Fears for London tourism following Westminster terror attack

Merlin Entertainments shares weakened and G4S rose as investors weigh a possible softening in London tourism and a likely increase in demand for private security after the Westminster terror attack.

Shares of Merlin, the operator of attractions including the London Eye Ferris wheel and Madame Tussaud’s, were down at one stage almost 3% since the incident. Analysts at Peel Hunt yesterday cut their target price, citing concern about weakening tourist visits.

“We now believe there is a risk that tourism in London will fall, particularly visits from families,” Peel Hunt analyst Ivor Jones wrote in a note. That could hurt profits, he said, adding that the UK accounts for about a third of group sales.

G4S, which derives about 20% of sales from within the UK, mainly employing security guards, traded as much as 3.3% higher at one stage in London. UK Prime Minister Theresa May restated a commitment to spend an additional £2.5bn (€2.9bn) on building the UK’s counter-terrorism and intelligence units.

If tourism falls in response to the attack, it could also threaten UK spending on luxury goods and entertainment, which has been bolstered by rising visitor numbers as travellers took advantage of the Brexit-weakened pound and shifted from destinations like France in the wake of a series of incidents there.

Handbag-maker Hermes said this week tourists were favouring the UK and Italy for European vacations, with spending at London and Rome stores compensating for continued softness in its domestic market of France.