Examination of Witnesses (Questions 200
WEDNESDAY 31 JANUARY 2001
200. Tell me that.
(Mr O'Boyle) The market penetrations
were: in 1996 266,000 day visitors, people who had come for the
day; 33 per cent were coach bookings; 24 per cent were schools.
Total visitors 324,000. In 1997, bearing in mind 1996 was nine
201. That does not answer the question I asked
you. I asked about local. School bookings would have been local.
Some of the coach bookings would have been relatively local. How
much was what we would call outside tourism?
(Mr O'Boyle) I shall have to reply in
writing, if I may, I do not have those.
202. I am amazed; absolutely amazed. Here is
a project which was deliberately put outside Londonand
one understands the motives for itbut it looks increasingly
that it was rather like the Dome, only in this case it was a good
project and will survive, but it was put in the wrong place. You
do not actually know what your market was supposed to be. How
much was intended to come from visitors from outside the region,
not repeat visits from within the region which are much harder
(Mr O'Boyle) We do know and we know precisely.
203. You are not giving that impression.
(Mr O'Boyle) I do not have them to hand
in a short period of time. I can provide you with chapter and
204. Did you not expect to be asked about this?
Something which is intended to be a major attraction, a national
attraction and indeed for people coming from abroad, not just
intended to serve Leeds and its area, has to have additional attractions,
because if it were dependent on the local market, once you have
seen a piece of armour it looks much the same the second time
you see that same piece of armour. The logic is for it to be near
other attractions which themselves bring in people from a much
wider area, is it not?
(Mr O'Boyle) You are right.
205. So people move from one to the other.
(Mr O'Boyle) I have it here.
206. There you are, you had it after all. I
had confidence in you.
(Mr O'Boyle) Thank you. In 1996 our primary
market was 74 per cent, which is defined as nought to one hour's
travel from Leeds. That was 238,500, market size 5.42 million,
penetration rate 5.28 per cent. Secondary market: one to two hours,
12 per cent of our attendance, 38,500, market size 10.60 million,
market penetration 0.43 per cent. Tourist market: 14 per cent,
attendance 1996 45,000, market size 5.58 million, penetration
rate 0.97 per cent. Our strategy for 1997 onwards was to raise
the penetration rates in the one-hour-plus marketplace.
207. That is a very, very difficult thing to
do. I remember one of these theme parks was built in a place called
Flint in Michigan based on the car industry and I went to look
at it. Talking subsequently with some of the people who ran it,
I told them that it could not be a success because no-one would
come back twice because once you had seen it, you had seen it
and there was nothing additional to attract people. How far have
you achieved the 14 per cent which you wanted for other tourists?
(Mr O'Boyle) Our whole strategy was to
target the one-hour-plus market because this was a major catchment
area that offered immediate growth potential. Our typical London
national museums in the secondary market equate to 5.3 per cent
penetration. In their primary market they get 5.5 per cent and
we were getting 5.3 per cent. So you could see that we were demonstrating
a very good local take-up and therefore the message was a focused
message that along the corridors of the M62 the M1 and the A1
we should try to grow the secondary market up closer to the national
208. If you had got it up to the national museums'
figure what difference would it have made to viability? Would
you have been viable?
(Mr O'Boyle) Transformed it.
209. Get it up to London level.
(Mr O'Boyle) It would have transformed
210. I mean in percentage terms now not in growth.
(Mr O'Boyle) The regional UK museums'
secondary market penetration is one per cent on average. We were
0.4 per cent. So the comparator is not the same in terms of regional
attractions for museums as opposed to national museums. We were
looking to try to get our penetrations up closer to the regional.
We were not trying to get to the national levels.
211. You are sending us notes on a variety of
things: cost of consultants, forecasts and your model of the financial
effects of the various volumes. Given the Department has been
aware for some time that the Government was moving towards a free
museum strategy, have you done an estimate of the difference that
would make to visitor numbers, up to trebling I guess, and to
the debt pay-off time for RAI?
(Mr Young) No, not exactly that but if
I might add force to something Mr Wilson said, the new strategic
plan for the Armouries, drawn up since this deal was finalised,
posts an increase of 40 per cent of visitors on the basis of free
access for children and pensioners and one pound for adults, rising
to 250,000 by 2003-04, rather lower than some of the figures being
mentioned in previous questioning. That would make optimistic
Mr O'Boyle's 30-year payback. So in the figures the company produces
they must be making some more optimistic projections of visitor
spend or something. In our judgement it will take at least 30
years for these investors to get anything.
212. We shall see that from his figures no doubt.
In the negotiating process, did you do a calculation of net present
value of the income streams implicit in the catering and car parks
which you made over to RAI? That is in effect a gift you made
(Mr Young) We did not do exactly that
calculation. What we did do was import into the agreement something
mentioned in paragraph 1.107, which means that once the RAI gets
enough from its corporate entertainment and catering to pay off
the debt to the bank, at that point the Armouries get 20 per cent
of RAI's income. That was our answer to it. It was an imponderable
question but that was our answer to it, to make sure that if they
do pay backand it is a big "if"then the
Armouries, the public sector, gets 20 per cent.
213. That is not really the comparison I am
looking at. The comparison I am looking at is the force majeure
outcome which Mr Williams commented on earlier. I am sure we can
calculate, can we not, C&AG, what the range of net present
values were which arose from that?
(Sir John Bourn) Yes, we will do that.
214. There seems to be a bit of a conflict between
the two witnesses in a sense. As I understood Mr O'Boyle at the
beginning, he was saying that if they had had an effectively free
or very low cost entry price the place would have been packed
full and it would have become intolerable. Mr Young now seems
to be telling us that is not true and what is virtually a full
price will actually mean even lower figures than were originally
predicted at a price of £5 or £7. There seems to be
a bit of conflict there between the two views.
(Mr Young) All I am doing is telling
you the content of the current strategic plan from Royal Armouries.
It is not my figure. The Royal Armouries' trustees have agreed,
as I understand it, a strategic plan which allows for an increase
in visitor numbers of the Leeds museum up to 250,000 for the year
215. It sounds as though the conflict is between
the Royal Armouries and RAI.
(Mr Wilson) May I attempt an explanation?
I think what Mr O'Boyle said was that he was concerned that if
it were freeand his concern was before it openedthere
would be even more people than predicted and therefore it could
not cope. Obviously as soon as it opened we were achieving nowhere
near the numbers. That was what he was trying to express. Therefore
there is no direct correlation between that and what we are now
projecting. As far as the Royal Armouries are concerned, I do
not want to be sitting here in another three or four years' time
explaining to you why we have failed to meet visitor targets.
Therefore we have set targets which we believenot consultants
believein all the circumstances applying are achievable.
Those visitor targets are set during the period when we are going
to be surrounded by a very large building site. The building site
once it is completed should then give us a visitor attraction
around us which we hoped to have from day one, which we always
believed would attract large numbers of people to that part of
Leeds. It had also originally been intended that that would have
better access to it than it now has because there was to be a
light rail transport system bringing people directly from a large
car park by the M1 south of Leeds so that it would be very easy
and attractive to come to the museum. That has not yet happened.
Until those things happen, we are not going to be predicting large
numbers of visitors, unless by any chance all the other things
we do actually bring them about. If they do, I shall be delighted
and I hope everyone else will be. We are going to be extremely
prudent from now on.
216. I clicked earlier on something you said
and I do not know whether it was just my imagination. You seemed
to say that you had worries that the information you had been
given by MORI were legitimate worries. Is it fair to say that
you passed those worries to RAI who ignored them?
(Mr Wilson) Yes, it is fair to say that
we discussed those. I believe we had a two-day session before
opening in 1995 when this was discussed. The Royal Armouries'
representatives did express concerns about the levels of pricing
which were being suggested by RAI.
Mr Steinberg: Why did you not tell us that right
at the very beginning?
Chairman: One last point in that case. May we
have copies of all of the consultants' forecasts from the beginning?
Thank you very much. It remains but for me to thank you for coming
and to say on a personal note, though I try not to let any sentiment
be introduced into these hearings, that I have been to your museum
and it is very impressive. It is just a pity the numbers are not.
Thank you very much indeed.
11 Note: See Evidence, Appendix 2, page 21 (PAC 171). Back