If you are the owner Madam Tussauds, the London Dungeon and the Eye, this year’s terror attacks in the capital are bound to have had an impact.
Merlin Entertainments PLC’s (LON:MERL) share price slide today suggests the market is concerned it is more than these and poor weather at the root of current trading issues.
READ: Terror attacks deterring visitors to London warns Merlin Entertainments
External shocks have become a recent feature of the attractions group recently. The Smiler ride accident at Alton Towers hit last year.
Today’s update said sales will be flat this year due to the ongoing impact of London’s wave of terror atrocities and hurricanes in Florida and Italy.
The trading update overshadowed seemingly very good news of a roll-out of Peppa Pig styled attractions and a new adventure–based attraction in Birmingham with TV survival specialist Bear Grylls.
Curate's Egg
Broker Liberum is reviewing its forecasts after the update, which it said highlighted increased risk for investors.
The re-allocation of £100mln of investment cash away from theme parks towards hotels will dilute returns, for example.
Neil Wilson, senior market analyst at ETX Capital, is more optimistic over the hotel room expansion.
“Investing in hotels makes sense. Enabling visitors to stay overnight at its attractions is a key part of the strategy as it boosts earnings potential, average spend, and stimulates additional demand.
Even so, he added the comments on tourism don’t tally with the figures showing record inbound visitors, which may be indicative of a problem with some of the older attractions.
If you are prepared to look linger term, there are potentially good revenue streams to come through and it has the Peppa Pig franchise, which has become a global phenomenon.
Or according to Danny Cox at Hargreaves Lansdown: “Overall, Merlin is something of a curate’s egg at the moment and the group will need to work hard to keep the numbers moving in the right direction.”
Shares fell 18% to 368.4p.