Merlin reveals financial impact of Alton Towers accident

Alton Towers in Staffordshire.

Alton Towers in Staffordshire. - Credit: PA

Alton Towers owner Merlin Entertainments today revealed the impact of its major rollercoaster accident earlier this year as it reported a sharp fall in visitors numbers over the peak summer season.

Merlin saw like-for-live revenues tumble by 11.4% across its theme park division over the first nine months of its financial year after seeing “significantly” lower numbers of visitors to Alton Towers, while other UK attractions in the unit, such as Thorpe Park, were also hit.

It warned that annual theme park earnings would be at the lower end of expectations and would probably continue to be impacted over 2016 in the aftermath of the accident.

Five people were seriously injured in the crash on June 2 on The Smiler ride, which resulted in the 500-acre theme park in Staffordshire being shut down for four days.

Merlin also suspended UK theme park marketing and temporarily closed rides at two other sites.

The group said in its latest trading update that poor weather throughout August also kept visitors away from its theme parks, while the strong pound against the euro impacted demand from European holidaymakers for its London tourist attractions, which include Madame Tussauds and the London Eye.

But the popularity of its Legoland resorts helped shore up wider group trading, with overall like-for-like sales edging 0.3% higher in the 36 weeks to September 5.

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Merlin has already warned over profits in the theme park business, saying in July that earnings would be between £40million to £50m, down from £87m in 2014. It now believes earnings will come in at the lower end of the range.

“Although difficult to assess at this stage, we continue to believe that there may be an ongoing adverse impact on the resort theme parks operating group profitability in 2016,” the group added.

It is still expecting the wider group to see profit before tax “broadly in line” with last year at £249m this year after savings in financing and other costs.

Chief executive Nick Varney said in July he was “deeply sorry” over the Alton Towers crash, which he described as a “devastating event”. He said the firm would continue to do what it could to support those who were injured and their families.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “The aftermath of the Alton Towers tragedy is still being felt in terms of a reduction in visitor numbers, with the possibility that this may yet follow through to next season.”

But he added Merlin was “far from being a one-trick pony”, which has helped its share price remain relatively firm despite the theme park hit.

He said: “The Legoland parks continue to grow apace, even against strong comparatives, whilst the strategy of turning parks into resorts with the opening of new hotels at several location is ongoing.

“Meanwhile, in addition to this year’s launch of seven attractions, a further seven are planned for next year across the globe, with Legoland and Madame Tussauds being of particular focus.”

Merlin’s Legoland resorts notched up like-for-like revenue growth of 6.7% over the nine months to September 5, helped by the new Lego “Friends” themed areas at Legoland in Windsor, California and Florida.

It has also opened new hotels at a number of resorts, including the 125-lodge Enchanted Village at Alton Towers and the Aztec hotel at Chessington World of Adventures, which has helped offset the drop in visitors.