Merlin Entertainments plc has announced that it will open its first LEGOLAND park in South Korea in 2017.
South Korea is one of the LEGO Group’s largest markets in Asia and the country has an established theme park market. Merlin currently operates six LEGOLAND parks in five countries with new parks planned for Dubai (2016) and Japan (2017).
Located on the island of Jung-do in Chuncheon, Gangwon Province, the LEGOLAND Korea site is around an hour's drive from Seoul and less than 2 hours’ drive for 23.7m residents.
The park will be financed and run under an ‘operated and leased’ model, similar in structure to that employed for LEGOLAND Japan.
The total investment for LEGOLAND Korea is estimated at KRW300bn (£172m) of which Merlin will invest approximately KRW100bn (£57m) mainly in branded assets. The remainder of the assets, mostly relating to the park infrastructure, will be funded by a property company owned by a consortium of local public and private investors.
The National Government, Gangwon Province and Chuncheon City will fund the construction of a bridge to the site and provide wider infrastructure support as part of the agreement. It is expected that the development of LEGOLAND Korea will spark further development of the island's retail and leisure facilities.
Pre-opening costs are estimated at KRW11bn (£6.5m). The ongoing EBITDA margin from the turnover-based rental charge to the property company is forecast at between 20 to 25%. (Merlin’s EBITDA ROIC target is 20%.)
Commenting on the announcement, Nick Varney, Merlin Entertainments Chief Executive Officer, said, “I am delighted to be able to announce another Asian LEGOLAND Park project. South Korea offers both a developed theme park market and strong LEGO brand recognition. In addition, the city of Chuncheon provides the ideal location, with great transport links and a picturesque island setting.
“The project is being supported at both the national and local levels, with significant contributions from both Gangwon Province and the City of Chuncheon, as well as a group of Korean investors.
“We continue to be excited by the potential opportunity of LEGOLAND parks globally and reiterate our target of opening, on average, a new park every two to three years.”