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Surge pricing is coming to theme parks

Surge pricing is coming to theme parks
  • Theme parks are the latest industry to implement a form of surge pricing.

  • Merlin Entertainments, which owns Legoland and Madame Tussauds, plans to start "dynamic pricing" at its top attractions.

  • Wendy's drew backlash and quickly walked back its announcement about exploring dynamic pricing.

If you're planning a visit to Legoland, you might want to first consider if it's going to be a busy weekend — it could end up costing you.

Visitors to certain Legoland locations will soon start experiencing surge pricing — or "dynamic pricing," as the CEO of the company that owns the parks calls it — based on fluctuating demand.

Legoland owner Merlin Entertainments plans to implement the system for its top 20 global attractions before the end of the year, a spokesperson confirmed to Business Insider. Merlin, which also owns Madame Tussauds and the Sea Life aquariums, will extend dynamic pricing to its other Legoland locations in the US next year, the Financial Times reported.

The new system would charge visitors more during peak times, such as sunny summer weekends that draw higher attendance, than it would for rainy weekdays in the offseason, Merlin CEO Scott O'Neil told CNBC in an interview Monday.

"At least for our business, surge pricing is not the name, it's dynamic pricing," O'Neil said. "And that actually, ironically, does two things: It actually protects the guest experience.

O'Neil said in the interview that dynamic pricing will help the parks, which have a limited capacity, deal with fluctuating demand in a way that cuts down on overcrowding and long wait times.

"You don't want to go to Legoland Florida or Legoland New York or Legoland California or Madame Tussauds right down the street here and wait hours in line," he said.

"You take the prices up, it keeps the numbers down to a reasonable number," he said. On days without as much foot traffic, the park could then lower the price of admission and attract those looking for a bargain.

O'Neil declined to provide specifics on the pricing swings under the model, but suggested that guests attending on off-peak days could potentially see a 10% discount, or even "a bit more."

A company spokesperson told BI that they didn't have specifics to share yet on whether there would be a price limit for any price hikes under the new model.

"For those of us who are a little more budget-conscious, a little more value-based, what an opportunity to have more people be able to experience it on the shoulder times," he said, referring to discounted prices.

Price fluctuations are not new for Merlin properties, which already reduce entry fees during off-peak periods. But the dynamic pricing model is a step further, incorporating more data to better drive demand and adjust things more quickly, the company told BI.

"This change brings us in line with competitors and the broader holiday industry that have similar pricing structures, which benefit guests who choose to book off-peak," a Merlin spokesperson told BI.

When pressed by CNBC on how families who are only able to visit during peak times, such as spring break or summer vacation, would deal with potentially higher prices, O'Neil said that the flexible entry fees were "more important than anything."

Surge pricing has gotten more popular in recent years, thanks in part to the popularity of ride-share apps like Uber. While industries like hotels and airlines have used it for decades, other businesses like restaurants and movie theaters are increasingly following suit.

Earlier this year, Wendy's faced swift backlash after announcing that it would experiment with dynamic pricing with its menus, though the fast food company later walked this back and clarified that it did not plan to raise prices in response to high demand (the company said it would, however, lower prices to drum up interest during slower periods).

Read the original article on Business Insider