PPP: future of tourism development - Best practice examples from Austria

1. Moscow, 15th March 2010 PPP: future of tourism development - Best practice examples from Austria

2. Content • About Kohl & Partner • Public Private Partnership in tourism • Best practice examples from Austria

3. About Kohl & Partner • Independent and internationally operating consulting company specialized in the hotel and tourism industry • Leading tourism consulting company in Austria with more than 30 years of experience • Eight offices in six countries (Villach, Vienna, Munich, Stuttgart, South Tyrol, Sofia, Bucharest and Budapest) • International team with more than 40 tourism experts 3

4. Core business areas Destination Development Tourism Infrastructure Hospitality Industry • Feasibility Studies • Hotel Valuations • Operator Selection • Strategic Concept Development • Technical Service Agreements • Aqua Parks/Thermal Spas • Conference Centers • Golf Courses • Ropeways/Cable Cars • Tourism Attractions/ Sights • Destination Audits • Tourism Master Plans • Destination Assistant Program • Hotel Master Plans • Development of organizat. structures

5. Content • About Kohl & Partner • Public Private Partnership in tourism • Best practice examples from Austria

6. Definition Public Private Partnership “A contractual agreement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector are shared in delivering a service or facility for the use of the public.”

7. Why do we need Public Private Partnership in tourism?

8. Faster imple-mentation of tourism projects is possible Lack of budget and Know-How in many municipalities Tourism Infra-structure Develop-ment is expensive but vital PPP projects Pressure by competitors requires new investment Why do we need PPP in tourism?

9. Tourism Infrastructure Aqua Parks, Ropeways, Golf Courses Possible Public-Private Partnership Leisure Infrastructure Theme Parks, Sport Complexes, Museums Events & Festivals Sport, music and cultural events Potential areas for PPP in tourism Picture Picture Picture

10. Content • About Kohl & Partner • Public Private Partnership in tourism • Best practice examples from Austria

11. „Five drunks are not a team“ – a cooperation is NOT a rescue team SUCCESSFUL PARTNERSHIP 1 The involved partners should define common goals 2 Every unit needs its own business-plan and strategy 3 Mature partners and a strong leadership are required 4 Four golden rules for Public Private Partnership 11

12. Cooperation model Concession model PPP models Informal cooperation Operation model Sponsoring Associate model Most common PPP models in tourism 1 4 5 2 6 3

13. Cooperation model 1/2 Main characteristics Best practice example DMC of the municipality Velden • 600 hotels and pensions with a total room count of 7.800 beds • More than 500.000 overnights per year • Public & Private Sector agree to work together (usually Public Sector share is higher than 50 %) • Public Sector has a contract with the Joint Venture • Ideal model if nothing is built or the contributions cannot be measured Possible tourism example Destination Management Companies

14. Cooperation model 2/2 MunicipalityVelden 34 % Tourism BoardVelden 49 % Destination Management Company Velden Event Company4 % T. support Associat.4 % CasinoAustria5 % Golf Course5 %

15. Operation model 1/2 Main characteristics Best practice example Operating company of Schönbrunn castle in Vienna • Consists of castle, royal garden, Sisi museum, emperor appartments, etc. • More than 3 million visitors annualy • Public Sector assigns a private company for planning, constructing, financing and/or operating • Public Entity receives fixed annual amount of money • An operator contract as the legal basis with detailed task description Possible tourism example Leisure or cultural facilities or convention centres

16. Republic of Austria(100 % owner) Schloss Schönbrunn Kultur- und Betriebsges.m.b.H. (operating company) Castle & Royal Garden Sisi Museum Emperor furniture collection Emperor Appartm. & Silver Collection Operation model 2/2 • No public subsidies – operating company keeps operational revenue • All investment and renovation financed by the operational revenue

17. Associate model 1/2 Main characteristics Best practice example Development of a Spa Centre in Bad Hofgastein • Surface of 32.000 square metres divided into six different zones • Total investment for renovation and enlargement EUR 25 million • Public Sector signs an equity participation for a tourisminfrastructure project • Investment as an impulse for regional tourism development • Public sector often covers infrastructure development costs Possible tourism example Golf Courses, Aqua Parks, Spa Centres, Ropeways

18. Associate model 2/2 MunicipalityBad Hofgastein 49 % Regional tourism organisation 24 % Construction Company Spa Centre Gastein Raiffeisen Bank2 % Oberbank19 % Brewing Union Austria6 %

19. Concession model 1/2 Main characteristics Best practice example Development of cable car near Innsbruck • Connecting Innsbruck (560 m) with Nordkette (2.269 m) • Total investment of around EUR 51 million • A concessionaire (private sector) is granted the right to use an existing facility • The facility stays in the ownership of the public sector • The concessionaire generates the revenues through direct selling of the services to customers Possible tourism example Golf Courses, Aqua Parks, Spa Centres, Ropeways

20. Concession model 2/2 Investment Public share 73 % Investment Private share 27 % Total investment of EUR 51 million Concession contract for 30 years

21. www.kohl.at VIENNA • VILLACH • SOUTH TYROL • MUNICH • STUTTGART • BUCHAREST • SOFIA • BUDAPEST