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UPDATE 2-Weak pound drawing tourists back to London, says Madame Tussauds owner
March 2, 2017 / 8:02 AM / 9 months ago

UPDATE 2-Weak pound drawing tourists back to London, says Madame Tussauds owner

* Merlin Entertainments saw Nov/Dec jump in visitors from EU -CEO

* Says trend has continued into 2017

* Full-year pretax profit up 3.4 percent

* Shares down 3.8 pct; had been up 11 pct in 2017 (Adds detail, CEO comment, shares)

By James Davey and Kate Holton

LONDON, March 2 (Reuters) - European tourist visits to London have picked up since November, with the benefit of a weaker pound outweighing security concerns, Merlin Entertainments, said after reporting full-year results on Thursday.

Merlin, operator of attractions including Madame Tussauds and Sea Life, said in September that security worries after attacks in Europe were deterring families and school groups from visiting London even though sterling’s depreciation since the Brexit vote made the capital better value for overseas visitors.

The pound has fallen 11 percent against the euro and 17 percent against the U.S. dollar since Britain voted to leave the European Union in June.

“There’s always going to be a lag, but by November, December we started to see what we would expect, which is a big uptick in EU visitors to London,” Chief Executive Nick Varney told Reuters, adding that the upturn has continued into this year.

Varney said that attractions such as the Tussauds waxworks and London Eye Ferris wheel are bellwethers of the London and UK tourism economy because about 80 percent of their visitors are foreign, with half of those from EU countries.

The Merlin CEO said that in the absence of attacks the most important factor in determining tourist flows into city centres is price, which is mainly driven by foreign exchange.

“I’ve been around for 26 years in this business, I’ve seen the IRA (Irish Republican Army) right the way through to Islamic State,” Varney said.

“The impact of them (attacks) is, in my experience, never more than six months.”

Varney said that Merlin, which also owns the Legoland business and theme parks such as Alton Towers, entered 2017 in a strong position after a 3.4 percent rise in 2016 pretax profit.

However, shares in the company were down 3.6 percent at 479.3 pence by 1243 GMT, having climbed by 11 percent in 2017 prior to Thursday’s results.

Some analysts noted that forecast capital expenditure for 2017 at up to 390 million pounds ($478 million), compared with 259 million pounds last year, was higher than expected.

The world’s second-biggest visitor attractions group behind Walt Disney made a pretax profit of 259 million pounds, up from 250 million pounds in 2015, on revenue up 11.7 percent at 1.43 billion pounds. The dividend was raised by 9.2 percent to 7.1 pence.

Varney remained relaxed about the impact of Brexit on Merlin.

“The German government won’t tell us to stop employing lots of Germans ... And I don’t believe anybody is going to be silly enough to suddenly make it difficult for Germans and French and Italians to come to London to spend their money,” he said.

“I retain optimism both in the government’s approach and the belief that we’ll get a good outcome.” ($1 = 0.8153 pounds) (Editing by David Goodman)

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