Investment into Experience

December 2015



Investment cycle of a typical attraction



Investment culture within your annual accounting set up



6-7%, over investment and under investment



When to borrow money to create a positive cycle



Investment into commercial, experience and infrastructure



Investment into staff to grow revenue – delivering economic growth



How to get investment?

Overview

Over Investment I get funds and build in on some land in the country We had to lay off staff and could not repay our loans and went bust after 14 months of trading.

It will cost around £50 million to build

I want to build/extend my attraction to do something amazing and get 1 million visitors

When we opened attendance numbers were only 500,000 in year 1

Guests complained about waiting and a poor experience generally

Graph of Death Annual Attendance 90,000 80,000 70,000 60,000 50,000 40,000 30,000

20,000 10,000 2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Under Investment

Beyond industry average penetration 200 100 % %

Up to industry average market penetration

0% A scientific approach to leisure

Under Investment Typical investments per new visitor Attraction From To Farm Park £15 £28 Zoo £40 £70 Museum/Science centre £45 £75 Regional Theme Park £35 £60 Branded theme park £100 £170

Revenue not big enough to reinvest

Fight to maintain attendance and dwell time

Poor Trading Performance

UK PLC • •





Under Investment in the UK attractions Industry

Vision XS estimate of Under Investment into the UK Attractions Industry Heritage and musuems Currently Generates around 210 million visits a year for a market of 70 million residents and 34 million overseas tourists Farm Parks (2014) which is around 2 visits per person annually

My prediction is that this figure could be 3 visits per head per annum generating 314 million visits to the UK and creating another £10 billion of income for the UK To do this requires investment of £7.4 billion

£3,437,500,000

£61,200,000

Amusement Parks

£150,000,000

Theme Parks

£3,375,000,000

Zoos and Wildlife

£365,625,000 £-

£1,000,000,000

£2,000,000,000

£3,000,000,000

£4,000,000,000

Questions you need to answer 1. What does your attraction need to move it forward? 2. Is the economic structure of your attraction correct to receive experience investment? 3. What is the right mix of investment between infrastructure, experience, commercial, and curatorial?

Our Experience of Investment Experience: Good and Bad!

Gold Reef City: Johannesburg Challenge: Wrong economic model

Solution: 6 months of pain

Greenwood Forest Park Challenge: Not enough infrastructure to match the rapid growth Solution: A lot of rapid digging!

Twycross Zoo Challenge: Building a ‘folly project’ and not investing into the core experience

Solution: Sack the management team and rebuild over the next 15 years!

Disney’s Animal Kingdom Challenge: Looked beautiful but could not be operated Solution: 5 years of reengineering

What should you invest in? Inputs to decision making; •

• • •

Experience Model • Visitor surveys • Experience Analysis Accounts Collection/Curator’s plan Competition

This Proposal is only valid for 30 days from the date of submission.

Like to Have

Need to Have

Investment Triangle

• Drive Attendance • Increase Dwell time • Increase visitor experience Visitor Experience

• Improve visitor experience by better circulation • Improve safety • Improve capacity • Improve visitor satisfaction

? Infrastructure

• Increase spend per head • Improve profit per visitor • Improve visitor satisfaction Commercial

Investment Into Infrastructure

Investment Timeline/Cycle. Year 1

Experience

Year 2 Year 1

Experience

Year 2

Year 3

Commercial

Year 3

new audio visual experience 100 car park spaces

Infrastructure

toilet block

new food kiosk

Commercial

Main aims

Infrastructure

attendance to 120,000

park more cars increase food spend

Each year invest 6-7% of total revenue

Year 4

Year 5

play area

small exhibition

paths

Year 6

300 overflow improve road car park spaces junction

refit retail area remove toilet complaints

increase park more cars improve safety in summer attendance to 140000 increase retail spend

Investment Timeline/Cycle Year 1 Experience

Year 2

new audio visual experience 100 car park spaces

Infrastructure Commercial Main aims

Year 3

attendance to 120,000

new food kiosk park more cars

£

300,000

Infrastructure

£

-

£

50,000

Commercial

£

-

£

75,000

Total

£

300,000

£

125,000

Year 5

play area

small exhibition

toilet block

remove toilet complaints

increase food spend Experience

Year 4

£

£

40,000

40,000

paths

Year 6

300 overflow improve road car park spaces junction

refit retail area increase park more cars improve safety in summer attendance to 140000 increase retail spend

£

250,000

£

20,000

£

30,000

£

110,000

£

45,000

£

175,000

£

280,000

£

80,000

£

80,000

Investment Timeline/Cycle Experience

Year 1 new audio visual experience

Infrastructure Commercial Total Investment £ Attendance Spend Per Head £ Total Income

£

Reinvestment (7%)

£

Main aims

300,000 105,000 16.00 1,680,000

117,600 attendance to 120,000

Year 2

Year 3

Year 4 play area

100 car park spaces new food kiosk

toilet block

paths

£

125,000 120,000 18.50

£

£ £

40,000 119,000 19.70

£ £

280,000 116,000 20.50

Year 5 small exhibition

Year 6

300 overflow improve road car park spaces junction refit retail area £ £

175,000 140,000 20.50

£ £

80,000 137,000 20.50

£ 2,220,000

£ 2,344,300

£ 2,378,000

£ 2,870,000

£ 2,808,500

£

£

£

£

£

155,400

park more cars increase food spend

164,101

remove toilet complaints

166,460

200,900

196,595

increase park more cars improve safety in summer attendance to 140000 increase retail spend

The Basis of what to invest – 5 models for success Do your homework; •

Each of the models should be investigated properly and revised until there is a balanced view of the investment process across all key overlapping parameters.



This could take many weeks!

This Proposal is only valid for 30 days from the date of submission.

The Business Plan Process Assessment and scope

Due Diligence

Research

Submission

Funding Agreed

Assessment and scope

Writing Up

Update as the project continues

All the data needed

Review the thing after!!!!

P+L – key economic infrastructure for success Low

High

Used

Example £ 2,344,300

Total Income Staff Costs and training

21.0%

40.0%

28.0% £

656,404

4.0%

8.0%

6.0% £

140,658

6.0%

8.0%

7.0% £

Maintenance

3.5%

6.0%

4.0% £

93,772

Overheads

4.5%

6.5%

5.0% £

117,215

Cost of food

7.6%

7.6%

7.6% £

178,500

cost of retail sales Cost of other sales Cleaning Insurance

7.1% 2.5% 1.3% 1.3%

7.1% 2.5% 1.5% 1.5%

7.1% 2.5% 1.0% 1.5%

£ £ £ £

166,600 59,500 23,443 35,165

Other Loan Interest Total Costs

7.0%

10.0%

7% £

164,101

65.9%

98.8%

76.8% £

Marketing

New investments

Trading Surplus (EBITDA)

£

164,101

1,799,459 544,842

Investment into Staff This is for you if;

This is not for you if;

 You have less than around 30% of your total costs are staff costs

× Staff are your biggest headache × Volunteers run your attraction (do it for free please) × You have looked at your experience and there is a ‘delivered element’ at least once an hour in your attraction

 You realise that there are very few points your experience gets delivered to visitors by a real person.  You can identify that there are areas of your experience that could be delivered through tours, shows, guides, costume characters, interpreters…….

Investment Into Staff

Investment Into Staff  For our attraction imagine if;  We employ 5 staff to run shows and demonstrations for the visitors…..  Costing say £150,000 per year (now 31% of turnover)  The dwell time increases per average visitor from 4 hours to 4.5 hour. 

Bad news – total costs rise from £1.8 million to £1.95 million

 Good news – total profit rises by £143,000 per year to £688,000

How to get Investment? •

• • • • • •

Do your 5 models and write a strong business plan written for one of the following; • Bank • Head office • Investment angels • Equity Investors Don’t rely on grants or sponsorship Really know all your numbers when presenting to potential funders Allow 6 months minimum and be prepared for several rounds of questions Grow balls of steel! Talk to us about our Heritage/Leisure Fund. Good Luck

This Proposal is only valid for 30 days from the date of submission.

Summary Do; • • • •



Have a 3 – 6 year plan Know your aims of investment Get the right accounting infrastructure Think about investing in staff to provide better experiences and/or extend dwell time Invest an average of 6-7% of total revenue including all secondary spend annually

Don’t; • • • •

Build a monument to yourself! Over invest Under invest Forget someone with a twinkle in their eye delivering an experience can be better than a $10 million techno cave.

Design Team Office details Tony Sefton, CEO & Founder, [email protected] Domnica Radulescu, Senior Consultant, [email protected]

Dawn Woollam, Commercial Manager, [email protected]

VisionXS ltd, 5-6 Marketplace, Wallingford, Oxfordshire, OX10 0EG United Kingdom 0207 665 1888 www.visionxs.co.uk