Merlin trading in line so far, though tourist outlook uncertain

Investors in visitor attraction operator Merlin Entertainments were set to muster for the company’s annual general meeting on Tuesday, with the board confirming group trading for the year to date had been “broadly” in line with expectations, reflecting the outlook and commentary it provided on 2 March.

The FTSE 100 firm said it had continued to make “good progress” towards its 2020 ‘New Business Development’ milestones, including the opening of around 250 accommodation rooms so far in 2017 at LEGOLAND Florida and LEGOLAND Billund, with further rooms scheduled to be opened in the balance of the year.

Three ‘midway’ attractions had also been opened to date, comprising LEGOLAND Discovery Centres in Melbourne and Philadelphia, and Madame Tussauds Nashville.

SEA LIFE Centre Chongqing was set to open on 15 June and, as previously announced, Merlin’s new brand 'Little Big City' would open in Berlin in July.

LEGOLAND Japan also opened on 1 April - ahead of schedule and reportedly on budget.

Merlin;s international ‘New Business Development’ continued to make a “strong contribution” to group performance, the board claimed, and it remained confident in the delivery of its 2020 milestones.

Looking at current trading in its midway London division, trading in the early part of the year benefited from stronger foreign visitation to the UK, which the board said reflected the more favourable foreign exchange rates.

That reportedly continued in the immediate aftermath of the Westminster attack on 22 March, although the incident did result in a softer domestic day-trip market.

However, the subsequent attacks in Manchester and London over the past month had resulted in a further deterioration in domestic demand and, given the typical lag between holiday bookings and visitation, Merlin said it was also cautious on trends in foreign visitation over the coming months.

Trading in the LEGOLAND Parks and Resort Theme Parks Operating Groups had been in line with expectations, although a number of its UK parks had been adversely affected in recent weeks by the terror attacks and subsequent heightened security measures.

“I am pleased that we are making good progress towards our 2020 New Business Development milestones,” said chief executive Nick Varney.

“That said, the impact of recent terror attacks on our London attractions is unclear at this stage.

“What is clear however is that London has bounced back before, and will do again.”

Varney said he had “every confidence” in the longer term resilience and growth trajectory of the market, adding that London was “very much open for business”, welcoming visitors from the UK and from around the world to what he called an “exciting and vibrant city”.

“Merlin has a diverse portfolio of global brands with over 70% of 2016 profits from outside the UK and this proportion will only grow over time as we continue to invest internationally.

“I remain confident in the company's underlying growth prospects.”

Merlin was set to report its 2017 interim results on 4 August.