by Theme Park Magazine
LEGOLAND is the latest theme park giant to adopt surge pricing, with plans to implement a new dynamic pricing model later this year. This means guests will pay more to enter the park during peak periods, such as weekends, holidays, and sunny days. While the move aims to manage crowds and boost revenue, LEGOLAND follows in the footsteps of major players like Disney, Universal Studios, and Cedar Fair, who already utilize similar pricing strategies.
CEO Defends Strategy
Scott O’Neil, CEO of Merlin Entertainments, the parent company of LEGOLAND and other leisure destinations, recently discussed the changing landscape of the theme park economy on CNBC. O’Neil notes a trend among consumers: “Staying longer and spending more at fewer attractions seems to be the trend.”
In addressing the company’s decision to implement surge pricing, O’Neil prefers the term ‘dynamic pricing,’ explaining, “It actually protects the guest experience…you take the prices up, it keeps the numbers down to a reasonable number.” By managing visitor volumes, O’Neil believes dynamic pricing aims to enhance the overall experience for guests.
Earlier this year, Wendy’s faced significant consumer pushback when it floated the idea of surge pricing. However, most parts of the theme park industry have already successfully integrated dynamic pricing, allowing parks to maximize profits while potentially mitigating overcrowding.
Downfall of Theme Park Surge Pricing
Surge or dynamic pricing at theme parks has critics. The model raises accessibility concerns, as it can disproportionately impact lower-income families who may be priced out of visiting during coveted periods like school breaks and holidays. Additionally, fluctuating prices add a layer of complexity to planning and budgeting trips, potentially diminishing a family outing’s spontaneity. Merlin Entertainment’s adoption of dynamic pricing indicates a broader industry shift, suggesting that remaining theme park giants not offering it may soon follow suit.
Surge Pricing Research
Surge pricing has a mixed track record. A University of Minnesota study found that its introduction into rideshare apps led to increased driver complaints and decreased driver income due to financial losses associated with those complaints.
Similarly, research published in the “Journal of Global Scholars of Marketing” (September 15, 2023), “The dark side of surge pricing and the mitigating role of information disclosure,” concluded that customers generally perceive surge pricing as unfair. However, the study also found that transparency about the reasoning behind price fluctuations can positively impact fairness perceptions.
Dynamic Pricing vs. Surge Pricing
When questioned about Merlin Entertainment’s surge pricing model on CNBC, CEO Scott O’Neil emphasized the company’s preference for the term “dynamic pricing.” Understanding the distinction is important.
According to an Associated Press article, “Dynamic pricing and surge pricing both continuously adjust prices based on various factors, sometimes within minutes. Dynamic pricing can involve both increasing and decreasing prices, based on market conditions, the season, and supply changes. Surge pricing is a subset of dynamic pricing and only involves escalating prices based on supply and demand.”
Merlin Entertainments states that under this ‘dynamic’ model, guests could see slightly lower entry prices on less crowded days.
What do you think of surge pricing at theme parks? Let us know in the comments below.
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