House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport Eighth Report

Visitor forecasting

85. The visitor forecasts were the foundations on which the Millennium Experience was built. The numbers of visitors to the Dome will determine NMEC's financial future and the final success or failure of the project. The Millennium Commission's first set for guidelines to potential operators included an indicative target of between 15 million and 30 million visitors.[243] Responses to the invitation to tender, received at the end of 1995, suggested that visitor numbers would be about 10 to 15 million.[244] The preferred operator, Imagination, proposed a target of 10 million visitors based on the Exhibition being staged at the NEC in Birmingham.[245] Between February and May the private-sector operator and the Commission explored a variety of options for the Exhibition with visitor numbers ranging from 10.9 million to 16 million. In May 1996, after Greenwich was chosen as the site for the Exhibition, the Commission abandoned private-sector involvement and adopted a more modest plan, with a visitor target of 10 million.[246] At the end of 1996, the Commission rejected the first business plan presented by the public-sector operating company, later NMEC, which had included a visitor target of 13.5 million. The increase in the visitor forecast reflected the increased public interest reported by a MORI poll. The revised indicative budget presented by Ms Page and NMEC to the Commission, which it approved, was based on 10 million visitors.[247] The Company revised the visitor number forecasts throughout early 1997 while it prepared the budget for submission to the incoming Government. The Company considered whether "that 10 million was the right figure and whether it was sustainable and defensible and indeed made sense".[248] Research by the Company and the Commission, and their respective consultants suggested that the intention to visit was very high.[249] Accordingly, the visitor forecast was increased to 11 million on the basis of survey and opinion poll evidence, and then further raised to 12 million following a decision by the Board in April 1997 for incorporation in the May 1997 business plan that was submitted to the incoming Government.[250] In July 1997, the Commission accepted the May business plan and its visitor forecast of 12 million.

86. When Mr Mandelson gave evidence to the Committee on 2 December 1997, he said: "The second sort of contingency you are talking about is the event of the Millennium Experience failing to excite and failing to attract the visitor numbers that are projected. All I can say is that every professional and industrial projection that has been made says that the 12 million visitors whom we are seeking to attract are probably a conservative estimate."[251]

87. According to Lord Falconer, "a figure had to be put on [visitor numbers] because budgeting had to done",[252] and he agreed that a lower visitor forecast figure might have resulted in the Exhibition having gone ahead in a different form.[253] Mr Smith recited the history of the visitor forecast figures and admitted: "Those were figures which I accepted, which I think all of us accepted ... everyone was working on these sorts of assumptions. I think we all got it wrong ... we were all working on, to a considerable extent, guess work."[254] Lord Falconer made a similar assessment, and said "people have just got to try their best to achieve the targets that they set. Otherwise, you make everybody ludicrously risk-averse."[255]

88. Ms Page said that the budget balanced with a figure of 11 million visitors, but that people would need to respond to the Experience "in the same way as they have responded to the Festival of Britain or the Lisbon Expo".[256] Surveys of the propensity to visit continued throughout the Dome's development and construction, and once it had opened.[257] Ms Page asserted: "Even in November/December 1999 there were indications that well in excess of 12 million people intended to visit the Dome".[258] She explained that people's decisions about whether to visit the Dome were influenced by a number of factors, including accessibility, price, public relations, expectations of the content, alternative attractions and the strength of the pound.[259] She added that two additional factors influencing the decision were accessibility by car and availability of free tickets to schoolchildren.[260] Ms Page said: "All of those things came along after that 12 million forecast was put into the budget which was given to the incoming Government".[261]

89. The Millennium Commission was aware of the risks involved in supporting the Exhibition and understood that visitor number forecasts were not a precise science. However, on the basis of their own appraisal, the Commission believed that 12 million visitors would be achieved, even though that figure was at the upper end of the range.[262] However, Mr Gerbeau said that as soon as he arrived at NMEC he realised that there was "no market for 10 or 12 million visitors", and that it would take five years to establish that level of business, even with a well-established brand.[263] Mr Middleton, of Dome Europe, said that it had been a cardinal error to publicise a figure of 12 million, because there was no "research which gave credence to that as a realistic target".[264]

90. However, it appears that the figures were to a greater extent based on evidence from opinion polls.[265] NMEC state that there was regular NOP tracking research from 1997 up to the opening to gauge attitude's to the Dome; the evidence from those polls indicated that the visitor forecasts were achievable but did not "take into account any external factors which might influence people's views".[266]

91. The financial implications of fewer than expected visitors are severe. The projected lifetime commercial income has fallen by more than half since 1997, to just £85 million.[267] The danger of insufficient ticket receipts was acknowledged by Mr Ayling in February 1999, when he said: "The risk area is in the receipts that we get through the gate, the numbers of people going, the kinds of people who will be coming, whether or not we are able to get the occupancy that we are planning for, and that of course will be expecting a very high degree of consistency throughout the whole of the year which will take quite some management".[268] The over-optimistic visitor forecast affected not only the Company's revenue but also its costs. For example, original staffing levels and Dome infrastructure were determined by the expected number of visitors.

92. From the middle of 1997, to the opening of the Dome there appear to have been no systematic endeavours to revise the visitor number forecasts. NMEC and the Millennium Commission put their trust in opinion poll evidence and do not appear to have reconsidered their underlying business assumptions in the light of the transport strategy, the strength of the pound, or the establishment of the Dome's ticket prices.

93. The introduction of one million free tickets for school children has undoubtedly had a negative effect on visitor numbers. It has also introduced a two-tier system of visiting for children since those on free visits have had their access to parts of the Dome limited. Ms Page believed that free tickets had had a negative impact on costs and income because of the additional staff and facilities required, and because those children did not return to the Dome with their families as paying visitors to the extent that had been expected.[269] Ms Page has criticised the introduction of free school trips; "The more children going with schools, the fewer families go, so you lose adults which was a key part of the business plan". She added that free trips had seriously hurt visitor numbers and meant organisers "couldn't do some things".[270] On the other hand, had free school visits not been offered, NMEC would undoubtedly have been criticised on those grounds. In retrospect, in view of this being a worthwhile education project it might have been that the costs of free tickets for school children should have been borne by Departments of Education and not been a burden on NMEC. Lord Falconer said that "it is impossible to tell what the effect on the visitor numbers has been but the reasoning behind it was a determination to reach out to people who would not otherwise go to the Dome".[271] Ms Page said that the Company had neither quantified the impact on visitor numbers nor reduced its visitor number forecasts when the concept of free tickets was adopted.[272] In NMEC's Report and Accounts for 1998-99, Ms Page stated that "we have to get through our year of living. That year begins when we open the doors to our expected 12 million visitors. It is they who will write the final chapter in any post-mortem document."[273]

94. Therefore, from the first estimates of attendance in 1995 of 10 to 15 million, right through to the opening of the Dome, there appear to have been no systematic endeavours to question the visitor number forecasts. The Millennium Commission and NMEC put their trust in opinion poll evidence and did not appear to reconsider their business in the light of the developing transport strategy, the establishment of ticket prices or the strength of the pound. The Company re-set the target to 10 million following poor attendance figures in the first weeks of 2000.[274] Mr O'Connor said that "between January and May ... visitors were not turning up in the numbers expected ... throughout that period the situation was getting worse".[275]

95. We still do not know who decided the various visitor forecast figures, who changed them, or why. However, ultimate responsibility must lie with the Board of NMEC and successive shareholders. The fluctuations in the visitor forecasts from more than 15 million to 10 million, up to 12 million and back down to 10 and finally 6 million seems to have been made without proper regard to the immense financial implications those changes entailed. It appears that NMEC, the Millennium Commission and the Department for Culture, Media and Sport accepted the over-optimistic opinion polls without considering the underlying assumptions or exploring a new methodology on which to base those crucial figures.

243 QQ 27, 51, 156; Evidence, p 143. Back

244 QQ 27, 215-216, 451; Evidence, p 143. Back

245 Q 216; Evidence, p 143. Back

246 Q 451; Evidence, p 143. Back

247 QQ 27, 271, 451; Evidence, p 143. Back

248 Q 27. Back

249 Q 26. Back

250 QQ 4, 23, 27, 39, 217, 321. Back

251 HC (1997-98) 340-II, Q 374. Back

252 Q 397. Back

253 Q 313. Back

254 Q 452. Back