Visitor Attractions

Although it looks as though we have passed the inflationary peak of 2023, consumers are cost-conscious. Moving into 2024 the key theme within the Visitor Attraction sector is likely to be value for money, which is largely attested to the current economic climate, with reduced discretionary spend and a heightened focus on quality. The Domestic Sentiment Tracker February 2024 (DST), prepared by VisitBritain, highlights the following:

Visitor Attractions face other operational challenges such as the national minimum wage increase and high cost of utilities. The impact of these challenges will vary for different assets depending on the size, location and type of attraction. For example indoor attractions, like aquariums, may benefit from reduced utility costs whereas outdoor attractions, like farm parks, theme parks, and zoos, which typically have less built accommodation, may not reap the benefits as much. However, lower wholesale energy prices are likely to have a minimal impact in the immediate term and operators should seek to improve the energy efficiency of the built accommodation.

Despite the current economic climate and on-going uncertainties, the Great Britain Day Visits 2023 Overall Survey highlighted the following positive sentiment:

How can operators be proactive?

As ESG becomes more prominent, operators should seek an integrated sustainability approach. Adding an accommodation offering is a viable way to meet consumer needs. For example, the DST highlighted the ‘net level’ of the number of intended domestic trips is 6% higher than the former 12 months, with 81% of participants intending to take a UK overnight trip within the next 12 months, compared to 65% abroad. This is crucial to address, as 19% of those intending to visit a Visitor Attraction are intending to save money on-site by reducing their spend in shops. By increasing the time spent on-site by consumers, this can improve the secondary spend, which may ensure operators maintain their revenue mix.

Attractions with an existing accommodation offering could seek to decarbonise their supply chains, particularly as 80% of hotel emissions are attributed to the supply chain, or further develop to provide a greater array of accommodation.

Merlin are set to deliver the UK’s first operationally carbon neutral holiday village at LEGOLAND Windsor in spring 2024. The woodland village will provide a high quality sustainable resort giving an economic boost and bringing jobs to the local area whilst increasing catchment time - the on-site secondary spend and forward bookings provide a stable cash flow forecast.

Operators can embrace digitisation and the use of technology to enable pre-booking, which the 2022 Visit Britain survey highlighted 71% of attractions used. It can enable operators to account for seasonal demand and market conditions, thus enabling staff allocation and minimising the wage bill. In particular, outdoor attractions are likely to be impacted drastically by the national minimum wage increase from April 2024 because they usually have large staff requirements, irrespective of visitor numbers, so operators must be proactive in allocating staff according to seasonal demand and fluctuation in customer numbers.

Digitisation can also assist in dynamic ticket pricing strategies to boost revenue, because arguably, as we are in a market where operators cannot react to consumer needs, they must initiate them. Personalised offers, dynamic pricing strategies and a seamless onsite experience enriched by technology may lead to consumers feeling they had a positive experience, value for money and they may be inclined to book again.

Visitor Attractions continue to diversify their on-site offering by adding alternative income streams, such as partnership agreements and EV charging, as a popular means to stabilise income. For example, at Paulton’s Park the installation of Peppa Pig World has reduced seasonal fluctuations in the number of visitors due to the widened age demographic, and this also attracts families from a large catchment area.

As the cost of debt remains high and private equity remains cautious to invest, there is currently little transactional activity within the market. It appears most operators seek not to acquire new assets, but rather to invest into their current ones, with a heightened focus on sustainability and an enriched consumer experience to maintain revenue.