achieving financial sustainability through cultural tourism · capitalise on your strengths:...

Achieving Financial Sustainability

Through Cultural Tourism

Presented by Simon Spellicy

Sandwalk Partners

Ideas | Strategy | Growth

October 2017

IDEAS. STRATEGY. GROWTH | SANDWALKPARTNERS.COM

The Partners have successfully managed large and medium scale businesses

as CEO, COO and CFO, delivered major transactions and been advisors to

boards and management on executing improvement and growth strategies.

Sandwalk Partners, is a boutique consultancy that focuses on assisting our

clients transform the breadth, quality and commercial return they achieve

from the visitor experience.

Our experience covers a broad range of industries:

ABOUT SANDWALK PARTNERS

2

- Arts, Culture & Heritage - Technology - Building Materials

- Brand Licensing - Tourism - Energy

- Retail - Call Centre - Private Equity

- Food & Beverage - Loyalty Marketing & Rewards - Infrastructure

- Hotels - Entertainment - Freight


3

OUR CLIENTS


4

In an uncertain funding environment tourism offers a channel to sustainable revenues.

Uncertain government revenues

- recurrent funding at or below CPI growth

- efficiency dividends

- capital developments not supported by operating funding

- only likely to become worse

Need for sustainable, self-generating funding:

- sponsors and donors

- commercial leases, venue hires, F&B, retail

- paid experiences, exhibitions, tours, talks etc

Tourism is a channel to unlock these opportunities by connecting with

a local and international audience

WHY LOOK TO TOURISM?


Source: Tourism Research Australia

5

“Cultural tourists” exhibit all the most desired visitor characteristics

“Cultural tourists” can be defined as those who visit cultural, arts,

heritage and environmental attractions.

They are an attractive potential audience because:

they stay longer

- 4.2 nights v 3.2 domestic on average

- 27.6 nights v 25 nights international on average

they spend more

they pre-package cultural events as part of their itinerary

they plan ahead and so can be influenced early

THE CULTURAL TOURISM OPPORTUNITY


1

DEVELOPING COMMERCIAL TOURISM PRODUCT

Six essential stepping stones on the journey…

2 3 6

4 5 Strategic

Context

Potential

Audience

Authentic

Experiences

Targeted

Marketing

Financial

Feasibility

Strategic

Partnerships


STRATEGIC CONTEXT


Create a lively & vibrant place to be, stay, talk about and return to.

Grow existing, and find new, audiences.

Promote and raise awareness of the importance of botanic gardens:

- environmental;

- scientific;

- health and wellbeing.

- shift perception from “nice to have” to “must have”.

Generate sustainable revenues for reinvestment.

Control the funding agenda.

WHAT STRATEGIC OBJECTIVES CAN TOURISM SERVE?


PLANNING CONTEXT

Strategic Plan

Tourism Retail Food &

Beverage Licensing

Corporate

Driver

Planning

Response

Integrated commercial visitor experiences

Business

Outcome

9

Organisational

Vision & Mission

Commercial Strategy

Tourism and other commercial activities should serve your vision & delivery of strategic goals.


OUTCOMES TO BE ACHIEVED

10

Growing core audiences and generating sustainable revenues are inextricably linked

Source: SWP Analysis

Growing Revenues

1. Ticketed activities

• tours, talks, venue hire

• exhibitions, festivals, events

2. High volume: Low yield

3. Low volume: High yield

4. Official merchandise,

mementos & souvenirs

5. Donations, sponsorships &

partnerships

Growing Audiences

1. Acquisition and engagement

• On-site

• Online

2. Retention and activation

• New “Friends”

• New Subscribers

• Returning visitors for

exhibitions & other activities

3. Long-term Support

• Advocates, partners,

supporters, friends


POTENTIAL AUDIENCES


FOR ALL VISITORS NOT JUST FOR TOURISTS

12

Demand Driver Description Mechanism

• locals who could visit

• Media

• Marketing

• Friends

• Partners

• On-site

• Tourists who could visit

• Media

• Retail

• Wholesale

• Inbound

• On-site

• Breadth, depth and quality

of engagement

• Visibility & Awareness

• Location and ease of access

• Compelling

experiences

• Engaging visitor

journey Cross-sell

and upsell

Locals

Tourists

Visitor

Engagement


POPULATION PROJECTIONS

Source: Vic Environment, Land Water & Planning “Victoria in the Future” (2016).

13

4.2 5.1

6.1 7.0

8.0

1.4

1.5

1.7

1.9

2.1

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2011 2021 2031 2041 2051

Population (Millions)

Greater Melb Other Vic

Is the local population growing or declining? What potential impact will locals have on demand?


VISITOR ARRIVAL FORECASTS

Source: SWP Analysis of data from Tourism Research Australia “Tourism Forecast 2016 issue”.

14

Are international and domestic visitor numbers forecast to grow?

15,687

4,170

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2011 2013 2015 2017 2019 2021 2023 2024

Visitation Forecast to 2024 ('000s)

Dom Int F'cast Dom F'cast Int


What are the important markets & motivators that your product must appeal to?

MAJOR MARKETS & MOTIVATIONS

15

Source: SWP Analysis of data from Vic Econ. Devel. Jobs, Transport & Resources “International visitation and expenditure in Victoria” (June 2016)

0% 5% 10% 15% 20%

Other Asia

Indonesia

Hong Kong

India

Singapore

Malaysia

Germany/France

UK

Nth. America

NZ

China

Top 10 International Visitors to

VictoriaTop 10 International Origin

Markets


Who is already visiting, why and how do we convert them?

EXISTING AUDIENCE

16

Source: SWP Analysis of data provided by Client.

0

500

1000

1500

2000

2500

3000

3500

FY12 FY13 FY14 FY15 FY16

Reason for Visiting

Performances Public Exhibitions Other

FY13

FY15

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

RBG Visitors by Month FY13 - FY16*

FY13 FY14 FY15 FY16

VISITOR DEMAND FORECAST

Source: SWP analysis July 2016

17

0.10 0.09

0.35 0.41

0.47 0.51

0.55

0.0

0.2

0.4

0.6

15 16 21 26 31 36 41

Out of State Visits (Mil)

0.30 0.33

0.61 0.65

0.69 0.73

0.77

0.0

0.2

0.4

0.6

0.8

15 16 21 26 31 36 41

Intrastate Visits (Mil) 0.38 0.42

0.96 1.06

1.16 1.25

1.32

0.0

0.5

1.0

1.5

15 16 21 26 31 36 41

+

Visits (Mil)

1.2

3.7 3.7

1

2

3

4

5

16 21 26 31 36 41

Ave.

4.2

7.4 7.5 7.5 7.6 7.6

0

2

4

6

8

10

16 21 26 31 36 41

Ave.

Population Conversion Rates (%)

Visitor Conversion Rates (%)

485% increase

2016-2041.

136% increase

2016-2041.

These metrics can be combined to create a forecast of demand


AUTHENTIC EXPERIENCES


GUIDING PRINCIPLES

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Shining a light on what you do best…

1. Capitalise on your strengths:

experiences must be an authentic reflection of who you are

offer deeper engagement without compromising core audiences

2. Focus on creating a high quality, highly engaging, experience:

depth of experience justifies charging a commercial price

3. Understand your markets & tailor your experiences to them

4. Use strategic partnerships to enhance your value proposition

5. Start small to manage risk and reinvest revenues for growth


LEVERAGE EXISTING EXPERIENCES FIRST

Leverage Existing

Experiences

Review current

experiences for quality,

marketability, scalability

Improve and expand

appropriate existing

product

Develop partnerships to

leverage existing,

complimentary activities

Create New Experiences

Develop cash surplus for

reinvestment

New products to:

-open new markets and

audiences

-create new revenues

Review, assess and

optimise existing products


21

Key collection, cultural, design, landmark buildings,

information assets and/or activities

Experience Zones:

Best practice visitor and community engagement

experiences and precinct/place

• Distinct experience zones

• Integrated stories, themes and needs

• Contemporary food, beverage & retail

• Increased visitation

• Best practice experience

• Community engagement

• Sense of place

• Self sustaining • Brand Value

Content

Assets

Capability

Curatorial

themes,

story telling,

experiences

and events

Cu

rate

Showcase

Outcome

Capability to deliver and service visitor experience

Enable

De

liv

er

AUTHENTIC CONTENT SERVING CORE PURPOSE

Source: SWP Case Study

Authentic experiences are developed from core assets that inform their content & narrative


Authentic narrative themes inform product content sales & marketing messaging in a tourism development plan.

NARRATIVE THEMES AND DELIVERY OF CONTENT

Science Centre

Arboretum Garden Zones

Cultural Centre

Remnant Forest

Content Theme

1. “Natural” green spaces

3. Life Sciences

4. Aboriginal history &

heritage

5. Leisure, relaxation, social,

lifestyle

6. Showcasing the region

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The aim is a visitor journey that increases engagement with each step

OPTIMISING THE VISITOR JOURNEY

Attract and

Motivate

Welcome

and

Orient Engage Immerse &

Dwell Immerse

Share

Return

Retain

Recom-mend

Convert

High Engagement Low Engagement

On Arrival Transaction Point Immersive Experiences Online

23


WELCOME

PASSIVE

MINIMAL (GUIDED)

PASSIVE

ACTIVE/EDUCATIONAL

ACTIVE

PASSIVE

PASSIVE

WELCOME

ACTIVITY ZONES

Tourism activities should align with the proposed intensity of use in each zone

24


EXAMPLE VISITOR JOURNEYS

Self- Guided

Optional Add-on

Premium Guided

Arrival Welcome & Orient

Immerse

Dwell, Immerse,

Retain

Immerse

Immerse

Immerse

25


HIGH VOLUME

Accessible pricing

Regular, high volume schedule

Authenticity is not sacrificed

Controlled group size

Volume drives commercial gain

despite low margin

EXPERIENCE MIX

26

PREMIUM PRICE

Experience seeking “F.I.T.s”

Immersive, exclusive &

interactive

Specialist content & premium

price suggest exclusivity

Value adds built in (F&B, retail)

Margin drives commercial gain



AUTHENTIC ENGAGMENT - COMMERCIAL OPTIMISATION

Capability

Platform

Brand values

Bundled experiences

Cross promotion

Commercial model

EDUCATION

HOTELS

GALLERIES ETC

SOCIAL MEDIA

EXHIBITION TOURS

TALKS

FOOD

WEBSITE

SHOP

27

Consistent narrative across experiences

Curated content informs, motivates & activates

Cross-sell & up-sell sustain commercial revenues

Collaboration is key


28

“Our Purpose”

Become a Subscriber

‘Support Us’ messaging

“Stay Informed”

Festivals, events, exhibitions,

public programs

Cafés, restaurants, venue hire,

Packaged F&B, retail etc

CROSS-SELL AND UP-SELL

Each touch point promotes a range of core messages, offers and opportunities


CROSS-SELL & UPSELL EXAMPLES

Tours promoting F&B

Shows promoting

packages

Packages promoting

a featured show

29



STRATEGIC PARTNERSHIPS


* Which of the following activities will you typically do when you take a weekend break away from home?

VISITORS ARE SEEKING A RANGE OF ACTIVITIES

31

“The more unique the

element of the trip is to

Canberra, the more

appealing it will be.”

“The key drivers

of rest &

relaxation and

new experiences

will be the critical

factors when

consumers make

their choice.”

A single experience may not be enough to motivate even highly interested visitors.


Dining – Onsite F&B partners or local, “best-of”

Retail – Garden’s shop, merchandise, nursery products, produce

Other local attractions - deepen the visitor experience, add value

Hotels - help create attractive itineraries

Tourism Australia, state & regional tourism organisations

Transport channels - airports, trains, taxis, Uber

Media - general, arts, tourism, social

PARTNERSHIPS HELP ESTABLISH VALUE

32

Partners provide content for bundled experiences as well as promotion and exposure.


COLLABORATION WITH STRATEGIC PARTNERS

33

Agreed Goals

Audience engagement

Conversion & yield

Commercial sustainability Brand

Aspiration & Vision

Simple Delivery

Mechanism

Compelling Value

Proposition

Strategic Partners

Promotion & Marketing

Commercial Model


A collaborative planning approach is needed to align key objectives and deliver outcomes.


TARGETED MARKETING


Travel purchases tend to be made through intermediaries whose revenues come from commissions

TRADITIONAL TOURISM CHANNELS

Source: Tourism Australia, “Distribution in Australia’s international markets: Situation Analysis March 2013”

Commission

(10% - 30%)

35


ACCESSING TOURISM CHANNELS

Source: Tourism Australia, “Distribution in Australia’s international markets: Situation Analysis March 2013”

36

To effectively leverage the established tourism sales network it is important to engage at every level

ITOs, wholesalers and retailers are dependant on each other to source product, build itineraries and promote to customers


An over-arching tourism sales plan supports individual sales plans for each major market.

PLANNING FOR SUCCESS

TOURISM

SALES

PLAN

37

MICE

Domestic

Cruise

UK

US

Asia--------------

------------------------------------------

--------------

Social

In-market

On-line

Local


TESTING FEASIBILITY


High-level revenue estimate based on visitor forecast, conversion rate, and revenue per pax.

INDICATIVE REVENUE

39

FY 2015 Visitors

4% based on

benchmarked

conversion

Based on

conservative

average spend

PotentialAudience-CurrentVisitors

RBGaudience 4,175,000

ConversionRateScenarios

Scenarios Rate Pax

Lowcase 2.0% 83,500

Mediumcase 4.0% 167,000

HighCase 5.0% 208,750

RevenueProjections

$10 $15 $20

2.0% $835,000 $1,252,500 $1,670,000

4.0% $1,670,000 $2,505,000 $3,340,000

5.0% $2,087,500 $3,131,250 $4,175,000

Conversion

ScenarioPrice

Current Visitors


Potential Audience – Current Visitors

Conversion Rate Scenarios

Revenue Projections


Source: SWP case study

40

Cash

Generated

Cash

Generated

Cash

Generated

Cash

Reinvested

Cash

Reinvested

Initial funding

Reinvestment

Pool

Initiative 1 Initiative 2 Reinvestment Initiative 3 Reinvestment

Performance Milestone 1

Performance Milestone 2

SELF-SUSTAINING REVENUES TO FUND ONGOING INVESTMENT

Cash generated in the short-term can be reinvested in further growth initiatives.


1

SIX STEP JOURNEY

2 3 6

4 5 Strategic

Context

Potential

Audience

Authentic

Experiences

Targeted

Marketing

Financial

Feasibility

Strategic

Partnerships


1. Capitalise on your strengths

2. Focus on creating a high quality, highly engaging, experience

3. Understand your markets & tailor your experiences to them

4. Use strategic partnerships to enhance your value proposition

5. Start small to manage risk and reinvest revenues for growth

RECAP - GUIDING PRINCIPLES

Ideas | Strategy | Growth

2 MacDonald St

Paddington NSW 2021

www.sandwalkpartners.com

Andy Lown

M: +61 401 710 167 E: [email protected]

Simon Spellicy

M: +61 421 11 77 22 E: [email protected]

CONTACT DETAILS

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