Examination of Witnesses (Questions 155
- 159)
THURSDAY 29 JUNE 2000
MR DAVID
QUARMBY AND
MR PIERRE-YVES
GERBEAU
Chairman: Gentlemen, I would like to
welcome you here this morning. This is the first time that either
of you, in your present positions or indeed in past positions,
has been before this Select Committee. We are very interested
to hear what you have to tell us. Mr Fearn will start the questioning.
Mr Fearn
155. Thank you very much, Mr Chairman. Before
I begin, can I mark my interest in this, from the letter which
we have received from the Clerk. I am an exponent of the Dome,
always have been and so far always will be, because I see it as
a single success and, speaking to the people out there, an even
bigger success from the ones who have gone. So if we can, shall
we say, turn round the bad press in time, that will help, but
that is a difficult job, I know. We have just returned from Scotland.
In Paisley the whole of the town was in great praise for the Dome,
I have heard all over the country that this is so, and I think
so myself. So there are critics of it, but I am not one. Can I
ask first, in the course of 1999 did the Board consider the financial
implications if visitor numbers fell significantly below 10 million?
If so, what contingency plans were put in place at that time?
(Mr Quarmby) I had better deal with that,
because PY was not here at that time, and perhaps I could just
remind the Committee, Mr Chairman, that I have only been the Chairman
of NMEC for five weeks, though I have been a non-executive board
member since February 1997, so I am in a position to answer Mr
Fearn's question as a non-executive director.
Chairman
156. Could I say, Mr Quarmby, that I should
have referred to the fact that you have, of course, been before
us in a different capacity previously.
(Mr Quarmby) Thank you. The Board did, in the course
of putting the business plan together over the previous three
years, consider a range of possible visitor numbers from 10 million
up to about 16 or 17 million and did explore the implications
of what those numbers would be in terms of the economics of the
project. In fact, there was in the original budget a substantial
revenue contingency that allowed for variation around the 12 million,
though as events have turned out, not a sufficient contingency
to cover the sort of values that you are looking at now.
Mr Fearn
157. What kind of contingency are you talking
about?
(Mr Quarmby) The revenue contingency which is made
quite clear in our previous annual reports was about £40
million.[1]
158. Do you think that if the opening night
had been managed better, those figures would now be more than
they are?
(Mr Quarmby) I think the circumstances of the opening
night and the receipt of guests at Stratford, which was only one
of the four receiving points for guests, are well known. I would
be happy to answer further questions about that. It certainly
took the edge off the experience of the opening night for 2,000,
3,000 or 4,000 of our guests. Significant in that, of course,
was that among those 3,000 or 4,000 were a number of editors of
newspapers, and I think that their experience has been a contributing
factor to the attitude of some of the media towards the project,
certainly in the early months. Without that, I think we would
not have had quite the degree of media criticism that we have
had, and which has undoubtedly dented our visitor numbers.
(Mr Gerbeau) If I can add to that, I do believe there
was no market potential for 12 or 10 million. It was pretty clear,
as soon as I stepped in to run a full business review on the real
market potential of the attraction, that there is no market for
12 million around this attraction. From my experience, coming
from a similar turnaround experience, we took, with a brand which
was known well, five years to establish those kinds of numbers,
so definitely not in the first year. What the Dome challenge was
at the beginning was that it was not only risky because it was
a whole new brand to establish, but also—and I think that
was actually very courageous and was what got me into the job—it
was 100 per cent innovation. As we know, it takes time to establish
not only a visitor attraction business, but to establish something
that is entirely new. Usually in that type of business what you
do is you establish yourself and you take maybe 60 per cent that
was already working somewhere else, then you do 40 per cent to
try out innovation. What was remarkable in this attraction is
that it was all new, so that was a very big challenge to face
in terms of visitor numbers. So even though, as David was saying,
December 31st had an impact, at the end of the day there was no
market for 10 or 12 million.
159. When you say it was risky, do you consider
now that it was risky, or would you have considered it risky at
the time? At the time both major parties in Parliament had endorsed
it.
(Mr Gerbeau) What I am saying is that it was a great
risk, but it was fantastic, because it is remarkable to do that.
If you talk to people in this industry, they are looking at it
with both eyes; one eye is going to say it is so innovative that
it is fantastic, setting up new ground, setting new standards,
but at the end of the day also looking at the way it is a great
threat to the industry because it is working very well. The whole
industry is looking forward to the latest issue, because there
is viable business to be made, and we are proving now, since February,
that there is a viable business to be made around this attraction.
1 Note by witness: The figure in previous Annual
Reports referred to the cost contingency. However, the
original project budget did include a revenue contingency of about
£40 million. Back
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