Destination Management

1. Destination Management Lecture 3 University of Applied Sciences Stralsund Leisure and Tourism Management WS 2009/2010

2. Part Two Explores the issues involved in the developmentof new attractions, including feasibility studies,financing design and project management.

3. Types of development New purpose-built attractions on “Greenfield” sites- Tropical Islands Dome (former Cargo Lifter) New purpose-built attractions on existing attraction sites- reanimation of closed attractions ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Major new developments at existing attractions- major new rides at a theme park New developments to improve visitor facilities (services)- new retail outlets, themed catering, on-site transport Creation of new events or staging of “moving” events- Olympic Games, Expo (World Exposition), Part Two \ Development process

4. Motivation for development Public sector- conserve heritage, provide leisure facilities, education, improve image of country/area, economic development, gain political advantage Private sector- diversifying product portfolio, increasing market share, new targeted markets, boost profit Voluntary sector- mainly conservation and education Part Two \ Development process

5. The Feasibility Study

6. Case Study „Rio Nuevo“ Objectives: Content: Part Two \ Development process \ Feasibility study

7. The feasibility study The term encompasses a wide range of studies that differ somewhat in respect of their purpose and content Main objective is to test the potential viability of a proposed project It is a systematic, logical and neutral tool for rational decision-making BUT: in some cases it is designed to legitimize a decision that has already been taken Part Two \ Development process \ Feasibility study

8. Feasibility study objectives Assessing financial viability Clarifying and refining the original concept Forecasting the likely nature of size of targeted market Providing support for applications for finance Helping to find the optimum site Supporting planning Attracting potential sponsors, franchisees, … Analysing operational issues such as labour availability Identifying sources of potential financial assistence Providing useful marketing information Part Two \ Development process \ Feasibility study

9. Additional objectives • Assist in selling a site or venture; • Assist in obtaining government approval- Local and State; • Gain support from State or Federal Government; • Provide basis for business and marketing plans; • Ensure sufficient time and resources are committed to ensure success. • Obtain approvals, permits, licenses, …- environment Part Two \ Development process \ Feasibility study

10. What must be addressed by the analysis? Is there an existing or potential market for the project? If so, what is the likely level of demand? Can the project generate sufficient revenue to achieve commercial viability? IS THE PROJECT FEASIBLE? Part Two \ Development process \ Feasibility study

11. Successful Tourism Project • A successful tourism project is one that: • Will attract sufficient customers to be financially, or commercially viable; • Is environmentally sustainable; • Is capable of obtaining all necessary approvals – permits, licences etc.; • Can be built, or developed at the proposed costs. • = Preconditions to GO AHEAD Part Two \ Development process \ Feasibility study

12. Scope of the Analysis • Depends on various factors: • End-user requirements; • Location; • Type and size of project; • The project components. Part Two \ Development process \ Feasibility study

13. Feasibility Study Stages Preliminary concept Rough costings Market feasibility study Revise concept Identify location and site Revise costings Visitor number and spending projections Financial evaluation Identify sources Impact studies Sensitivity analysis Part Two \ Development process \ Feasibility study

14. Feasibility study contents • The market study • Who will visit the attraction?- domestic and foreign holidaymakers, day trippers, School and college groups, local residents- age, sex, class, stage in family life-cycle • How many people will visit the attraction?- population of catchment area, number of holidaymakers visiting the area, competitors targeting the same market segments • Where they will come from?- catchment area • When will the visitors come?- degree of seasonality affects staffing, attraction capacity and cash flow management Part Two \ Development process \ Feasibility study

15. Feasibility study contents • Site selection criteria • Proximity to major centres of population • Transport networks and their reliability • Existence of other attractions in the area • Socio-economic profile of the catchment area • Availability of suppliers/services • Amount, type, quality and costs of land • Regulations on the use of land • The climate • Availability of qualified labour at acceptable costs • Public sector financial assistance and ‘help in kind’ • Attitude of local community towards planned project • … Part Two \ Development process \ Feasibility study

16. Feasibility study contents Profit Break-even point Costs Variable costs Fixed Costs 0 Number of visits • Financial viability • based on calculation of COSTS and REVENUES • Depending on the type of organization viability means to produce a profit or surplus on running costs • Cashflow management • Break-even analysis Part Two \ Development process \ Feasibility study

17. Who should undertake the feasibility study ? Part Two \ Development process \ Feasibility study

18. Wenzel Consulting (No Product Placement !!!)  Please visit: http://www.wenzel-consulting.de

19. Sourcing Information and Data • Process starts with 3 Questions: • What type of venture is being considered? • What factors affect the project? • What information is needed relative to the development of the project and identification of likely demand? • Need to determine the sources of the information. • Need to ensure that you have sourced and are using the right information!! Part Two \ Development process \ Feasibility study

20. Types of Research • Quantitative Research • Provides historical data on visitor numbers, occupancy levels, travel type, accommodation type used, length of stay, etc. • Qualitative Research • Addresses issues such as consumer travel motivators, decision making, attitudes, needs and expectations, levels of satisfaction, etc. • Both may be sourced directly or indirectly i.e. Primary or Secondary data. • Growth trends may be projected and can be used as a basis for projections. Part Two \ Development process \ Feasibility study

21. Primary Data • Data obtained specifically for the project itself and may include surveys, interviews, observations, focus groups, • May be sourced in the following way: • Inspection of the site; • Observation of locality and region; • Visitor surveys, written or verbal questionnaires; • Telephone or mail surveys; • Interviews with operators & industry representatives; • Visiting competitors product; • Consultants report; • Statistical analysis. Part Two \ Development process \ Feasibility study

22. Primary Data cont. • Number of issues to be considered when collecting primary data including: • Personal or other bias; • Relevancy of questionnaire; • Validity and reliability of survey; • Cost of research, both financial and time. Part Two \ Development process \ Feasibility study

23. Secondary Data • Comprises all published and readily available information gathered previously. • Large amount of data available; • Is easily accessed; • Is far less expensive than primary data. • Limitations: • Information can be out of date; • Validity of the data, sources, methods; • Gathered for a different purpose. Part Two \ Development process \ Feasibility study

24. Where to Source Information cont. • Main Research Programs:- Public sector e.g. Federal and Regional Statistical Offices- Privat / Voluntary e.g. OSGV – Touristim Statistics Part Two \ Development process \ Feasibility study

25. Where to Source Information • IMPORTANT NOTE: • Always make sure that the information or data that you are using can be substantiated; • Use accurate projections not marketing targets or “guestimates”. Part Two \ Development process \ Feasibility study

26. Secondary market research – market study “Gäste in MV” [Guests in Mecklenburg Vorpommern]beside official figures from statistical office and FUR-study one of the most important source for secondary studies for tourism branch in Mecklenburg Vorpommern Provides decision-makers with detailed figures about the size, structure and development of the market of holiday makers in the region Carried out in co-operation with the University of Applied Sciences Stralsund Part Two \ Development process \ feasibility studies

27. Secondary market research – market study Market structure regarding:- origin (country, federal state)- travel purpose, and benefits sought- duration of stay- suggestion to travel from- way and place of travel organization- means of transportation- type of ~ and expenditures for accommodation- amount of daily expenditures- companions- age, income- influence of cultural aspects of destination- degree of satisfaction Part Two \ Development process \ feasibility studies

28. Secondary market research – market study Part Two \ Development process \ feasibility studies

29. Secondary market research – market study Our typical tourist • is 43.6 years old - 1,743.50 € net income - accompanied by partner - travels without children - travels by car - travels regularily - by half from eastern and western Germany - is a regular customer- seeks a beach, nature and relaxation- stays in a hotel for 9 days- spents 45 € for the room and 20 € a day Part Two \ Development process \ feasibility studies