Theme Park Operator Set to Implement Variable Pricing Strategy

Merlin Entertainment is set to introduce dynamic prices to combat the lower visitor numbers it has been recording post-pandemic.

The Legoland owner is planning to implement surge pricing at its top 20 global attractions by the end of this year, with a rollout in the US next year. CEO Scott O’Neil shared this information with the Financial Times.

The company, which also owns Madame Tussauds and Sea Life, will adjust prices based on peak summer weekends and rainy off-season weekdays. Neil described their dynamic pricing model as "very intuitive."

Merlin Entertainment has seen a decrease in visitor numbers compared to before the pandemic. In 2023, the firm reported 62.1 million visitors, which is 5 million less than the 67 million visitors in 2019 across its 141 locations worldwide.

Despite the decrease in visitor numbers, the company's revenues increased by 8.4% year on year to £2.1 billion. However, Merlin Entertainment reported a pre-tax loss of £214 million, mainly due to the impact of building Legoland attractions in New York and South Korea during the pandemic.

Merlin is not the only company using dynamic pricing. Halfords also started implementing dynamic pricing last year to boost profits by directing more customers to its less busy garages.

Similarly, pub owner Stonegate rolled out dynamic pricing in its 800 venues during busy times. Marketing expert Mark Ritson highlighted the importance of effectively communicating price changes to customers to avoid negative perceptions.

Maintaining a flat price and then raising it when demand increases was a clear mistake. I'm not certain about the legal aspects, but it seems more sensible to increase prices by 20p and then lower them when demand is lower," he commented.

He added, "It's generally simpler to lower prices than to raise them. From my experience with pricing, I've learned that how you display a price is much more crucial than the actual price itself."

Editor's P/S:

The implementation of dynamic pricing by Merlin Entertainment, owner of Legoland, Madame Tussauds, and Sea Life, reflects a shift in the industry's approach to managing attendance and revenue. While it may prove beneficial in optimizing profits during peak seasons, it is crucial for businesses to strike a balance between maximizing income and maintaining customer satisfaction. Communicating price changes effectively and ensuring that customers perceive them as fair is essential to avoid potential backlash.

The article highlights the growing trend of businesses adopting dynamic pricing models, particularly in industries such as hospitality and retail. By adjusting prices based on demand, companies can increase revenue while managing capacity and optimizing resources. However, it is important to note that dynamic pricing can also create challenges in terms of customer perception and maintaining a consistent brand image. Businesses must carefully consider the implementation and communication strategies for such pricing models to ensure they align with their overall marketing and customer engagement goals.