Merlin Entertainments is the standout performer today, as the tourist attractions operator announces both FY revenues and profits rose despite what it billed as a difficult year. Although poor Summer weather and a spate of terror attacks kept tourists away from its key central London ‘Midway’ attractions – including Madame Tussauds and the London Eye – today’s release has sparked renewed optimism that the company is directing attention to the right areas of the business to inspire growth.

In fact, the word that stands out more than any other in today’s preliminary results release is Legoland. The franchise has extended its reach over the past decade, opening new locations in Florida, Malaysia, Dubai and Japan, while a New York park is expected to open in 2020 as discussions for a park in Korea and China continue.

This rapid expansion, alongside the drive to increase accommodation capacity, helped the parks to deliver a 4.7% increase in like-for-like revenues (and an 18.2% increase in organic revenues), easily outpacing the traditional Midway business which saw LFL revenues fall 1.2% (and mustered just 1.3% organic revenue growth).

Having been stripped of its UK 100 listing last year following a sustained retreat from June’s all-time highs, punctuated by an October profits warning, the commitment to open a further 644 new rooms across all theme parks, a 68% increase on 2017, is being well-received by investors. Building on existing demand from those able to easily travel to parks by opening the door to visitors from further afield, in addition to generously offering them the ability to splash more cash over a multi-day trip, is a high growth strategy that today’s buyers hope pays off in the long run.

Shares have climbed to a 3.5-month high of 383p on the back of results, however have so far been unable to crack November highs of 385p.

Henry Croft, Research Analyst, 1 March 2018