Examination of Witnesses (Questions 40
- 59)
WEDNESDAY 31 JANUARY 2001
MR ROBIN
YOUNG, MR
GUY WILSON
AND MR
CHRISTOPHER O'BOYLE
40. Why do you not have one?
(Mr Wilson) We do have one.
41. What is the address?
(Mr Wilson) armouries.org.uk.
42. Why was it pulled for a short time?
(Mr Wilson) It was pulled for a short
time because we were reorganising it.
43. How important are free tickets as promotion?
(Mr Wilson) As promotions they can be
extremely important.
44. What is the policy on them?
(Mr Wilson) The policy on free tickets
is to give free tickets when it is to our advantage to do so.
45. How many do you give? What proportion of
the tickets are free?
(Mr Wilson) I cannot give you an honest
answer to that at the moment. It has changed every year that we
have been open as our marketing policies have changed. I can let
you have the information[4].
46. In respect of the report's comments on the
collapse of visitor numbers, what steps were taken to address
that collapse?
(Mr Wilson) Between ourselves and Royal
Armouries (International) we spoke frequently at our operating
committees about what could and should be done and a considerable
number of initiatives were attempted, both changes in the ticket
price and special reductions. Many ticket prices were tested between
1996 and 1999 by Royal Armouries (International) in an attempt
to reverse that decline. They also looked very carefully at changing
what the proposition of the museum was and they introduced major
exhibitions in an attempt to reverse the trend. Sadly, whether
the trend was slowed we cannot tell, but it was not reversed.
47. Is it right that you reduced expenditure
on marketing?
(Mr Wilson) Yes, we did.
48. What impact did that have?
(Mr Wilson) As the marketing spend went
down, so the visitor numbers went down.
49. With hindsight was that a wise decision?
(Mr Wilson) It may not have been. On
the other hand, two points there. You start off with a very high
marketing budget, which is way above that which you expect to
have eventually. You would have expected it to reduce in any case.
Mr O'Boyle will be able to tell you that Royal Armouries (International)
did not have the cash to carry on with that sort of level of marketing.
If you look at the consultants report of 1999 that we had from
KPMG, they did a survey of the spend on marketing in the Royal
Armouries compared to like attractions. They found that we were
one of the highest spenders on marketing. I do not think you can
really say that the reduction in spend on marketing was a major
contributing factor, although certainly we, and I know Mr O'Boyle
was, were concerned about it and we should all like to have spent
more if we could.
50. I should like to have details later of the
spend on marketing since the opening. On the visitor numbers and
the ticket prices, how much is it to get in?
(Mr Wilson) Now it is £4.90 adult
price. One of the first things we did when we took over in 1999
was go for a much lower admission price.
51. Why did you keep the price up for so long?
(Mr O'Boyle) We followed the advice of
the six consultants which we actually commissioned: three before
opening and three after opening. The MORI figures were quite rightly
showing that it was price sensitive at £5. What one has to
remember is that that was £5 in 1992 money and when you inflate
that to an opening in 1996, it is a materially different figure.
That equates to over £6. The MEW research, when you put the
industry inflation of RPI plus one, which were the ticket price
increases that were prevalent at that time, takes it over £6.
That is the first point.
52. What MORI have told me is that in punters'
jargon a fiver is a fiver and that that is what makes the difference.
They told you that as well.
(Mr O'Boyle) The second point was that
we actually commissioned Gardner Merchant, prior to financial
completion, to carry out their own validation of the business
plan and visitor numbers. They came up with 650,000 as their projection,
which they were prepared to enter into the business plan and to
back with £1 million of investment into the company. We commissioned
two further organisations prior to opening: one was BJL, Barrington
Johnson Lorains who are a very well respected northern based leisure
marketing organisation. They forecast 850,000 visitors in January
1995. Then we commissioned MEW, a well respected organisation,
to conduct a 1500-person survey nationally with a focus in Leeds.
They came up with a clear consensus that the £6.95 would
deliver over 800,000 visitors to us.
53. Was MORI's lesson not that if you charged
over a fiver then you would lose visitors, you would lose a considerable
total?
(Mr O'Boyle) The balance we had to strike
was that potentially if we were free we would be flooded, the
visitor experience would be destroyed and we would very quickly
end up with a downward spiral. The building could not handle more
than a certain number.
54. I am glad you do not have to lose sleep
over that one.
(Mr O'Boyle) Of the three reports commissioned
after opening, two of them were independent of ourselves, they
were commissioned by our investors and by the bank, and they both
demonstrated that the marketing strategy, the pricing and the
resources which were committed to back that strategy, were absolutely
right and the pricing levels were appropriate.
55. Why do you think that Madame Tussaud's decided
not to go ahead with a bid for this, with all their expertise?
(Mr O'Boyle) We were fortunate to have
had Michael Herbert, who was Chairman and Chief Executive of Tussaud's
at that period when they were considering entering the bid as
a non-executive director on our board. He has advised me that
they were more worried about the control issues, where operators
like to have control of the visitor experience and the marketing
rather than split control. We did discuss in detail with Tussaud's
them coming in as an operator and we were talking around about
figures in the high fives and low sixes, 600,000, at that point.
They pulled out because of the split control.
Mr Griffiths: It appears to me that at least
one member of the support group says that despite the support
group's combined knowledge of local conditions, expertise and
experience of the museum sector in Yorkshire, our advice on such
matters as admission prices, exhibitions, displays, etcetera,
was ignored. For that reason, the Committee may not be surprised
that we are having to have this hearing today.
Mr Campbell
56. May I first of all ask about the cost of
advisers and consultants? What is your estimate of the total cost
of all the advice and consultants which have been employed from
the outset?
(Mr Wilson) I am afraid I have not done
an analysis of that.
57. Could you do one and could you ask Mr O'Boyle?
(Mr Wilson) Yes, we could certainly put
together a combined total for you. Would that include the consultants
on the building?
58. Yes. Every consultant.
(Mr Wilson) Yes.
59. What was the experience of Gardner Merchant
in heritage sites and museums?
(Mr O'Boyle) They had an extensive pedigree
in operating sites across the UK. It is fair to say that a lot
of that experience was around the catering operations, but they
did subsequently expand into full facilities management and indeed
have taken that on now into other PFI operations. We went to Gardner
Merchant because basically they had the critical mass necessary,
the systems and they were prepared to invest and back their expertise
with hard cash in the company, which was one of the requirements
for the lead investor to manage that operational risk.
4 Note: In the period December to January 2001, 26,843
complimentary tickets were issued. Back
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