Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 40 - 59)



  40. Why do you not have one?

  (Mr Wilson) We do have one.

  41. What is the address?

  (Mr Wilson)

  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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