Theme park operator Merlin Entertainments CEO sees 'tremendous' potential in Saudi Arabia

Theme park operator Merlin Entertainments, which owns Legoland and Madame Tussauds, said Saudi Arabia represents "tremendous" opportunities and that its Dubai operations are under study for further expansion as part of the company's global growth push. Scott O’Neil, Merlin Entertainments' chief executive, told The National that Saudi Arabia is a "very interesting" market as the kingdom develops its tourism sector and that he aims to visit Riyadh in the next few months. "We believe that there is tremendous opportunity there," Mr O’Neil said in an interview at Legoland Dubai. "You have a government that wants to build, that wants to transition from oil into entertainment and a tourist economy, they have the will, they have the means, there seems to be a lot of incredible attractions going on there – and it's a reason that's really interesting to us," he said. The Arab world's largest economy is developing non-oil sectors such as entertainment, culture and sports to create jobs, boost people's quality of life, lure high-skilled talent and attract tourists to the kingdom. The move is part of the Saudi Vision 2030 created in 2016 to reduce the country's dependence on oil, overhaul the economy, build new industries and invest in existing high-value sectors. Saudi Arabia's Crown Prince Mohammed bin Salman is implementing social reforms alongside the economic agenda to help modernise the kingdom, including holding music concerts, opening cinemas and allowing women to drive. Saudi Entertainment Ventures (Seven) , a wholly owned unit of the Public Investment Fund, said in November that it plans to invest 50 billion Saudi riyals ($13.3 billion) to develop 21 integrated entertainment destinations in 14 cities in the kingdom. The new destinations will be developed in partnership with major international brands such as Clip ‘n Climb, Warner Bros Discovery, Mattel and toy giant Hasbro. In May, Seven and Hasbro said they are teaming up to launch the world’s first Transformers- themed indoor entertainment centres. Qiddiya, the kingdom’s mega entertainment hub, is one of several giga-projects announced as part of 2030. The kingdom’s first water park and a $3.7 billion Six Flags Qiddiya are planned at the site, which will be home to the Falcon Flight, the tallest, longest and fastest roller coaster in the world. Entertainment events attracted more than 120 million visitors from 2019 until the first quarter of 2023, the country's General Entertainment Authority said in March. Merlin Entertainments, which oversees Legoland Dubai, is also considering further growth in the emirate as part of big expansion plans worldwide including in the US, China and Australia, Mr O'Neil said. "This is our highest-rated park in the world and that gives you a pretty good indication of what success might look like. This is a park we will invest more in," he said. "This region is still in the embryonic stages of an incredible run of growth and it's nice to be at the forefront of it." The company is undertaking a "very intensive review" of finding gateway cities with the aim of having major entertainment clusters in the 10 most important cities in the world by 2030, he said. Using central London as a model, whereby the London Eye is the anchor attraction and a cluster of other attractions are positioned around it, the company is surveying 20 cities including New York, Shanghai, Paris, Singapore, Amsterdam and Dubai to find anchor attractions and finalise a pick of 10 cities. Dubai is an attractive candidate due to the tourist inflows, world-class attractions and public-private partnerships that ease doing business in the city, the executive said. "This is a city that does everything big, everything is grand: it's the biggest, it's the best, it's the tallest, it's the most shiny and that bodes very well for our business and bodes very well for tourists. This is a place you want to come to: it's safe, it's clean, it's grand, I think there's an attraction at every turn," he said. Dubai aims to exceed the pre-pandemic annual number of international visitors this year, after it recorded a 17 per cent increase in the tourist numbers in the first quarter of 2023, the emirate's tourism chief Issam Kazim said in May. The emirate hosted 6.02 million overnight visitors in the January to April period, compared to 5.10 million tourists during the same period in 2022, according to the Dubai’s Department of Economy and Tourism. The figure climbed close to the 6.26 million visitors during the first four months of 2019, before the pandemic. Merlin Entertainments plans to invest "billions of dollars" over the next five years to grow the number of attractions and expand its footprint globally, Mr O'Neil said. The company has more than 140 attractions, 23 hotels and six holiday resorts in 25 countries, operating in the US, Europe, Asia and Australia. In 2022, Merlin Entertainments recorded 56.4 million visitors globally, accounting for £2 billion ($2.6 billion) in revenue. That compares with £1.3 billon in 2021 from 35.2 million visitors. The company's revenue in 2022 exceeded pre-pandemic levels, however, the number of visitors remained below the 67 million people who flocked to its attractions in 2019. Merlin Entertainments swung to a pre-tax profit of £136 million in 2022, after a loss of £94 million in 2021. This is amid a shift in consumer preferences for experiences, rather than goods, after the isolation during the pandemic, Mr O'Neil said. The company's US market bounced back "almost instantaneously", the UK recovered about 80 per cent of its visitor numbers, while Asia recovered about 70 per cent of its volumes (mainly anchored by China), he said. "The Chinese tourists are very influential in UK, Europe, Asia-Pacific, Australia, Korea and Japan, but we have not seen Chinese tourists travel outside of China other than to Thailand, where there's been a boost in Bangkok," he said. "Overall, we're hoping to see Asia back close to 2019 levels in late 2024." Merlin Entertainments, which was taken private by Blackstone , KIRKBI and the Canadian Pension Plan Investment Board in 2019, is among the companies seeking a slice of consumer spending at a time when families are under pressure from rising cost of living. Mr O’Neil said families were visiting less often but spending more. "Spending is up … people are picking fewer, better [activities] … they're doing that for additional days and/or more spend in the attraction. Our hotels in an off-peak time are doing very well right now," he said. "Inflationary pressures are real," he said, referring to higher salaries due to government-imposed minimum wage levels and competition for workers during a labour shortage in 2022. "There's been an easing of the labour shortage in 2023, so we've been able to ramp back up our level of staffing but it had put a lot of pressure on the business," Mr O'Neil said. Designing and building attractions is also becoming more expensive, due to the higher prices of raw materials and commodities, which puts pressure on the company's contingency budget, he added. Despite economic uncertainties and geopolitical tensions, the global company will focus on "bringing more experiences to more people around the world", he said. These pressures "certainly won't stop our growth, we have such an incredible growth opportunity ahead, we're just gonna have to work a bit harder and a bit smarter", the executive said. Artificial Intelligence (AI) tools like ChatGPT can help increase efficiency and capitalise on growth opportunities but without detracting from the "human touch" that defines family attractions, he said. "I don't think there's a CEO in the world that's not contemplating how AI is going to influence their business and the world in general," Mr O'Neil said. AI can help Merlin Entertainments in naming future rides, new markets to enter, media buying efforts and new attractions to drive visitation, he said. Mr O'Neil, 53, who was appointed chief executive of the theme park operator in November 2022, was speaking in Dubai as part of a whirlwind tour of 90 of Merlin Entertainments' attractions around the world. "We continue to like the tailwinds, the trends are in the right direction, there seems to be this flight to quality that seems to fit right into our hands and we're working very hard to grow ahead of this economy," Mr O'Neil said. Merlin plans to open the first standalone Peppa Pig Theme Park in continental Europe, which is set to open at Legoland Deutschland in 2024. Alongside this, North America's second Peppa Pig Theme Park, scheduled to open in Dallas in 2024, has broken ground. Following the opening of the two parks, Merlin will operate eight Peppa Pig attractions globally, including three theme parks and five Midway Peppa Pig World of Play attractions across America, Europe and Asia-Pacific. Developed in partnership with Hasbro, the parks are aimed at the growing preschool entertainment market, the company said. "Our purpose is making memories and bringing happiness and spreading joy, and if we focus on our purpose and making this the greatest place to work in the world, then everything else takes care of itself," Mr O'Neil said.

Theme park operator Merlin Entertainments CEO sees 'tremendous' potential in Saudi Arabia

The Madame Tussauds' owner is also seeking to expand in Dubai, US, China and Australia as part of its global growth plan, Scott O’Neil says