.

Evidently, it hasn’t worked. Enough. No

They have treated the annual passes as though it’s the “Netflix” model. It isn’t. There isn’t a scalable model where it works.

I'm not sure £1000+ would work but they do need to value their attractions appropriately.

I think without going on another merlin tangent they have priced the merlin pass and day tickets to kill the competition. The strategy is one that it's cheaper to not allow the competition to make investments by forcing them to copy merlins pricing strategy. Ultimately they are happy to take any money as long as it doesn't end up in a competitors pocket.

This has undervalued the theme park industry in the UK for years and a reason why you don't see the investments of the 90s and early 2000s anymore.

Universal could disrupt this with a whole new pricing tier. This could change the market dynamics allowing non-merlin parks to feel they can charge more, or Universal might find it hard to convince the UK domestic market that they need to pay £60+ for entry when everywhere else charges under £40.

Only time will tell but I think the merlin annual pass will continue to dominate the leisure sector in the UK.

 

[Matt.GC]

I actually disagree that aiming for a more expensive product would be the Merlin parks’ best strategic bet in the face of Universal.

Aiming for a more expensive product puts the parks right in Universal’s firing line, whereas being cheaper does give them a legitimate point of division with Universal that Universal will likely never attempt to compete with them on. If anything, I could see Merlin reducing prices further in an attempt to undercut Universal more aggressively.

Well said. There is absolutely no reason for Merlin to raise prices and/or go for a more premium product. None whatsoever.

There is no logical reason I can think of, as to why you would purposely create competitive overlap.

This is the point where I wonder how much more Towers can take? It already suffers from the bulk flogging of annual passes, and it's hard to see what else can be cut substantially. Yet at the same time, what is the value of MAP without Alton Towers included?

 

[Ash]

Well said. There is absolutely no reason for Merlin to raise prices and/or go for a more premium product. None whatsoever.

There is no logical reason I can think of, as to why you would purposely create competitive overlap.

This is the point where I wonder how much more Towers can take? It already suffers from the bulk flogging of annual passes, and it's hard to see what else can be cut substantially. Yet at the same time, what is the value of MAP without Alton Towers included?

You don’t think there’s a general link between the price of a product/service and its overall quality?

I’d argue there’s 3-4 hundred years of evidence otherwise.

If universal studios Hollywood is around £110
Europa Park £60+
Efteling £40
Phantasialand £55+

I think towers charging £50+ if it wants to compete in that space is reasonable.

But as I’ve said it only makes sense if MAP go up too.

It would be honestly better if they scrapped the group ones entirely and just did the individual parks.

 

[Matt N]

You don’t think there’s a general link between the price of a product/service and its overall quality?

I’d argue there’s 3-4 hundred years of evidence otherwise.

If universal studios Hollywood is around £110
Europa Park £60+
Efteling £40
Phantasialand £55+

I think towers charging £50+ if it wants to compete in that space is reasonable.

But as I’ve said it only makes sense if MAP go up too.

It would be honestly better if they scrapped the group ones entirely and just did the individual parks.

I don’t think me and @Matt.GC are saying that higher prices wouldn’t result in better quality over time, nor are we saying that the pricing of the MAP and entry hasn’t had effects on the parks. We also aren’t saying that reduced prices would lead to better quality either.

I can’t speak on Matt’s behalf, but the point I was trying to make is more that from a business standpoint, staying cheap or going cheaper carves Merlin a competitive niche that makes them legitimately stand apart from Universal. If Merlin raises prices, it increases the competitive overlap with Universal and removes them from this lower cost, affordable niche in the market.

Irregardless of quality increasing in the long run as a result of price increases (not necessarily a foregone conclusion), increasing those prices puts them directly in Universal’s firing line and sets them up for a head on head battle that Universal would almost certainly win by mere virtue of their greater financial weight, IP catalogue and such. When compared with a new, shiny Universal park, Alton Towers at a heightened price point would likely be less palatable to the public… but if Alton Towers retains cheaper pricing, they tap into the market that can’t or won’t pay Universal prices (which won’t be an insignificant segment of the population).

Like it or not, being “cheap and cheerful” is a very legitimate business strategy that has produced proven results in numerous sectors when done well. Look at Aldi and Lidl in the supermarket sector. Or Wetherspoons in the hospitality sector. Sometimes, price is a very legitimate selling point and dividing line with competitors; people will be attracted to something that’s cheap!

In the same way that not everyone wants to or can afford to shop at Fortnum and Mason or eat at Michelin star restaurants, not everyone can afford or wants to pay Universal’s prices. From a business standpoint, this is where Alton Towers and Merlin could find their niche in a post-Universal UK industry. Am I saying it would improve quality? Not necessarily. But if such a strategy was done well, Merlin could make a legitimate case for their parks from a “value for money” standpoint, which I don’t feel they could if prices were hiked.

 

[Matt.GC]

You don’t think there’s a general link between the price of a product/service and its overall quality?

I’d argue there’s 3-4 hundred years of evidence otherwise.

If universal studios Hollywood is around £110
Europa Park £60+
Efteling £40
Phantasialand £55+

I think towers charging £50+ if it wants to compete in that space is reasonable.

But as I’ve said it only makes sense if MAP go up too.

It would be honestly better if they scrapped the group ones entirely and just did the individual parks.

No, there isn't a direct link between price and quality. The link is in market forces and that alone. And there's more than 3-4 hundred years evidence of that.

Look up Tulip Mania if you don't believe me. Tulips were sold at their height in the 1600's at approximately £1000 in today's money.

Sainsbury's will sell you a bunch for £3 now. And just like in the 1600's, they're still just Tulips.

Regardless of whatever figures that can be quoted, Merlin partially gets away with charging them. You know that hanging monorail that we know they're going to close any season now? Those patches of grass and cuttings where flat rides used to be?Those sacked actors? Those inedible £20 burger meals? Those 4pm kick outs? Those minging hotel rooms for £400+ per night?

They're mostly supply and demand business decisions. Cashing in on demand.

But that demand will be lowered when a better quality offering comes along, even if it's priced higher. Because price and value are 2 entirely different things.

Towers is already poor value unless you have a MAP. Why on earth would a business that's run for profit hike their prices, invest heavily to create a competitive overlap with Universal, and absorb the losess in the interim years, only to hope to get back to where they are right now?

Would you invest your pension savings in a business that came up with such a proposal? I certainly wouldn't!

 

[Ash]

No, there isn't a direct link between price and quality. The link is in market forces and that alone. And there's more than 3-4 hundred years evidence of that.

Look up Tulip Mania if you don't believe me. Tulips were sold at their height in the 1600's at approximately £1000 in today's money.

Sainsbury's will sell you a bunch for £3 now. And just like in the 1600's, they're still just Tulips.

Regardless of whatever figures that can be quoted, Merlin partially gets away with charging them. You know that hanging monorail that we know they're going to close any season now? Those patches of grass and cuttings where flat rides used to be?Those sacked actors? Those inedible £20 burger meals? Those 4pm kick outs? Those minging hotel rooms for £400+ per night?

They're mostly supply and demand business decisions. Cashing in on demand.

But that demand will be lowered when a better quality offering comes along, even if it's priced higher. Because price and value are 2 entirely different things.

Towers is already poor value unless you have a MAP. Why on earth would a business that's run for profit hike their prices, invest heavily to create a competitive overlap with Universal, and absorb the losess in the interim years, only to hope to get back to where they are right now?

Would you invest your pension savings in a business that came up with such a proposal? I certainly wouldn't!

I didn’t say direct, I said general. Intentionally, so people wouldn’t make that link. But alas.

And it seems you’ve missed the point on the supply and demand, I’d argue there’s a higher demand because the MAP exists at the price it does and in the volumes it does.

People are visiting because of the value of the MAP, not the value of the proposition they’re visiting. That in turn means there’s little to no driver in the parks improving they’re offering because once they have the MAP the barrier to entry to visit is zero. You can’t improve on that and there isn’t a better offer.

So Merlin’s only option then is to nickel and dime their way in to making more cuts, more savings to the product degrading and degrading it. As long as the initial MAP purchase is made, as you rightly say on the value of the product. What the customer is offered is irrelevant to the attractions themselves.

And as you say, if you won’t let them put their prices up for MAP demand, this is their only option.

I’d argue they wouldn’t and will never create a competitive overlap with Universal, but the better parks in Europe (Europa, Efteling, Asterix, Port Aventura, Phantasialand) is where it should be aiming. But it’s barely in the conversation.

Would I invest my pension in one of the example parks mentioned above? Absolutely, because they operate on a wholly different business model.

And that is exactly my point.

 

[Matt.GC]

So Merlin’s only option then is to nickel and dime their way in to making more cuts, more savings to the product degrading and degrading it. As long as the initial MAP purchase is made, as you rightly say on the value of the product. What the customer is offered is irrelevant to the attractions themselves.

And as you say, if you won’t let them put their prices up for MAP demand, this is their only option.

I’d argue they wouldn’t and will never create a competitive overlap with Universal, but the better parks in Europe (Europa, Efteling, Asterix, Port Aventura, Phantasialand) is where it should be aiming. But it’s barely in the conversation.

Would I invest my pension in one of the example parks mentioned above? Absolutely, because they operate on a wholly different business model.

And that is exactly my point.

Correct about that. With Merlin, you pay peanuts and get a rubber tyre swing on some rope and a few bananas. You get what you pay for. To get in to all those local Sea Life's whenever you want, the big expensive attraction has to be cut back, with the shortfall made up for by the gate ticket, short break, and food payers. Ok if you have a MAP, you've been many times before and brought some form of lunch box with you.

The problem is, the rope is now parcel string, the tyre used to be Dunlop but is now Kwik Fits budget brand, and the bananas were bought reduced from Aldi.

The value is getting poorer, and Merlin's model is to try and flog MAP's, whatever the cost to Towers. They've never really been a theme park operator, they're a subscription service who run some some bells and whistles Travelodges.

That doesn't bode well for their biggest attraction when a real resort opens. Flogging people a MAP for less than the price of a day at Universal will do wonders for their other parks and midways.

But it reduces Towers to little more than an extra brand in which to sell that MAP. And I can't see a way out of that. Whilst Towers is there, the value of a MAP increases. But it also degrades the resort further down the rabbit hole of where it's been heading for a long time now. Just another tacky brand logo on a website.

I would imagine their strategy would be to double down on cheapo MAP sales in response. They can't sell the place because it's linked to MAP sales and requires so much investment to survive without the Merlin umbilical cord attached, that I can't see anyone wishing to buy it.

Whilst the industry at large will adapt and be just fine in my opinion, maybe even benefiting from Universal, I can't see any way of Towers getting any better. I can't see a business case for it either.

 

[Enter Valhalla]

Just a thought, 10-15 years ago Merlin parks were really expensive. The entrance fees were high and they positioned themselves as a premium day out. The strategy has changed now and the prices haven’t risen much in the past 10 years.

Could this be a deliberate move by Merlin in the face of Universal? Merlin know that Universal is an expensive product so they’re positioning themselves as the cheaper alternative.