The growth of Merlin Entertainments, Europe's biggest Leisure operator, has been so rapid over the last decade that it now owns and operates close to 90 attractions across North America, Western Europe, Asia and Australasia. A key component of this expansion is the roll out of Merlin's "midway" brands, Madame Tussauds; SEA LIFE; Dungeons; LEGOLAND Discovery Centres and the Eye.
Glenn Earlam, Managing Director of the Midway Operating Group has responsibility for continued development and strategy for the midway attractions. He talked to Charles Read about wax, clusters and managing brands with "unlimited potential".
Related: Interview with Mark Fisher, MD, Theme Parks, Merlin Entertainments / Merlin Entertainments' John Jakobsen on the Rise and Rise of Legoland
How did you get started in the
attractions industry and please can you tell us about your career to date?
My background is actually FMCG marketing for Unilever (on PG Tips and Ragu sauces); and then Bass where I worked on Carling and the "You've Been Tangoed!" soft drinks Campaign. However in 1995 I was attracted to a job in a quite different sector – Marketing Director at Alton Towers – and the rest is history! I spent 3 very happy years at Alton Towers, then taking over responsibility initially as Marketing Director for Tussauds Group's 3 theme parks – Alton Towers, Thorpe Parke and Chessington World of Adventures – and then as Managing Director, Southern Parks for the major development of Thorpe and Chessington.
In 2004 – a big chance to look after what Tussauds called their City Centre attractions – the London Eye – then 6 Madame Tussauds, and Warwick Castle. In 2007 when Merlin acquired The Tussauds Group these became part of the midway operating group (except Warwick) which I then became MD of. Then we had just over 30 midway attractions – now, just 4 years later we have doubled that figure to over 60!
What is your current role, responsibilities and targets?
As Managing Director of the Midway Operating Group I work very closely with my colleagues in our creative and development operation – Merlin Magic Making – on the identification of new sites and overall development of our midway brands – Madame Tussauds; SEA LIFE; Dungeons; LEGOLAND Discovery Centres and the Eye – as well as for the operating performance of the midway sites.
Midway Performance
Looking at Merlin's Annual Report, 'Midway' appears to be the most profitable and fastest growing of Merlin Entertainments three operating groups. To what do you attribute this level of success?
Merlin has developed a very efficient operating model in our midway brands – I believe unique in the sector. Not only can our skilled Merlin Magic Making creative team and site operators produce an outstanding high quality and very exciting attraction for a fraction of what our competitors invest (average capital cost of £7m for a midway); but also one which operates with relatively low costs and produces very high ROIC levels of around 20% and above. Our strategy of continuous investment then keeps the attractions fresh and encourages high repeat visits.
Add to that our very strong brand propositions which are at the heart of the Merlin success, particularly SEA LIFE; Madame Tussauds and LEGOLAND Discovery Centres and we have an unbeatable formula capable of global roll-out.
How is Merlin's long term capex strategy of "new in every attraction every year" applied in the Midway operating group?
At the heart of Merlin's growth and our success is our objective to produce hundreds of new compelling propositions every year – that excite and heighten our guests' enjoyment. These might be as big as a hotel in a theme park resort; penguins into the London Aquarium; a new multi-million pound ride; or simply a 'black box' travelling exhibit like the current 'Jelly Disco' into SEA LIFE; or addition of talking heads at the end of the attraction to ensure you leave the London Dungeon laughing. The main thing is that every single Merlin attraction has some new investment every year. However we also work on a clear capex cycle which means that depending on the type of attraction/brand the level of investment will be different year on year – we work in midways for example in putting a major investment into every site on a 5 year cycle. This is every 3/4 years in the theme parks which have very different visitor drivers and are all day experiences.
Regarding exploiting strategic synergies, Merlin's annual report says, "Our scale and asset intensity in certain markets enables us, amongst other things, to offer attractive national promotional offers to visitors; to achieve procurement savings; and to invest in e-commerce platforms to improve our sales channel management capability". How is this achieved in practice?
This has become an increasingly important part of our commercial strategy supported by our increasing efforts to 'cluster' attractions together in a location/town thus benefitting from linked ticket sales and other promotional, operational and procurement savings this presents – good examples of this are Blackpool where we have 8 attractions now; London of course; Berlin; Sydney and Amsterdam.
Other initiatives like the Merlin Annual Pass now available in the UK and Germany have proved fantastically successful; and in fact in 2012 we will launch MAP in the USA as we now feel we have sufficient attractions there to make it attractive.
E-commerce is a very important area of development for us as more and more of our visitors buy tickets online and decision making times on attraction visits gets shorter and shorter. We have seen a real explosion in activity here with e-commerce sales more than doubling in the last two years. In fact in anticipation of this two years ago we commissioned IBM to develop a tailor-made single back end system for us which now operates across the whole group with all individual attraction sites using it. This has not only increased the efficiency of our online sales but has more than paid back the original investment already.
LEGOLAND is very much for families of pre-teens. What's the target demographic for Midway attractions?
This depends very much on the brand. The LEGOLAND Discovery Centre target for example is very similar to the LEGOLAND Parks; SEA LIFE has a similar younger target audience although perhaps a little broader than the LDC's. Madame Tussauds and the Eye tend to be more adult brands; while the Dungeons are split between teen and young adult groups, and families with children in the 8-12/13 group who still tend to visit with their parents.
As part of Merlin's resort strategy for its theme parks are there plans to add second and third Midway gates to all theme parks and LEGOLAND parks?
Yes absolutely – our strategy is to turn all our theme parks into 2/3 day destination resorts and that means both the addition of accommodation; and second gate attractions like waterparks and of course our midway brands. We currently for example have second gate SEA LIFE attractions at LEGOLAND California (where we also have a waterpark); and Gardaland; and a Dungeon at Warwick Castle; with several more planned.
We also sometimes 'merge' the brands incorporating them within the theme park main offer – good examples of this are the new Atlantis ride at LEGOLAND Windsor ( LEGO/SEA LIFE) ; SEA LIFE attractions within Alton Towers and Chessington; and a different Atlantis experience in LEGOLAND Billund. 
How is the Midway group managed?
Operationally the midways are managed regionally – currently with Midway Regional Directors for Europe, USA, Australia and New Zealand and of course London. We also have a Development and New openings Director who also looks after Asia although at some stage this too will have its own Regional Director. All of these report directly to me, as do the Global Brand Marketing Directors who are responsible for ensuring a brand consistency across all our sites and for central creative initiatives.
What's the secret to maintaining quality, brand and focus with such aggressive expansion plans involving a range of attractions?
Our focus is always on maintaining high quality standards and delivering what we promise! Our success at this is defined by our visitors – Merlin is the only company that gets daily feedback in every one of our attractions – feedback which is reviewed all the time and any attraction whose satisfaction scores dip is contacted immediately and if necessary a team will be sent in to help the local attraction sort out the problem.
The other important thing is that we separate out responsibility for openings and for ongoing operation of existing sites. The regional operating teams do not take over the new sites until they are open and the snagging complete and all opening marketing and other activity is the responsibility of a new Openings team. That means no site team ever takes their eye off the ball on their existing day to day business.
Midway – Brand/Project Questions
SEA LIFE
In an interview with Dave Gibson of the National Marine Aquarium, he noted that SEA LIFE "seems to be taking over the world" and was positive about the improvements in commitment to conservation and animal welfare in commercial aquariums. Is the conservation/education aspect of aquarium at odds with the entertainment remit of running a fun attraction?
Conservation is at the heart of the SEA LIFE brand and truly is what picks us out from the rest. We are the world's No 1 aquarium brand and our fantastic team would not ever allow us to compromise how we care for, breed or display the creatures; or to do less in the general marine environment – they are fierce advocates for marine conservation! Our attractions are never about tricks or unnatural behaviour they are about 'amazing discoveries' connected to the world below the sea. We want our visitors to have fun when they come to SEA LIFE of course, and they do, but we also look to educate them with 
fantastic facts, to fascinate and provoke interest and action – not to 'entertain'. This includes for example having very clear policies relating to marine mammals for example – we fundamentally do not believe certain species should be in captivity; but where we have inherited creatures we work with experts to devise the best care for them with us or elsewhere.
Please tell us about conservation projects.
We work very closely with marine conservation and scientific organisations in so many areas including the world famous rescuing and rehabilitation of injured marine animals particularly seals, otters and turtles – with our teams often working round the clock feeding seal pups at 4 hourly intervals for example. Two good examples of our big projects would be:
– The conservation of turtle nests /breeding grounds is a real issue particularly in those areas which have been developed for holidaymakers . SEA LIFE is involved in a major project in partnership with NGO Sea and Sky in Zakynthos in Greece with to protect the breeding grounds of the local loggerhead turtles/build a much needed turtle hospital for injured turtles in the area
– Stop Whaling. Working with the WDCS SEA LIFE has now hosted two youth conferences on the subject and worked to develop information and lobby environment ministers across Europe to stop Greenland/Japan calls to restart whale hunting
How do you ensure quality in terms of animal welfare, education, and outreach programmes?
Apart from the fact that our marine displays and development team is probably the most expert in the business, we work closely with a team of external vets, and marine organisations. We also have an internal ethics committee which operates all the time and is fierce in what it believes is right – and which always has the last say. We would never compromise this position for any commercial imperative – it is fundamental to the SEA LIFE brand.
We're seeing the SEA LIFE brand added to theme parks and LEGOLAND. How does this work in terms of management? Is there any conflict?
Regardless of where they are located the local SEA LIFE manager who would always have marine training, vet and central SEA LIFE experts always have the final word when it comes to what goes on in the aquariums.
EYE
Merlin was forced to protect the EYE brand this year. As Merlin expands are you finding that your brands are increasingly at risk? Particularly is China an issue in this regard?
Yes this is certainly an issue and we are fierce in our protection of our brands. We have now trademarked them as far as possible worldwide and take immediate and robust action if we become aware of any breach
Are you looking to build any more EYE wheels or do you plan to expand by converting existing iconic 'observation' buildings – like the Blackpool and Sydney Towers?
We certainly see the Eye brand as having great development potential but the emphasis will always be on the word 'iconic' – the Eye brand would never go on small towers or wheels; and we are constantly looking for potential opportunities of all kinds.
Madame Tussauds
To what extent do you try to bring in local culture and customs to Midway attractions and is more important for say Tussauds than your other brands?
This is a very important element in the rollout of all the midway brands. It is probably most obvious in fact with the Dungeons which are themed entirely around the nastier history of the location in which they are situated!
In SEA LIFE we always look to include displays relevant to the area and the native marine life ; in the LDC's Miniland of course reflects the location; which Madame Tussauds is an eclectic mix of very local figures relevant to the locations; regional and international A -List entertainment, political and sporting figures which may appear in several of the attractions.
We're seeing resurgence in interest in wax museums which seems at odds with a trend for high tech attractions. Why do you think this is and what have you done to make Tussauds more appealing to the i-generation audience?
Madame Tussauds is not like any other attraction – not only because of the quality of our figures but because in our view it is not a wax attraction but an 'homage' to our continuing fascination with celebrity. Nowhere else either has the relationship with celebrities we enjoy – it is an honour to be chosen to be represented in a Madame Tussauds attraction – and celebrities work closely with us including not just providing sittings but also in the provision of clothing and other personal artifacts. Equally, since we opened up the attraction, threw away the ropes and barriers, and encouraged our visitors to interact with their heroes – it is a celebrity experience like no other – which is as enjoyed and relevant today, in this techno age, as it ever was.
LDCs
The LDC in Manchester has been a runaway success. Please can you tell us about this and how it has shaped your strategy going forward?
We are delighted with the performance of all our new LDC's – in Manchester, Dallas and Chicago – they are all exceeding both visitor number and ROIC targets which has given us the confidence to increase our rollout to an average of two new openings a year, although in 2012 this will actually be three – in Kansas City, Atlanta and Tokyo. In fact in my opinion this is the brand that has unlimited potential to work in middle size cities which could not support some of our other brands.
What is the difference between a LEGOLAND Park and an LDC? Is the latter a toe in the water for full parks?
No they are quite different from one another – a theme park is a whole day or even 2/3 day experience whereas a midway – like an LDC – is just what it says – something you do as part of a day out – whether that is while you are out shopping (many of our new sites are in quality retail locations) or doing other things – say in London or Blackpool where you may be visiting several other attractions; or spending time on the beach!
General
What's your strategy in terms of IPs vs. Merlin brands, eg '4D Marvel Super Heroes' experience at Madame Tussauds, London vs. say the SEA LIFE brand and Crabzilla?
The right IPs are certainly becoming more important – but only in the right place – and to support our already very strong brands and sub-brands like Nemesis and Oblivion. We are therefore unlikely to consider an IP link if we have a massive compelling proposition which speaks for itself – a world first ride for example. But where it may be the same ride technically that we have elsewhere or that others have then theming is what gives it the ultimate magic and a clever IP link may have a role to play there like for example our highly successful SAW ride and Maze at Thorpe Park. Equally, if the attraction is harder to explain /make unique like say a 4D show or a dark ride then an IP can help to make sure that visitors understand what they can experience – next year for example we will be opening two new Ice Age 4D shows in Gardaland and Alton Towers and this is a perfect partnership. 
However with the formation of our Merlin Magic Making organisation and appointment of our Global Creative Director and an IP Manager we certainly plan to ensure that Merlin is the first stop for IP owners looking to stretch their brands.
Midway By Location
Blackpool
Blackpool saw the "launch' of Merlin's biggest portfolio of attractions in one town anywhere in the world – the Power of Eight! In the Tower: The Blackpool Tower Eye; The Blackpool Tower Dungeon; The Blackpool Tower Ballroom; The Blackpool Tower Circus; Jungle Jims. On the Promenade: Madame Tussauds, Blackpool; SEA LIFE; Pirate Adventure Golf".
Why Blackpool and is this a template for other locations? Any more plans to revitalise tired seaside resorts?
While we would never rule this out that is not a key part of our growth strategy! Blackpool is a unique and iconic seaside town in the UK – and we are delighted to be at the heart of the regeneration plans for this important town which will see it return to its heartland audience – families. Our brands are a very important part of that repositioning.
The Tower itself is owned by the council but the attraction is managed by Merlin. How is the deal with the Tower structured in terms of management of the Tower attractions, length of the agreement and ongoing investment?
Blackpool Council are both our landlords and our partners in this project. Merlin has a very long term lease on the buildings and has been responsible for the overall development and project management of the Tower and surrounding buildings, but the Council is funding its restoration and maintenance programme using monies for European and UK funders. Ongoing restoration will also be funded from receipts
Japan
Is the temporary Madame Tussauds Tokyo opened last month likely to become permanent? How has it been received? (Ed. since this interview see Madame Tussauds to Open Permanently in Tokyo 2013)
It has certainly been very well received and has exceeded our expectations both in numbers and through our customer satisfaction research so while no decisions have yet been made we are certainly seriously considering a permanent attraction in Tokyo.
When you announced this, and the opening of Tokyo LEGOLAND Discovery Centre next June, your press release said that Merlin "is continuing to look for further suitable sites across Japan and its leading cities for its brands – primarily LEGOLAND Discovery Centres and SEA LIFE". Any update on this?
Asia Pacific is a very key development area for Merlin and we are constantly looking for new opportunities.
You were also quoted as saying "Our experience has also shown that bringing together an exciting mix of retail, catering, and quality leisure attractions like the LEGOLAND Discovery Centres creates a whole new element to a family shopping day". Are you planning more clusters around Malls?
Yes this is a very important part of the midway development strategy – and we know that our quality attractions drive footfall in retail developments so there is a massive mutual benefit. Such locations also offer opportunities for us to 'cluster' attractions – and we very quickly see benefits as we have done already with the LDC/SEA LIFE opened earlier this year in Dallas. A similar development is planned in Kansas City next Spring.
Sydney
What are your plans for the Sydney group of attractions purchased last year? (See: Merlin Entertainments Deal With Village Roadshow Completes)
We are already well on track with our investment programme including the rebranding of the Sydney Tower Eye and some of the other attractions and in 2012 we will introduce the SEA LIFE brand to the Aquarium and to Kelly Tarltons in New Zealand, as well as opening our Madame Tussauds in Sydney.
The target markets for global expansion of Midway clusters were in the US and Asia. Is this still the case? How do you decide where to go and where is next on your horizon? Any plans for China?
Both of these remain our key development areas – with the USA perhaps our primary market now but with several locations already identified in Asia Pacific for the next 2/3 years including building on the success of the Madame Tussauds we already have in Shanghai.
Images: all images kind courtesy Merlin Entertainments
